Professional Documents
Culture Documents
JOURNAL REVIEW
Company in order to access the root of the switching technology.Sakari proposed a royalty
payment of five percent of the JV gross sales while Nora Proposed a payment of two
percent of net sales.
3. Should Nora and Sakari renegotiate? If yes, how should they restructure the deal to reach
a win-win situation?
Yes, they should renegotiate, because Nora and Sakari is a successful company in the field
of their respective businesses. Nora is one of the leading vendors of telecommunications
equipment in Malaysia. Sakari can gain a lot of strength Nora and knowledge of the
culture and the market. On the other hand, Sakari is one successful niche market players to
supply the digital switch technology. Therefore, both companies have their own strengths
and advantages over the other and both partners can learn and gain a lot from each other.
Therefore, in my opinion, should the two companies have to compromise so that the
contract can be realized. While talking about the restructuring negotiations, the following
are the main areas that will be taken into consideration in the restructuring negotiations,
namely :
Ownership : The first issue that must be restructured is about ownership and control of
resources. In my opinion, Nora got a majority portion of the equity JV (60 percent to 40
percent for Nora and Sakari) because of two things: The JV will operate in Malaysia and
not in Finland and Nora understand their culture better than Sakari, then the The second is
that Nora has a competitive managerial strength and suitable to manage the JV. Therefore,
it would be better if Nora holds a greater percentage than Sakari.
Technology : The second problem is that the technology transfer would be better if Nora
Sakari accept this proposal. Every company wants to control the transfer of technology at
the highest level. Therefore, Nora must let Sakari to keep the development of technology
in their homes and receive the proposed assembly and installation plan of this Sakari.
Royalties : In my opinion, Royalties to be compromised as Nora because of financial
stimulation drawn up by the manager Nora Nora indicated that the return on investment
will be less than 10 percent of desirable if royalty rates exceeding three percent of net
sales.
Arbitration : In my opinion, to arbitration a neutral location should be in addition to KL
and Helsinki, so there is no companies feel like a benefit for themselves in terms of future
disputes.
Salary and Perks : Salary and Perks should be administered in accordance with the
conditions in Helsinki for both companies and their JV requires the expertise of Finnish
experts who will work for Sakari. Therefore, salaries and benefits should be given
according to the rules and rates in Helsinki. Therefore, it would be better if Nora agree
with Sakari regarding Salary and Perks.
In conclusion, if the facts mentioned above reconsidered later Nora and Sakari Joint
Venture agreement will probably be realized.
4. How do you compare this joint venture project with other options available to the parties
involved (e.g., licensing)?
How companies expand their business abroad decide whether they should provide their
technology license to a local company or form a joint venture with companies or acquiring
it? Which of these choices will give them the most benefit?
An important feature of the model is that a company can switch from one setting another
during the life of business. Initially the company can form a joint venture, but then one
partner can buy other shares in the joint venture atapun turned into licensing.
Halaman 1 | 3
There are several factors in the decision, that is : the first factor is uncertainty about the
absorptive capacities of the parties and how their ability to assimilate and apply new
knowledge will grow over time. The second factor is the "friction", or difficulties in the
transfer of knowledge of the company or assets, and the related incentive problems. The
third factor is the cost associated with the "power of a scramble," when parties try to tip
the balance of bargaining power in their favor during the operation of the business.
Meanwhile, there are some risks and disadvantages for licensing. The Company may lose
control over the manufacture and marketing of goods in other countries. As an
international market entry mode, the license may also be less favorable than other options
because the back should be divided between the two parties. In fact, there is a risk that a
foreign license can sell the same competitive after a license agreement expired. Risks and
other issues involving choosing a partner, as well as all general uncertainty in doing
business with international partners, including language, culture, political risk, and
currency fluctuations. Alternatives for licensing including exports, acquisitions,
establishing international subsidiaries, a wholly-owned franchises, and forming strategic
alliances.
Finally, there is the cost of switching from one another arrangement after the
commencement of the initial effort. These costs generally arise from government policies
in the host country, such as the level of foreign ownership limits.
Halaman 2 | 3