Case 6: Telsys International: A Marriage of Two Cultures (Case or

Negotiation Simulation)

1. Ariyo Agus (NIM : 122090022 )

2. Adven T (NIM : 122090004)

3. Ahadian S (NIM : 122090006)

4. Anggi G (NIM : 122090013)

5. Bayu I K (NIM : 122090163)

6. Heru S (NIM : 122090065) 7. M Ryan Faisal (NIM :

122090096)8. Indah May R (NIM :

122090072)9. Ridwan M (NIM :

122090116)10.Robby A C (NIM :

122090124)11.Satria N (NIM :

122090129)12.Tri Cahya (NIM :

122090148)

Presented by:

Magister Manajemen © 2010 Trisakti University, MM34 All rights reserved.

Keywords

•Negotiation•International negotiation•Bargaining•Relationship building•Difference in ideology•Conflict•Decision-making

•Negotiation•International negotiation•Bargaining•Relationship building•Difference in ideology•Conflict•Decision-making

Company Profile

* History *Telsys International, Inc. (Telsys)

Initially was a new research unit at NASA’s GSFC – founded by James R.Chesney, which grew into Microelectronic System Branch (MSB), complete with prototyping, manufacturing, testing, training, and marketing functions, which the main research is in advance telemetry data systems.

Start at NASA’s 1992 “spin off” conference, more than 40 companies expressed an interest in commercializing the telemetry data systems technology, which lead to the decision to “spin off” the technology from public sector to private sector.

Realizing that in order to established the company would requires venture capital to underwrite the process, in 1994, after retiring from NASA, Chesney start to seek for this venture capitalist.

Start in UK, number of investors interest in becoming shareholders, followed by mutual understanding with a Canadian firm (ITC-International Technology Conts) – with Gary Baker as the president- which open an opportunity to get introduced to a venture company (VCG) to support the financial needs. The VCG is based in Kuala Lumpur. ITC play a role as a Canadian holding company for Telsys.

* History *Telsys International, Inc. (Telsys)

Initially was a new research unit at NASA’s GSFC – founded by James R.Chesney, which grew into Microelectronic System Branch (MSB), complete with prototyping, manufacturing, testing, training, and marketing functions, which the main research is in advance telemetry data systems.

Start at NASA’s 1992 “spin off” conference, more than 40 companies expressed an interest in commercializing the telemetry data systems technology, which lead to the decision to “spin off” the technology from public sector to private sector.

Realizing that in order to established the company would requires venture capital to underwrite the process, in 1994, after retiring from NASA, Chesney start to seek for this venture capitalist.

Start in UK, number of investors interest in becoming shareholders, followed by mutual understanding with a Canadian firm (ITC-International Technology Conts) – with Gary Baker as the president- which open an opportunity to get introduced to a venture company (VCG) to support the financial needs. The VCG is based in Kuala Lumpur. ITC play a role as a Canadian holding company for Telsys.

Company Profile

* History *Malaysian Venture Capital Group (VCG)

Founded by Dr. Nik Bashshar Ahmad abu Munir (as President and CEO), which he was initially developed a success asset management company in US – the company’s investment were Syariah-based.

The company at least have investment over than $360 million (US) in managed funds, which focused on f sectors: (1) Banking and financial investment; (2)Property development and investment; (3)International Business Trading; and (4)Information technology.

In information technology sectors, VCG supported by Dr.Kalil ‘Abd Al Wahid, assist the CEO evaluating potential investment in this area, which received his PhD in Electrical Engineering from Penn State.

* History *Malaysian Venture Capital Group (VCG)

Founded by Dr. Nik Bashshar Ahmad abu Munir (as President and CEO), which he was initially developed a success asset management company in US – the company’s investment were Syariah-based.

The company at least have investment over than $360 million (US) in managed funds, which focused on f sectors: (1) Banking and financial investment; (2)Property development and investment; (3)International Business Trading; and (4)Information technology.

In information technology sectors, VCG supported by Dr.Kalil ‘Abd Al Wahid, assist the CEO evaluating potential investment in this area, which received his PhD in Electrical Engineering from Penn State.

