Prerna Shree

PROTON HOLDING BHD

CASE SYUDY ON PROTONIndividual Assignment

(BLB20058-M)Hand in Date:-14/Dec/2011Hand out Date:-13/Oct/2011

Submitted To: - Submitted By:-Mr. Nidhi Khurana Prerna Shree(Lecturer) (PTM1101002) (MBA 1st year)

ASIA PACIFIC INSTITUTE OF INFORMATION TCHNOLOGY

PROTON HOLDING BHD

CERTIFICATE

This is to certify that is “PRERNA SHREE” Roll No. PTM 1101002 of MBA stream

had completed her assignment on “CASE STUDY ON PROTON” on 14 DECEMBER 2011.

Submitted To: - Submitted By:-Mr. Geetainder Handa Prerna Shree(Lecturer) (PTM1101002) (MBA 1st year)

ACKNOWLEDMENT


PROTON HOLDING BHD

I am very Thankful to Miss. Nidhi Khurana to providing such opportunity to prepare such

type of assignment which helped me to enhance my skills. I had a lot of difficulty during my

assignment but she guided me continuously and also helped me out to solve them. I would

like to thank to A.P.I.I.T SD INDIA for giving me an opportunity to work on this project. At

last but not the least I would like to thank to everyone who helped me out to accomplish this

project.

Warms & regard

Prerna shree.

TABLE OF CONTENTS


PROTON HOLDING BHD

Sr. No. Title Page No.

1. Acknowledgement 3-3

2. Background 5

3. Introduction 6-9

4. Analysis ( Internal and External environment) 11-22

5. Conclusion 27-30

6. References 31-33

7. Appendix 33-47

BACKGROUND STUDY


PROTON HOLDING BHD

Strategic products are generally obtained from one supplier where the short and long-term

supply is not guaranteed and represents high value in the cost price of the end product. The

strategy is to strive for a partnership-like relationship with the suppliers in order to obtain

significant improvement in quality, cost, delivery, product development and innovation.

Before the establishment of PROTON the component parts manufactured locally were few

and catered basically for the replacement market. However, with the introduction of specific

localization programs for the industry, in the mid of 1980s, by PROTON through its

Suppliers Development Program (PVDP), more components were produced to cater to the

domestic as well as export markets. Many suppliers were born, and later developed and grew

solely as a result of this PVDP. There were only 17 suppliers supplying 52 parts when

PROTON commenced operations in 1985, most of which were low-tech traditional local

parts like batteries, tires, and the like. To date there are 182 suppliers supplying more than 4,

000 parts to PROTON (Interview with the President PROTON Suppliers Association, 2006).

In 1986, PROTON established the Procurement and Suppliers Development Division (PVD)

whereby the objective is to develop its own group of suppliers in order to formulate and

implement the local content program for the national car. It was envisaged that with the

implementation of this local content program the automotive parts industry would expand.

This expansion was much needed not only by PROTON in its end favors to build a strong

industrial base to depend on, but also by the Government as a source of employment

absorption and reduction of imports.

OBJECTIVE OF STUDY

To evaluate whether the proton’s new strategic plan can boost its competitiveness.

INTRODUCTION


PROTON HOLDING BHD

PROTON PERUSAHAN AUTOMOBIL NATIONAL BERHAD

INCORPORATED 7 MAY 1983

TYPE PUBLIC SECTOR

HEADQUARTER SUBANGJAYA AND SHAH ALAM

MANAGING DIRECTOR MR.SYED ZAINAL ABIDIN

REVENUE RM8.23 BILLION MYR

SUBSIDIARIES LOTUS

PROTON MALASIYA’S FIRST CAR

MAIN PLANT SAHA ALAM

CAPACITY 80000 UNITS PER YEAR

VISION STATEMENT

Proton has their vision to have a very strong presence in the domestic market. As ja car

Manufacturer in a national economy you must dominate that economy.

MISSION STATEMENT

Driving Malaysia’s transformation into a leader in technology and quality. Proton are a

passionate group of people working together, creating exhilarating products and services

for global markets, synonymous with great styling, innovation and leading technology.

MARKET OF PROTON


PROTON HOLDING BHD

Proton Holdings Berhad is the holding company which is listed on the Bursa Malaysia. It

exports cars to the United Kingdom, South Africa, and Australia and the company is

aggressively marketing its cars in several other countries including the Middle East. It has

never succeeded to export their car to the US, because the cars required many changes to

meet American safety standards in order to secure coverage from auto insurers and satisfy

legislative requirements. In some countries, Proton’s cars suffer somewhat from a poor

public image because of their designs.14,706 Proton cars were exported in 2006 to other

countries. Proton cars have also been exporting a small volume of cars to other countries like:

Singapore, Brunei, Indonesia, Nepal, Sri Lanka, Pakistan, Bangladesh, Taiwan, Cyprus and

Mauritius.

