Strengths and Weaknesses of Nora Company - Case Study Example

A Proposed JV in Malaysia (Revised) Name: Institution: Introduction Merging of two or more companies is a common process in the business sector. The process of joint ventures increases companies’ opportunities to fit into contracts that they may not perform as single organization. Failure in fitting into big contracts by the companies may result due to lack of experience and facilities that facilitate processing the given tasks, forcing them to seek help from other competitors through coming together (Beamish, 2008). For instance, in the case study, due to demand for better communication processes in Malaysia, it forced various organizations like Nora Holdings and Sakari, both in the field of Networking, to negotiate in order to form joint venture for them to win the proposed contract by the government. During the negotiation, the two companies failed to agree in various issues such as the equity ownership, the structure and process of technological transfer to be applied, and loyalty payment among other, during the contract (Ainuddin & Wright, 2005). Therefore, in order for different companies to form a joint venture, it is important for the organizations to agree on the provision of work and payment among other issues in order to come up with a strong venture that is able to operate positively under tough competition. Strengths and Weaknesses of Nora Company Strengths During joint ventures, many factors need to be considered in order to form a joint organization that is able to operate within the set objectives. Therefore, strengths of the companies involved in the merging process are one of the factors that should be considered. In any business organization, good managerial system is required for an organization to operate as per its expectation (Ainuddin & Wright, 2005). This can be achieved through hiring potential management team, with the capability of developing good strategies and objectives of the organization. After putting in place the strategies, the management should make sure activities of the organizations are operated within the plan in order to deliver services as per customers’ expectation. Therefore, one of the strength of Nora Holdings is good management as triggered by potential and future oriented leaders like Zainal Hashim, the vice-chairman of Nora Company, giving the organization the chance to form joint ventures with other companies. Through creation of various joint ventures with local and international companies gave Nora Holding the opportunity to gain skills and experience via their technical team. For instance, Nora Holdings had a joint venture with Sumitomo and Marubeni Corporation of Japan, which gave the organization the chance of gaining approximately 6 per cent of stake from the local cable-laying firm, known as the Selangor Cables (Beamish, 2008). Through such operation, Nora has better opportunity of working with other companies because they are capable of producing better results. Nora Holdings, being one of the oldest organizations in the networking field, has attracted many investors due to their good performance because of many joint ventures they have involved, which have yield better results. Therefore, this show strength of the organization as they are tested and proven organization that can do better in any agreement made in joint ventures. Nora Holdings Company has various business activities that they involve in that acts as security in their business in case of failure in other sectors. This shows strength for the organization because it maintains good financial record, which helps in attracting more investors in the organization. For instance, Nora involves in both payphone business and the cable-laying contracts, therefore, in case of failure in one project, the other acts like security (Ainuddin & Wright, 2005). On the other hand, in the case of achievement in both sectors, it would be a double gain for the organization, which helps in maintaining better performance of the organization, increasing its better chance in forming joint ventures with other organizations. Moreover, Nora Holdings has various branches in Malaysia and other part of the world that helps it to distribute their services worldwide. The process of opening branches in different parts of the world, gives Nora Holdings the opportunity to have easy penetration in the international market, which increases their chances of getting many contracts. This creates higher chances of having many joint ventures. Weaknesses of Nora Holdings Another factor that is important and should be considered during joint ventures is the weaknesses of the companies involved. According to the case analysis, one of the weaknesses of Nora Holdings is poor attitude toward development (Beamish, 2008). Instead of focusing in both financial benefits and knowledge gain, Nora only, concentrate on the financial section. In the process of forming joint venture with Sakari, Nora Holdings would have benefited from the technological transfer offered by Sakari. This would have help Nora in their future development as they will have acquire new skills from their competitors. Therefore, it is important for any organization involved in joint ventures to concentrate on the development part more than financial gain. Strengths and Weaknesses of Sakari Company Strengths On the other hand, Sakari Company also is capable of having joint ventures with other organizations. For instance, during the collaboration with organizations such as Vantala helped them to gain trust of the customers in mobile technology (Ainuddin & Wright, 2005). The capability of engaging in joint ventures with other organizations is good for them because they gain experience in the field of their specialization. Therefore, they have the potential of good performance because they are able to come up with better strategies and work positively towards them. Sakari Company also engaged in various activities