Please help with notes to address the following:
1) Frame the issues of the case.
2) Do a SWOT analysis.
3) Analyze the corporate-level strategy pursued by the company as compared to the SWOT analysis.
4) Make specific recommendations for what the company should do next and directions that it should take.
5) Specifically consider the cultural orientations of the countries participating in case, and their impact upon it.
The case is "Case 2 Nora-Sakari: A Proposed joint venture (JV) in Malaysia".
International Business Joint Venture Case Study Guidelines
In order to be sustainable in global market, companies follow expansion strategies to expand their business and get competitive advantages over their competitors. Joint venture is an effective strategy to make a new entity in the host country by sharing resources with other partners. For making a joint venture strategy successful, parties follow effective negotiation process that helps them to resolve all related issues and develop an agreement for further business (Anson & Jones, 2010). In these guidelines, a case of Nora and Sakari is taken to develop understanding about issues related to joint venture. In addition, it will also explain SWOT analysis of joint venture and analyze the corporate-level strategy pursued by the company. These guidelines will also recommend some ways to make the joint venture successful in future perspective. It will discuss the cultural orientations of the countries and their impact upon success of joint venture.
Issues of the Case
In this case, Nora wanted to form a joint venture with Sakari. There were various issues that affected negotiation process between Nora and Sakari. Both companies had differences in their objectives, goals and cultures. They disagreed on different objectives associated to equity, transfer of technology, payment of royalty, arbitration issues, etc. Nora projected a share of 30% for Sakari and 70% for itself whereas; Sakari planned a part of 51 percent for Nora and 49 percent for itself in this joint venture. For royalty payment, Nora decided two percent of net sales, while Sakari proposed five percent of the joint venture gross sales. Apart from this, technology transfer was another issue because Sakari wanted to provide the basic structure of the digital switch to Joint Venture Company, while Nora proposed that Joint Venture Company would develop the basic structure of the switch (Beamish, 2008). Proposed salary and benefits of Sakari regarding expatriates were very high from Nora and the Joint Venture Company.
In addition, both companies were not agreed on location for arbitration namely KL and Helsinki. Each party considered that other party will gain advantage over another party on choosing preferable location in own country. Apart from this, there were cultural differences between Nora and Sakari because standard of living of both countries is different because Finland' living standard is higher than Malaysia' standard of living. Malaysia is more populous country rather than Finland and has various differences related to cultures, races, languages, religions, etc. (Salacuse, 2003). Therefore, differences in language, religions, customs and beliefs were big concerns for both companies before negotiating the agreement.
Due to culture differences, Malaysian managers influenced with western counterparts, who focus on mental capability and stress knowledge during negotiation. They don't consider soft approaches such as relationship building, sincerity and consistency. However, they are verbose and presented their views effectively. On the other hand, Sakari negotiators are serious, reserved and less verbal (Pezi, 2013). They don't use facial expressions to convey their ideas and views. As a result, it was difficult for both parties to convince each other for performing the deal.
SWOT framework explores strengths, weaknesses, opportunities and threats that provide an effective floor to investigate macro environment for an organization (Stonehouse & Houston, 2013). In context of this joint venture, SWOT analysis of this JV is summarized as below:
Strengths: Sakari was small company in the comparison of Nora, but has advanced technology whereas Nora was lacking of technical expertise. This JV could be helpful for Sakari to maximize its size whereas Nora to hold existing market share with innovative use of technology. In addition, Nora has regional knowledge that could be beneficial for Sakari in providing strength to its customized ...
The issues are identified and a SWOT analysis applied and compared to the corporate strategy in place. The cultural conditions of the countries involved are also considered.