LIST OF PRODUCTS

PROTON SAGA (1985 - 2011):- Among all products proton, The Saga is the

longest surviving model, soldiering on for nearly 22 years. The Saga continued to

receive minor updated until 2008, when a second generation Saga was introduced as a

sub-compact model instead.

PROTON INSPIRA- (2010-2011)

PROTON WIRA - (1983 - 2006)

PROTON SATRIA GTI - (1994 – 2007)

PROTON PERDANA - (1995 - 1998)

PROTON TIARA - (1996 - 2007)

PROTON JUARA - (2001 - 2003)

PROTON NEEDS TO REVAMP ITS STRATEGY BECAUSE


PROTON HOLDING BHD

Proton is facing pressures by Asean Free Trade Agreement (AFTA) and World

Trade Organization (WTO) in which Malaysia is a member of these two organizations

on the issues of lowering or removing tariffs and other non-trade barriers.

Proton is unable to match the quality of foreign competitors - something the

exposed with the lowering of import barriers.

Proton cars are facing competition arising from import tariffs.

Proton is unable to compete without the shield of tariffs due to its low technology.

Proton is unable to improve its entire network’s ability to operate in a more

productive to reduce wastage or unnecessary cost.

It has lost its Chinese joint venture as of in 2006 it has four joint venture with

Chinese partners.

By 2002 Proton had a market share of over 60% in Malaysia, which was reduced to

barely 30% by 2005 and is expected to reduce further in 2011 when AFTA mandates

reduce import tariffs to a maximum of 5%.

Proton is unable to communicate with its consumer about their expectations from

car.

Company is lacking in their R&D, quality, innovation and also product

differentiation in comparison to other competitors.


http://en.wikipedia.org/wiki/ASEAN_Free_Trade_Area

PROTON HOLDING BHD

Apart from the mentioned current strategy we can say that Proton is not working properly

in all of the above areas i.e. up to the benchmark that is why it is losing its market

share. After analysis of overall performance of proton, we found that it is very poor. We

have shown it in the figure given bellow:

COMPETITION

The existence within a market for some good or service of a sufficient number of buyers and

sellers such that no single market participant has enough influence to determine the going

price of the good or service. (E, Robert. 2009)

(On the basis of porter’s five forces framework i.e. entry of competitors, threat of substitutes,

bargaining power of suppliers, bargaining power of buyers and rivalry)(Appendix-4)


SUCCESS CRITERIA PERFORMANCE (COMPARISION WITH COMPETITIORS)

HIGH LOW JUSTIFICATION

MARKET SHARE

COST STRUCTURE

PRODUCTQUALITY

FINANCE

DISTRIBUTION

TECHNOLOGY

OWN BRAND

√ FALL DOWN TO 80%

√

√

GOES UP TO 30%

77% LESS THAN OTHERS

√

√ √

√

60% MORE THAN OTHERS

20% MORE SUPPLIERS

FALL DOWN TO 70%

100% IN HOME COUNTRY

OVERALL EVALUATION

PERFORMANCE IS VERY

http://www.investorwords.com/6664/service.html

http://www.investorwords.com/2962/market.html

PROTON HOLDING BHD

THE MAJOR COMPETITORS OF PROTON ARE

DOMESTIC COMPETITIORS

1. Perodua.

2. Nissan

3. Mitsubishi

GLOBAL COMPETITIORS

1. Daimler AG

2. Fiat S.P.A

3. Ford motor company

4. Toyota

5. Suzuki

6. Honda

Perod

ua

Proto

n

Toyot

a

Honda

Nissa

nNaz

a

Inok

om

Mits

ubishi

Suzuk

i0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Jan – June 2009Jan – June 2010Jan – June 2009Jan – June 2010VehiclesSales UnitMarket Share


PROTON HOLDING BHD

ANALYSIS OF EXTERNAL

ENVIRONMENT

All external environmental forces which can affect how a company operates but which are

beyond its control. These includes: political, Economical, social and technological.

(H, jones, 2009)

PEST ANALYSIS: - A PEST analysis is one of them that is merely a framework that

categorizes environmental influences as political, economic, social and technological forces.

