Nora and Sakari - Deal or No Deal

B.A.P.P’s

Nora and Sakari both are actual effective in their corresponding field of business. Nora is one of the chief suppliers of the telecommunication equipment in Malaysia. Sakari can gain a lot from Nora’s assets and knowledge about the culture and market. On the other hand, Sakari is one of the successful niche market players for contributing digital switches technology. So, both the companies have their own strengths and advantages over another and both the associates can learn and gain a lot from each other. Therefore, in our opinion, both the company should compromise in something in order to emerge the contract.

While speaking about the reorganization the discussions, following are the key areas where we would rearrange the negotiations.

Ownership: The first key issue that should be efficient is about equity ownership and power control. In our opinion, Nora should possess greater portion of JV equity (60 percent for Nora and 40 percent for Sakari) for two reasons. Primary is that JV will operate in Malaysia and not in Finland and they understand their culture better than that of Sakari. And the second reason is that Nora has the reasonable and appropriate managerial forces to manage the JV. Therefore, it would be well if Nora holds larger percentage of share than that of Sakari.

Technology: Another key area is technology transfer in which it would be better if Nora accepts Sakari’s proposal. Each company wants to control the technology transfer in the highest degree. Therefore, Nora should let Sakari keep the technology growth in house and accept the Sakari’s proposed meeting and installations plan.

Royalty: In our opinion, royalties should be compromised as Nora financial inspiration prepared by Nora’s manager’s which showed that Nora’s return on investment would be less than the desired 10 percent if royalty rates exceeded three percent of net sales.