Why have the negotiations so far failed to result in an agreement? Is the formation of the JV between Nora and Sakari the best option for both companies to achieve their respective objectives?

Question 1:

  1. Why have the negotiations so far failed to result in an agreement? Is the formation of the JV between Nora and Sakari the best option for both companies to achieve their respective objectives?
  • The negotiations between Nora and Sakari have failed mainly due to a mutual ignorance of one another’s cultural norms.
  • One of the key reasons for failed to result in an agreement is that there is enormous space between what Nora and Sakari can forgo to successfully negotiate the contract with each other.
  • The following are some reasons as this paper provide how far they are from the real contract. First of all, Sakari proposed an equity divide in the Joint Venture (JV) Company of 49 percent for Sakari and 51 percent for Nora but Nora proposed a 30 percent Sakari and 70 percent Nora divide. Second, Sakari proposed to provide the JV Company with the basic structure of the digital switch where by the JV Company would assemble the switching exchanges at the JV plant and subsequently install the exchanges in designated locations identified by TMB. On the other hand, Nora proposed that the basic structure of the switch be developed at the JV Company in order to access the root of the switching technology. Third, Sakari proposed a royalty payment of five percent of the JV gross sales while Nora Proposed a payment of two percent of net sales. Fourth, there is a huge gap in the Sakari’s expected salaries and perks from the JV Company and what Nora willing to provide. And finally both Nora and Sakari disagreed on the location for the dispute resolution. In conclusion, this paper want to address the lack of preparation and lack of understanding on the differences due to national culture is another factor for failed negotiations.

In addition, while Ainnuddin was talking about the Nora’s point of view, to ensure compliance with the terms of the TMB contract, joint venture negotiations with Sakari must be successfully concluded. Nora is looking to a protected partner that will enable them to comply with the TMB contract, as well as to learn from Sakari’s success and imitate that model in the Malaysian market. JV Company would be the best objective because if they are able to reach the negotiations, Nora would benefit from the JV in terms of technology transfer. Sakari was one of the leading telecom companies in Europe. It would be an important opportunities for Nora to learn from the Finnish experience and follow their success for Malaysia.
There are some reasons that prove Sakari is the best option for Nora as Sakari can provide what Nora really need and they also know each other as they already involved in the negotiations contract. For example, although Sakari was a comparatively a small player in fixed networks, these networks were easily adaptable, and could cater to large exchanges in the urban areas as well as small ones for rural needs. Moreover, Sakari’s smaller size, compared to that of some of the other MNC’s, was an added strengths because Sakari was prepared to work out customized products according to Nora’s needs. Large telecom companies were assumed to be less willing to provide custom-made products. Instead, they tended to offer standard products that, in some features, were not steady with the needs of the customers. Furthermore, if Nora started the negotiation with any other possible parties then that will be costly and consumes too much time that way Nora will lose its reputation in the market due to its inability to provide what it had previously promise with TMB.
According to Ainuddin, Sakari has experience in the exporting market and they have,…..

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