Sometimes two additional factors, environmental and legal, will be added to make a PESTEL

analysis, but these themes can easily be subsumed in the others. The analysis examines the

impact of each of these factors (and their interplay with each other) on the business. The

results can then be used to take advantage of opportunities and to make contingency plans for

threats when preparing business and strategic plans (R, Duand. 2009)

PEST ANALYSIS (APPENDIX (1)

POLITICAL

One of the important factors to consider is the presence of AFTA or ASEAN Free Trade

Area. Currently, most of ASEAN region are free trade or 96% of the entire ASEAN trade.

AFTA was established in January of 1992 in order to eliminate tariff barriers among the

Southeast Asian countries. It planned to reduce tariffs to zero to 5% in 15 years among the six

nations through a common effective preferential tariff (Ghani & Zainuddin 2008). Because

Malaysia has two national carmakers which are Proton and Perodua and the government

wants to protect their interests. Unfortunately, they said development could prove to be a

temporary solution. If we are going to check on the high selling prices of the national cars of

Malaysia because of high production costs and lack of vendor efficiency, there is a big

possibility that the local market will be ruled by imported cars. As a result, there will be

increase in the number of the vehicles on the road and there will be a glut of used cars in the

market, because people will tend to trade their cars for cheaper and imported brands. On the


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PROTON HOLDING BHD

other hand, the issue regarding the environment is vital because it is considered as one of the

most talk about topics in the world. The environmental regulation in Malaysia can be traced

back during the colonialism of British which introduced the environmental standards about

the mineral and agricultural resources to Europe. AND In terms of international trade, Over 5

years, Malaysia more than doubled its exports from US$29.416 billion. Historically, the

United States has long been one of Malaysia's largest trading partners, its exports to the

United States reaching 21.9 percent in2010.

ECONOMICAL

The vehicle sales in the country are expected to fall by 12.4% due to different economic

aspect, primarily the issue of global financial crisis, which affected the local financial

status of the country (Asean One Monitoring 2009). As a result, the government of the

country is expecting a slow economic growth for the country, which can affect the buying

behavior of the customers. Furthermore, due to the AFTA, it had increased the competition,

which will impact the performance of Proton. However, the performance of the automobile

industry will be maintained and managed due to the huge total labor force. Despite of the

slower economic growth in the unemployment rate can be reduced to only 3.5%, which can

shows an almost full em


PROTON HOLDING BHD

SOCIAL

The growing population in the country is one of the factors which can affect the

automobile industry. In 2010, the country had a total of 27.5 million citizens (US Department

of State n.d.). This will give a greater number of markets. Furthermore, the ratio of car

ownership in the country is somewhat high or total of 1:5, which signifies that people are

considering cars as important things in their lives. Furthermore, people will also set on big-

ticket items or consumers are expected to put off buying different motor

vehicles because of the employment market uncertainty because of the global and local

financial crisis. Another factor to consider is the growing knowledge and concern of the

people regarding different environmental issues. Furthermore, the impact of the image to

the loyalty of the customer is also another factor.

TECHNOLOGICAL

Technology is considered as one of the most important factor in the automotive industry. Due

to the increasing competition, the development in technology is growing and affecting the

performance and position of each and every company in the automobile industry. It is also

important to consider the maturity of technology, together with the maturity and

capacity of manufacturing, which affect the innovation process of any company. The

intellectual property is also important factor, because it is considered as a sign of authenticity

and uniqueness. Due to the different technologies, primarily the help of computer and the

Internet, the potential for innovation and development is increasing


PROTON HOLDING BHD

After PEST analysis, these are the opportunities and threats of Proton:

On the basis of Porter’s diamond model (Appendix 6)

OPPURTUNITIES

Available government support

Economic of scale

Available technological innovations

New product development to

improve the capability of the

existing models

Strategic alliances

Improve customer service

Brand image, and Building world-

class vendor

THREATS

Slow growth

Economic crises

Change in the consumer lifestyle

Changing technology

New competitors entering the

market

Threat of substitute product

Threat of trade disputes


PROTON HOLDING BHD

ANALYSIS INTERNAL

ENVIRONMENT

The conditions, entities, events, and factors within an organization that influence its activities

and choices, particularly the behavior of the employees. Factors that are frequently

considered part of the internal environment include the organization's mission

statement, leadership styles, and its organizational culture. (S.Janat,.2009)

According to ‘value chain’ (Appendix- 2), we can identify strengths and weakness of

proton.