Company Profile

Vision and MissionTelsys International, Inc. (Telsys)

VISION: Becoming a world leader in telemetry and satellite communicationsMISSION: 1. To bring seamlessly interconnect local area and wide area terrestrial networks to space – ground or air

– ground communications networks.2. To reduce cost and complexity of accessing and processing satellite data for remote sensing and

telecommunications applications.3. To suite the customer requirements by configuring different sets of standard family components

Malaysian Venture Capital Group (VCG)VISION: Keeping with the Islamic principle that business activities must be founded on allowable profit

making not interest – earning operation due to syariah principle of islamic investment and financing interest-earning instruments are not permitted rather than business activities emphasize profit and risk sharing on selected projects

MISSION: 1. To make a substantial contribution to the development of his country and other developing regions.2. To become a leader of islamic financial services industry

Vision and MissionTelsys International, Inc. (Telsys)

VISION: Becoming a world leader in telemetry and satellite communicationsMISSION: 1. To bring seamlessly interconnect local area and wide area terrestrial networks to space – ground or air

– ground communications networks.2. To reduce cost and complexity of accessing and processing satellite data for remote sensing and

telecommunications applications.3. To suite the customer requirements by configuring different sets of standard family components

Malaysian Venture Capital Group (VCG)VISION: Keeping with the Islamic principle that business activities must be founded on allowable profit

making not interest – earning operation due to syariah principle of islamic investment and financing interest-earning instruments are not permitted rather than business activities emphasize profit and risk sharing on selected projects

MISSION: 1. To make a substantial contribution to the development of his country and other developing regions.2. To become a leader of islamic financial services industry

The Courtship

In February and Mach 1995, VCG executives made their first exploratory trips to visit Chesney in Maryland, on the advice of Baker from ITC. They like what they saw: (1) a technology leader in critical area of space data communications; (2) a small but cohesive group of engineering talent who believed in technology; and (3) a sense that they could build a business relationship with Cheasney that would be based on trust.

Finally, Chesney and Montgomery believed they had found a venture capital partner with whom they could work.

In July 1995 there’s a meeting between Dr. Nik and Chesney for contractual agreement

In February and Mach 1995, VCG executives made their first exploratory trips to visit Chesney in Maryland, on the advice of Baker from ITC. They like what they saw: (1) a technology leader in critical area of space data communications; (2) a small but cohesive group of engineering talent who believed in technology; and (3) a sense that they could build a business relationship with Cheasney that would be based on trust.

Finally, Chesney and Montgomery believed they had found a venture capital partner with whom they could work.

In July 1995 there’s a meeting between Dr. Nik and Chesney for contractual agreement

Code of Conduct

Vision:Become a world leader in telemetry for remote satellite communications

Mission:

1. To bring seamlessly interconnect local area and wide are terrestrial network to space - ground or air - ground communications networks.

2. Reduce cost and complexity of accessing and processing satellite data for remote sensing and telecommunication applications

3. To suite the customer requirements by configuring different sets of standard family components

Code of Conduct:1. Indicate your willingness to “give and take” along the negotiation

2. Give your counterpart “on board” the project, so they are truly part of the team, not perceived as the “opposition”

3. Great respect with counterpart

Philosophy:1. To serve emerging market demands

2. Makes products ideal for interconnecting broadband networks using commercial communication satellites

3. Do good while doing well

Vision:Become a world leader in telemetry for remote satellite communications

Mission:

1. To bring seamlessly interconnect local area and wide are terrestrial network to space - ground or air - ground communications networks.

2. Reduce cost and complexity of accessing and processing satellite data for remote sensing and telecommunication applications

3. To suite the customer requirements by configuring different sets of standard family components

Code of Conduct:1. Indicate your willingness to “give and take” along the negotiation

2. Give your counterpart “on board” the project, so they are truly part of the team, not perceived as the “opposition”

3. Great respect with counterpart

Philosophy:1. To serve emerging market demands

2. Makes products ideal for interconnecting broadband networks using commercial communication satellites

3. Do good while doing well

Developed Issue

• Cross-cultural differences influence management styles in the following areas:

• Cross-cultural differences influence management styles in the following areas:

