Nora - Sakari

I think one of the main reasons for negotiation failure is the differences in cultural values b/w Finland and Malaysia. With the information provided in the case, I tried to use Hofstede's Cultural Dimensions theory to analyze the causes for negotiations failure. When applying the model to compare Finland's values to those of Malaysia, I noticed that they differ significantly in each dimension.

Source: Robbins & Judge - Essentials of Organizational Behavior, Edition 10 Page 29 Exhibit2-6

Power Distance Index (PDI): Malaysia scores almost three times higher than Finland, showing that in gen¬eral the Malaysian culture promotes a very hierarchical soci¬ety with a large degree of separation between upper man¬agement and regular line workers. There were evidence in the case where while Nora's executive had the power to make contractual decisions on the spot (since they held the centralized decisional power of the com¬pany), Sakari's negotiators "had to refer contentious items to the company board before [they] could make any deci¬sions that went beyond the limits authorized by the board".

Uncertainty Avoidance Index (UAI): While in this dimension the two sides differed least, Nora was more inclined to take risks involved with the creation of the joint venture. They were responsible for the establishment of the factory (manufactur¬ing) as well as operational (managerial) offices, while negotiating contracts with TMB and keeping the company in the good graces of the government. In turn, Sakari's higher uncertainty avoidance made negotiations more difficult and lengthy as they found problems with equity ownership distributions and the technology transfers between companies.

Masculinity Index (MAI): This dimension did not play a large role in the negotiations; the issues of female leadership could have risen in the future if the joint venture has worked out. An example of such issue could be that a female executive from Sakari could be assigned to oversee certain expatriate operations in Malaysia, thus causing problems with the predominately masculine management at Nora.

Individualism (IDV): It was clear from the case that while Nora (less individualistic, more collective) was working to ensure a collec¬tively and mutually beneficial joint venture for both companies, Sakari's (more individualistic) negotiators were seeking ways to make sure that Sakari and its employees were getting the best deal possible for themselves. This particularly was exemplified with the outrageous demands for compensation of Sakari's expatriates working at Nora in Malaysia

I think the question of whether or not a joint venture between Sakari and Nora would be the best option for either of the companies is difficult to assess. There are certain benefits, which are mentioned in the case that clearly outlines the initial motivation for the forming of JV. From the Sakari side, the motivation came in the form of a new market in Southeast Asia, while Nora was motivated by Sakari's telecom technology and the possibility of acquiring it and/or replicating it in the future. The forming of the joint venture would benefit both companies if the terms of the agreement were favorable for both parties. It is also noted in the case that Sakari had another option of expanding its operations into the European (EU) market (primarily the United Kingdom), which in turn split the management into two "camps" - one for the joint venture with Nora and one against it. While Sakari had a second strategy to pursue, Nora already placed a competitive bid for the TMB project and was in utmost need of a partner to fulfill its