STRENGTH

strong support from the

government

Proton has over 20 years of

experience

Experience of exporting cars

Availability of funds

Popular in domestic country

WEAKNESS

Over reliant on the government

Lack of successful operation

internationally

Limited product line

Quality constraint

Less human resource

Lack in R&D

CORE COMPENTENCIES

CORE COMPENTENCIES refers to strengths or strategic advantages of a business. Core

competencies are the combination of pooled knowledge and technical capacities that allow a

business to be competitive in the marketplace. (Johnson, at el, 2008)


http://www.businessdictionary.com/definition/organizational-culture.html

http://www.businessdictionary.com/definition/mission-statement.html

http://www.businessdictionary.com/definition/mission-statement.html

http://www.businessdictionary.com/definition/organization.html

http://www.businessdictionary.com/definition/employee.html

http://www.businessdictionary.com/definition/behavior.html

http://www.businessdictionary.com/definition/factor.html

http://www.businessdictionary.com/definition/events.html

http://www.businessdictionary.com/definition/entity.html

http://www.businessdictionary.com/definition/condition.html

PROTON HOLDING BHD

BUILDING SENARIO


1983FIRST MOVERNO CORE COMPETENCIESWINLOW COST CARENTERED INTO MARKET WITH LOW COST STRATEGY

YEARSBUSINESS SCENARIOCORE COMPETENCIESWIN/ LOSS JUSTIFICATION

1990-2000FIRST STRATEGIC ALLAINCESNO CORE COMPETENCIESWIN

YEARS

BUSINESS SCENARIOCORE COMPETENCIES

WIN/ LOSS JUSTIFICATION

EXPAINSION OF BUSINESS

INCREASE IN MARKET SHARE

PROTON HOLDING BHD

Expertise

PROTON expertise is focused around three axes: An industry/sector view, a geographic

view, and a functional view.

1. Industry/Sector Areas of Expertise

Proton Advisors has working knowledge in these two business sectors:

Financial Services

It is expertise in the global securities markets; including deep expertise in all aspects of

electronic trading, market data, order routing, execution management, order management,

order matching and execution. We also have substantial expertise in independent/automated

research technologies, including internet technologies such as semantic search and analysis.

We have worked for market data and information vendors, brokerages, stock exchanges, and

asset managers, advising on and delivering solutions for electronic trading.


2000-2010 CORE COMPETENCIESWIN

YEARS

BUSINESS SCENARIOCORE COMPETENCIES

WIN/ LOSS JUSTIFICATION

ENTERED INTO GLOBAL MARKET.

FLUCTATION IN MARKET

STRONG DISTRIBUTION NETWORK,PRODUCE F1 CAR,COLLABORATION WITH MITSULISH,BOOST IN INDONESIA,AWARDED FOR SAGA AND EXORA.

PROTON HOLDING BHD

Networking and Telecommunication

It has extensive experience in global telecommunications, with a strong focus on business-to-

business IP services and low latency networking for high-speed trading strategies. We have

worked for network and telecommunications companies, been customers of those companies,

and have advised network and telecommunications companies as well as network and

telecommunications hardware and software suppliers.

2. Geographic Expertise

Proton Advisors has worked with clients to deliver solutions around the world, with

particularly strong experience in the major financial markets.

3. Functional Expertise

Proton Advisors has working experience in the following functional areas:

Business Strategy

The foundation of your success is a business strategy that recognizes the strengths that you

bring to the marketplace, and deploys your assets optimally to exploit those strengths. We

can help you develop and refine your strategy.

Operational Execution

It doesn’t matter how brilliant your strategy is unless it is effectively executed. Your goals

and objectives must flow from that strategy, and be supported by the right measurements,

reward systems, and business processes. We can help you implement your strategy and

troubleshoot your current operations.

Marketing Strategy and Product Development

A core element of any strategy is an understanding of what the market will pay for, and an

ability to deliver products that customers will value. We can help you implement an

effective, market driven product development methodology, and develop an effective go-to-

market approach.

Information Technology and Business Process

Underlying the success of any business strategy today is a set of information systems that are

driven by and aligned with your business goals. You must have effective systems to manage


PROTON HOLDING BHD

your order-to-cash cycle, your customer service interactions, and to provide you with the

information you need to support timely and quality decision making. We can assess your

information technology systems, business processes, and organization, and recommend how

to improve them so that they effectively support your business goals.

PROTON was focusing on the above area before 2006(PERODUA entered in market) but

now the scenario has been changed because it is not working up to the benchmark. So, at this

point of time we can find that proton does not have any core competencies.

BUT, in order to get a sustainable competitive advantage, proton should go

for: (On the basis of Competitive advantage Appendix-5)

Vehicle Development

Vehicle Development includes strategic alliance, value added partnership with Lotus, MV

Agusta and Mitsubishi.

Innovation Capacity Building at PROTON - It includes Engineering and R&D

Process, Skill Building, Knowledge Management, Manufacturing, Quality Certification as

per standards.