1. Authority and Decision Making

2. Management Objectives and Aspirations

3. Communication Styles

4. Formality and Tempo

5. P-Time versus M-Time

6. Negotiations Emphasis

SWOT Analysis

INTERNAL STRATEGIC FACTORS

Strength Score

1. Chesney was an expert with encouragement of NASA’s senior management

2. Chesney product design was featured

3. VCG is investment holding company with over $360 million (U.S.)

5

5

5

Sub total of internal strength 15

Weakness

1. A different culture between Telsys and VCG on business ways

2. There’s lack of understanding between Telsys and VCG in listing company on the

Toronto Stock

Exchange makes to the negotiation run so slow

3. VCG’s investment limit not over than $7 million

2

2

3

Sub total of internal weakness 7

Total of internal strategic factors 22

SWOT Analysis

EXTERNAL STRATEGIC FACTORS

Opportunity Score

1. Malaysia and developing country was a huge potential

commercial market for Telsys’s product

2. A requirement of any agreement would be a training component

for young Malaysian engineers to serve on

internship in the United States and then to be transferred to

Malaysia

3. Able to recruit top engineers with limited budget

5

5

2

Sub total of external opportunity 12

Threat

The Toronto Stock Exchange regulation will not allow us to

increase the total number of share materially above the

number authorized when ITC first listed

3

Sub total of external threat 3

Total of external strategic factors 15

Negotiation Process Analysis

Approach to the Negotiation Process

American

Quick meetingsInformalMake cold calls

Full authorityDirectProposals first

AggressiveImpatient

A “good deal”

Malaysia

Long courting processFormal

Draw on intermediaries

Limited authorityIndirect

Explanations first

QuestioningPatient

A long-term relationship

nontask sounding

information exchange

means of persuasion

terms of agreement

Hofstede Model Analysis

Comparison Hofstede Model Analysis

Differences in Management Styles Around the World

1. Differences in Authority and Decision Making• In high-PDI countries subordinates are not likely to contradict bosses, but in

low-PDI countries they often do

1. Differences in Authority and Decision Making• In high-PDI countries subordinates are not likely to contradict bosses, but in

low-PDI countries they often do

2. Differences in Management Objectives and Aspirations towards:2. Differences in Management Objectives and Aspirations towards:

Three typical patterns exist: • top-level management decisions, • decentralized decisions, and • committee or group decisions

• Security especially of lifetime employment • Affiliation and Social Acceptance by neighbors and fellow

workers• Power and Achievement Orientation sought by managers• Importance of personal/family life over work and profit

Differences in Management Styles Around the World

3. Differences in Communication Styles3. Differences in Communication Styles

• According to Edward T. Hall, the symbolic meanings of time, space, things, friendships, and agreements, vary across cultures

• “In some cultures, messages are explicit; the words carry most of the information. In other cultures ... less information is contained in the verbal part of the message since more is in the context”

• Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication

• Communication in a low-context culture depends more on explicit, verbally expressed communications

• Hall places eleven cultures along a high-context/low-context continuum

GRAPH OF SWOT ANALYSIS FOR TELSYS INC.

Opportunity

Threat

Weakness Strong

(4, 4.5)

IAggressive strategy

IIITurn-around strategy

IIDiversivication strategy

IVDefensive strategy

Cost Leadership

Telsys’s commercial off-the-shelf (COTS) technology will reduce the cost and complexity of accessing and processing satellite data for remote sensing and telecomunication application.

Telsys’s reconfigurable system technology, a new paradigm in communications, will extend object-oriented programming to hardware as well as software.

This technology will break the price/performance expectation for communication equipment and will set new benchmark for flexibility, upgradability, and time to market

Critical Success Factor

1. The Malaysian way is to resolve by discussion and consensus (the court system is rarely used)

2. Avoid trying to promote the “American Way” of doing things

3. Ensure that the counterpart fully understand the proposed operations

4. Make certain that Telsys’s are represented by a senior Malaysian executive

5. Use Malaysian partner to promote the project outside formal meetings

6. Include senior technical executive on your team

What We Can Learn From The Case

1. Studied or knowing you counterpart and his negotiation team before the negotiation begin2. Build solid relationship with your counterpart, but keep them at a formal level3. Be Patient; look at the issues from both Malaysian and Telsys’s points of view and work to build solutions of mutual benefit4. Avoid confrontation and remember the importance of saving face5. Never embarrass your counterpart or back them into a corner during negotiations6. Don’t be averse to asking your counterpart about their opinion as to how to best address a particular issue7. After proposal submission, meet as regularly as possible with your counterparts to ensure they understand the project as well as the benefits to counterpart and us8. Avoid industry jargon

Tips for effective Cross Cultural Communication Next Slide