I would recommend that Nora and Sakari change the way in which they are approaching this negotiation, and not base their success on dominance over the other. An integrative approach has the highest potential for long term success and would ensure greater stability over time. Using this approach, it is imperative for both companies to demonstrate and illustrate the potential benefits gained from collaboration. They could collectively transform this into a win-win solution with a few key negotiation tactics. Firstly, they should vocally outline their commitment to reaching a deal. Sakari’s current strategy of hedging their bets has led Nora to believe that they are not as interested in the deal. This, when combined with Finnish cultural norms,
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Equity Ownership: I propose a 60%/40% split in favor of Nora. This allows Sakari to reap greater rewards than the initial proposal, and incentivizes them to value the success of the JV. Legislative changes in Malaysia have allowed increased foreign investment, and the 70%/30% split advocated by Nora is no longer mandated. Increasing Sakari’s ownership has significant benefits, as it lays the groundwork for them to use the JV as an export hub for expansion across Asia. The proposed split is also commensurate to the technological expertise that Sakari brings to the table, while accounting for the investment and deal-flow provided by Nora’s TMB contract.
2. Technology Transfer: The split proposed above also aids the resolution of this concern. Here, I advocate the ‘screwdriver’ based assembly approach advocated by Sakari for the SK10. However, in the interest of both firms, they should agree to set up R&D facilities within the JV structure for collective research on new products for the Asian market. This allows Sakari to protect their existing IP, while allowing both firms to learn and profit collaboratively. This is an example of the integrative outcomes that would serve each party better than simply dividing the existing
Equity Ownership: I propose a 60%/40% split in favor of Nora. This allows Sakari to reap greater rewards than the initial proposal, and incentivizes them to value the success of the JV. Legislative changes in Malaysia have allowed increased foreign investment, and the 70%/30% split advocated by Nora is no longer mandated. Increasing Sakari’s ownership has significant benefits, as it lays the groundwork for them to use the JV as an export hub for expansion across Asia. The proposed split is also commensurate to the technological expertise that Sakari brings to the table, while accounting for the investment and deal-flow provided by Nora’s TMB contract.
2. Technology Transfer: The split proposed above also aids the resolution of this concern. Here, I advocate the ‘screwdriver’ based assembly approach advocated by Sakari for the SK10. However, in the interest of both firms, they should agree to set up R&D facilities within the JV structure for collective research on new products for the Asian market. This allows Sakari to protect their existing IP, while allowing both firms to learn and profit collaboratively. This is an example of the integrative outcomes that would serve each party better than simply dividing the existing