Nora-Sakari: A Proposed JV in Malaysia Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Nora-Sakari: A Proposed JV in Malaysia Case Solution

Alternatives

As Zainal, what would you do to ensure that Nora fulfills the TMB contract?

TMB is the national telecom company of Malaysia and is responsible for developing the telecom infrastructure in Malaysia. TMG was looking forward to launch4G LTE and announced a project of worth RM 1 billion. Both Nora and Sakari would winthe bid of the contract however, Sakari is not as interested in the contract as Sakari had an alternative option of the UK contract. Nora has the only choice of joint venture with Sakari as the company commits to fulfill the TMB contract and deviation from the contract will negatively affectthe company's image and financials badly.

Moreover, in order to complete the contract, Nora needs a technology partner, therefore, as Zainal I would try to convince Sakari's negotiation team along with the modification of the terms of the contract in such a way that the terms should suit both parties as the joint venture with the Sakari is the best alternative for the Nora. There are several reasons behind the selection of this alternative as Nora had already spent significant resources such as sizeable time and amount in order to negotiate with the Sakari negotiation team.

As Zainal I would have other options as well such as partnering arrangement with the Alcatel and Ericsson however, being the vice president of Nora I do not have much time start negotiation with the new player from the start as time is also short to fulfill the TMG contract. Moreover, the technical standards of the Alcatel are not according to the standards that Nora is looking for and also not compatible with the requirement of the TMG contract.

Moreover, the other players such as Samsung and NEC who failed in the bid could also be the potential partners. However, both these companies are not feasible options as they already failed in the bid process.In addition to this, both companies are already operating with the local players, therefore among all Sakari is the most feasible option.

Furthermore, there are several other reasons that are supporting the stance that I should approach Sakari again such as the technologies SK4LTE and SK10 provided by Sakari are more standardized and market competitiveness as well as they actas a benchmark in the industry in terms of capacity, flexibility and energy consumption.

Although the standardized product offerings from Sakari are not suitable for the company as the requirement of the TMG contract is more customized, and that Sakari is willing to provide customized products and services. Therefore, this product offering from the Sakari also makes this option more viable for the company.

Therefore, as Zainal, I would take various steps in order to convince the negotiation team of Sakari. Moreover, being the vice chairman of Nora, my primary responsibility would beto act in the best interest of the organization, and fulfilling the TMG contract is the most important issue in order to achieve the future objectives.

In order to ensure the successful completion of TMG contract, the joint venture with Sakari is more important because the technological support from Sakari is mandatory to complete this contract. For that purpose, I would try to convince Sakari’s negotiation team with the revised compensation plan according to the international standards or local industry standards at least.

It is expected that this venture is equally important for Sakari as this joint venture will provide entry to Sakari in the South East Asian market. However, there is a need to convince that the Asian market is more potential market than the UK contract, which is the alternative for which the Sakari team is more biased therefore, I will approach the higher authority of Sakari with more and better financial knowledge, which will help me to encourage Sakari’s top management for this joint venture.

Recommendation

If Zainal decides to renegotiate (and assuming that Kuusisto agreed), how should he restructure the terms of the deal

If Kuusisto agrees to renegotiate the deal, then the terms of the deal should be revised carefully as the joint venture with Sakari is more important for Nora with the strategic and operational point of view. There are certain conflicts which may a rise during the negotiation, and these conflicts should be resolved for having abetter relation with Sakari. As Nora has good relation with the government, therefore equity structure should be revised as 30% stake of Sakari is not appropriate and giving 35% to 40% stake to Sakari in JV will help Nora to convince the Kuusisto....................

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