Nora Sakari Case Study for International Management Course
2238 WordsDec 8, 20129 Pages
November 13, 2012
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
1. Market Demand At the…show more content…
Nora has been reaching out to other companies for technology and had the goal of developing technology in-house, which it’ll be closer to doing by using Sakari in their JV. Sakari’s SK33, a digital switching system, uses components that are freely available in the open market and this is a major positive factor for Nora since other potential partners like NEC and Ericsson required purchase of components developed by parent companies. SK33 is attractive also since it is modular, its software could be upgraded to provide new services, it could interface easily with new equipment in the network, and it could lead to developing new switching systems. Sakari’s networks are easily adaptable, can cater to large exchanges in urban areas and small exchanges for rural needs.
The drawbacks are that Nora needs large investment in the building for the joint venture as well as that other companies have more established brands than Sakari. In the meantime, there are also benefits and disadvantages for Sakari in the joint venture. However, Sakari seems to have more leveraging in this negotiation in terms of the equity ownership. An appropriate leverage equation might be an equity split in 45% for Sakari and 55% for Nora.
Sakari - Benefits and Drawbacks of a JV
Nora is one of the leading companies in the telecom industry in Malaysia, and has established itself as a