Nora Sakari Case Study for International Management Course
Veena Meer
November 13, 2012
International Management
Case Analysis:
Nora-Sakari: A Proposed JV in Malaysia
Companies’ Overview Two leading telecommunications companies are negotiating forming a joint venture (JV) called Nora-Sakari. Sakari Oy (Sakari) was a Finnish conglomerate a leader in manufacturing cell phone sets and switching systems and Nora was a leading supplier of telecom equipment in Malaysia. The proposed JV in Malaysia has the purpose of manufacturing and commissioning digital switching exchanges to meet the needs of the telecom industry in Malaysia and neighboring countries, particularly Thailand and Indonesia. Both Companies- Benefits and Drawbacks of the JV
Benefits
1. Market Demand At the time of the negotiations, fixed network projects in Malaysia and Thailand were large and amounted to hundreds of millions of dollars. Given the conditions, it is imperative to their success that Nora and Sakari establish a competitive presence in this region to capture a share of the fixed network market. Low telephone penetration rates for most Southeast Asian countries also reflects the large potential for telecom facilities.
2. Host Country Conditions Telekom Malaysia Bhd (TMB), the national telecom company in Malaysia, was given authority by the government to develop the country’s telecom infrastructure such that it is on par with developed countries and they were provided with the finances to do so. There is a strong need to upgrade telecom infrastructure in the rural areas to achieve the government’s Vision 2020 program that targets Malaysia becoming a developed nation by 2020. TMB was lacking in the expertise and technology to undertake massive infrastructure projects. It was common for local telecom companies to form partnerships for technological support, as Nora is considering doing with Sakari. Together they can submit their bid for a particular contract to TMB who is in need of technological expertise, and
November 13, 2012
International Management
Case Analysis:
Nora-Sakari: A Proposed JV in Malaysia
Companies’ Overview Two leading telecommunications companies are negotiating forming a joint venture (JV) called Nora-Sakari. Sakari Oy (Sakari) was a Finnish conglomerate a leader in manufacturing cell phone sets and switching systems and Nora was a leading supplier of telecom equipment in Malaysia. The proposed JV in Malaysia has the purpose of manufacturing and commissioning digital switching exchanges to meet the needs of the telecom industry in Malaysia and neighboring countries, particularly Thailand and Indonesia. Both Companies- Benefits and Drawbacks of the JV
Benefits
1. Market Demand At the time of the negotiations, fixed network projects in Malaysia and Thailand were large and amounted to hundreds of millions of dollars. Given the conditions, it is imperative to their success that Nora and Sakari establish a competitive presence in this region to capture a share of the fixed network market. Low telephone penetration rates for most Southeast Asian countries also reflects the large potential for telecom facilities.
2. Host Country Conditions Telekom Malaysia Bhd (TMB), the national telecom company in Malaysia, was given authority by the government to develop the country’s telecom infrastructure such that it is on par with developed countries and they were provided with the finances to do so. There is a strong need to upgrade telecom infrastructure in the rural areas to achieve the government’s Vision 2020 program that targets Malaysia becoming a developed nation by 2020. TMB was lacking in the expertise and technology to undertake massive infrastructure projects. It was common for local telecom companies to form partnerships for technological support, as Nora is considering doing with Sakari. Together they can submit their bid for a particular contract to TMB who is in need of technological expertise, and
References: Phatak, Bhagat & Kashlak, International Management, 2nd ed., McGraw-Hill Irwin, 2009 See footnotes. -------------------------------------------- [ 1 ]. "Military." Malaysia Religion. N.p., n.d. Web. 19 Nov. 2012. . [ 2 ]. "Fujitsu." Wikipedia. Wikimedia Foundation. Web. 18 Nov. 2012. .