such as selling of the switches system and the development of software for small other companies. This is like strength to them because it provides financial security for the organization. Moreover, the move it provide them with wide variety in area of development making them to be able to attract investors and other joint ventures. In addition, the company is able to adapt to the changing marketing arena (Beamish, 2008). This helps the organization to maintain their services to clients and in the maintaining of the financial status. By developing stable financial records, the organization is able to attract many joint ventures both locally and internationally, hence, reflects future development of the organization. Weaknesses During joint investment, most of the organizations involves always go for big organizations rather than small business organizations. Therefore, Sakara being one of the small organizations in the field of networking, in both size and development, it is difficult for it to attract and convince other large organizations like the Nora Holdings. Therefore, this is one of the main weaknesses of the organization (Ainuddin & Wright, 2005). Another weakness of Sakari Company is high expectations in their undertakings, for instance, during their agreement with Nora Holdings in order to form a joint venture, they demanded for bigger share as compared to the percentage of participation in the project. This is a weakness because they need to demand for the average share and fully concentrate on the development in order to gain knowledge that they can use during their future development. The move will help them to expand and overcome their competitors’ threats to the organization. Opportunities and Threats Nora Holdings Nora holdings have various positive and negative impacts that affect their currents operation and future development. Most of these impacts are externally caused while some are from the organization. Positive impacts are caused from the opportunities while negative impacts are caused by threats of the organization. One of the opportunities of Nora Holdings is the ability to attract many joint ventures. This is an important opportunity because it attracts so many jobs for the organization, which helps in the generation of the organization income (Beamish, 2008). Moreover, through joint ventures, Nora Holdings is capable of learning new ideas from their partners, which they can use in developing their strategies. In addition, joint ventures help organizations like Nora Holdings to penetrate into the international market because they are capable of attracting both the local and international companies (Ainuddin & Wright, 2005). Another opportunity of Nora Holdings is the presence of good managerial system which compost of a team that is capable of developing better plans for the organization. This would help the organization to have good development in the near future. In the contrary, despite of many opportunities that Nora Holdings has, there are various threats that the company faces. For instance, the organization is facing many competitors in the market like Sakari, which provides similar services. Due to stiff competition in the market, job opportunity in the market reduces because all the organizations providing same services scrambles for the same jobs (Ainuddin & Wright, 2005). This makes the organization to get fewer jobs than expected. Another threat of the organization is involving many upcoming organizations in joint ventures. During such collision, some of the competitors take the advantage of knowledge gathering through studying and copying some of the tactics used by the organization. Therefore, the small companies’ uses the acquired knowledge in developing their companies, which later become a threat to Nora Holdings due to tough competition. Sakari Company Sakari is also another organization that faces many opportunities and threats. Sakari, being one of the smallest companies that involves in joint ventures has the opportunity of acquiring skills during the contract that helps them to develop their company. In the process of putting the gathered knowledge into practice, the organization will be able to prove in their development by expanding their companies (Beamish, 2008). On the other hand, Sakari also encounters some threats in its development. Being a small organization, it is difficult for it to penetrate into the international market, which makes it difficult to sell their services internationally. The problem also blocks them from attracting many companies for joint venture because they still lack some skills in their work. Conclusion In order for the business companies to have better growth on the services they offer, it is important for them to participate in joint ventures. Joint ventures are of great benefits because it makes it able for organizations to perform some of the tasks beyond its reach. During such moves, it help involves companies to share ideas during their agreement on the plans and objectives to be used to face the task ahead of them. Another advantage of the joint ventures is that it promotes easy penetration into the market (Ainuddin & Wright, 2005). Joint ventures helps companies to perform their duties in different part of the world, as any company can merge with the other so long as it meets the entire requirement, which helps them to advertise their services in such places. On the other hand, companies that participate in joint ventures are advised not to disclose their way of operation to competitors because they can use those ideas to bring down other companies. Therefore, any company in the joint venture should keep their strengths and weaknesses safe without disclosing those strengths and weaknesses. References: Beamish, P. W. (2008). Joint Venturing. Pittsburgh: IAP. Ainuddin, R. A., Wright, L. L. (2005). Nora-Sakari: A Proposed JV in Malaysia. London: Richard Ivey School of Business, University of Western Ontario. Read More