The negotiations between Sakari and Nora

Question 1

The negotiations between Sakari and Nora have been unsuccessful due to several factors. Primarily, there are disparities in the objectives among the two companies. This has resulted in the lack of arriving at a mutual agreement. The second reason rests on the approach, particularly the one applied by Mr Zainal when negotiating with Sakari. In the negotiation process, the individuals should demonstrate competence in several aspects, skills, and knowledge, including informed decision making, communication, and interpersonal. The lack of these skills in the negotiation is the reason for failure in arriving at an agreement.

The third reason is the difference in the cultural background between Nora and Sakari. To arrive at successful negotiation, both companies should demonstrate cultural competence, which involves acceptance of others differences. This ensures that both parties respect one another and collaborate to achieve the suitable decision. The fourth reason entails the division of equity ownership. Both firms have agreed to form the JV with the capital of RM 8 million but have disagreed on the equity share by both sides. Sakari proposes 49% and 51% for Nora. Nora proposes 30% for Sakari and 70% for Nora. Failure to arrive at a decision that meets each other’s equity ownership objective is the foundation of failed negotiation. The fifth reason entails the royalty issue. Both companies have proposed different royalty payments. Sakari proposes 5% while Nora proposes 2%. Arriving at the decision for the royalty payment is a key hindrance to a suitable decision. The sixth reason entails the difference in the living standards between Finland and Malaysia. These differences are demonstrated in the expatriates perks and salaries. The seventh reason focuses on technology transfer. The decision concerning the SK 10 is the foundation of the differences between what Sakari wants and Nora preferences, particularly on obtaining the assembling and installing….

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