Motorola and Nokia Versus Telsim.
Question 1.
In its aggressiveness to break into the promising Turkish Economy, Motorola company made huge mistakes in their investment with the family-owned Uzan Holdings. Motorola company did not conduct proper and more profound research into the microeconomic imbalances in the Turkish Economy during that period. There existed a weak but risk-loving banking sector that majorly relied on money inflows attached to huge expectations on returns, which left the economy even more vulnerable. The Uzan owned Imar bank had been the central and critical player in financing most of the family’s investments, including Telsim. That meant failure in the banking sector would affect their deal with Motorola. The company also made a massive mistake in the amount of money they lent the Uzan family. The $2 billion investment on a single deal is equivalent to the world’s largest network equipment manufacturer and supplier, Ericsson’s all vendor financing deals. That’s too much money to invest in an economy impeded with fluctuations and high inflation. Finally, they needed the most appropriate connections, and the government would be the first connection so far, which they failed to consider initially.
Question 2:
The Turkish government, through TMSF, upon taking over the Uzan Holdings and other Uzan family-related businesses, had no option but to share the funds generated with Motorola and Nokia companies. Firstly, the country had negotiation plans to becoming a member of the EU, and that meant it had to maintain its diplomacy status. The numerous lawsuits earlier filed by the companies in the US, British, and the Swiss Courts also allowed the companies to go after the money. Since the government now controlled the money, it could be easy to sue the government to pay the money.
References
CIA World Factbook, available at www.cia.gov/cia/publications/factbook/index.html.
Transparency International, available at www.transparency.org. This organization measures
corruption in countries around the world.
“The Uzans’ Adventures in Banking,” Balkanalysis.com, October 7, 2003, available at www.balkanalysis.com/modules.php?name=News&file=article&sid=151.
Turkish Economy, available at http://en.wikipedia.org/wiki/Turkey#Economy.
- Winkler, “Leaving the Rollercoaster: Turkey, Stability and the EU,” Turkish Policy Quarterly, www.turkishpolicy.com/default.asp?show=fall_2005_Winkler#_ftn23.
“Turkey: Telsim: Motorola’s Pyrrhic Victory?” Balkanalysis.com, August 15, 2003, available at www.balkanalysis.com/modules.php?name=News&file=article&sid=114.