Knowledge Sharing Culture:

Proton Engineers

Technical Partners

Venders Suppliers

Flexible Production

Attained through optimizing the resources

Standardized Work- Implemented by JIT and ‘Pull’ system

Overall Equipment Effectiveness (OEE) Monitoring-That includes availability, performance

and quality of PROTON cars throughout at optimum level. Proton is also working on LEAN

MANUFACTURING Lean Manufacturing is the process of improvement and waste

elimination undertaken by PROTON by avoiding unnecessary processes in car manufacturing

and unnecessary stock.

Fuel efficiency


PROTON HOLDING BHD

Proton knows the price of fuel isn’t getting any cheaper. The Proton Savvy uses just 5.7

liters per 100km combined city and highway driving (as per ADR81/01)

Customer service

All new Protons come with a competitive warranty to give you added confidence. All Proton

vehicles are backed by a comprehensive 3 year warranty. Plus you will also receive free

roadside assistance in the case of a breakdown. Proton also guarantees your car against

corrosion. Each Proton vehicle comes with a minimum 5 year comprehensive corrosion

warranty for peace of mind against corrosion. Proton vehicles undergo a Pre Delivery

Inspection by its Proton Dealer in accordance to the recommended inspection schedule set by

Proton Cars.

Strategy Alternatives and Recommendation

TOWS ANALYSIS

TOWS Matrix is a relatively simple tool for generating strategic options. By using it, we can

look intelligently at how we can best take advantage of the opportunities, at the same time

that we minimize the impact of weaknesses and protect us against threats. Used after detailed

analysis of threats, opportunities, strength and weakness, it help us to consider how to use the

external environment to our strategic advantage, and so identified some of the strategic

options available. (Johnson, et al, 2008)

The TWOS Matrix is an important matching tool that helps managers develops four types of

strategies:

SO strategies — use a firm’s internal strengths to take advantage of external opportunities.

WO strategies — are aimed at improving internal weaknesses by taking advantage of

external opportunities.

ST strategies — use a firm’s strengths to avoid or reduce the impact of external threats.


PROTON HOLDING BHD

WT strategies — are defensive tactics directed at reducing internal weaknesses and avoiding

external threats.

TWOS MATRIX OF PROTON

INTERNAL STRENGTH

1. Commendable experience of 20

years.

2. Government support.

3. Experience of exporting cars.

4. Availability of funds

INTERNAL WEEKNESS

1.Over reliant on the government

2.Lack of successful operation

internationally

3.Limited product line

4.Quality constraint

5.Less human resource

EXTERNAL OPPURTUNITY

1. Worldwide demand of product

2. Collaboration with Asian

companies may boost up the sales.

3. Proton is evaluating a plan to

built a manufacturing plant is

Egypt.

S O

1. They can enter in new global

market because it has good

experience. (INTERNATIONAL

level strategy)

2. It has government support, so

they can provide quality service at

best price. (BUSINESS level

W O

1. Try to increase the production

while working on worldwide

operation. (international level

strategy)

2. The manufacturing plant in

Egypt may increase its product

line.


PROTON HOLDING BHD

4. Economic of scale strategy)

3. Company can go for joint

venture or collaboration.

(INTERNATIONAL level

strategy)

( International level strategy)

EXTERNAL THREAT

1. Slow growth

2.Economic slow down

3.Change in the consumer

lifestyle

4.Changing technology

5.New competitors entering the

market

S T

1. Try to manufacture fuel efficient

car to increase sales. ((operational

level strategy)

2. By their well qualified and

technical R&D department they can

attract more customers and can lead

in terms of quality, cost and

innovation amongst their

competitors.(operational level

strategy)

W T

1. Reduce the price of cars as much

so it can be affordable for every

customer.

(Business level strategy)

2. Always try to increase the sales

as it has good experience in export.

(Business level strategy)

ALTERNATIVE STRATEGY: Here we are referencing the method and direction of

strategic development beyond the scope of TWOS matrix but within the scope of company’s

direction.

1. CAPTURE THE MARKET

Proton can capture the market, but competing at a local level should not be the concern for

Proton thus for competing at a global level it should have some strategy that involves its

strengths and opportunities so that it can overcome its weaknesses and threat.

2. MAINTAINING COST LEADERSHIP

It needs to have a cost cutting strategy so that it can invest in global market as it can also

manage low cost of its car

3. ATTRACT CUSTOMERS

It can also have some expert people to build some international strategy to know the customs

and attract the customer segment of the countries in which it is going to expand its market.

4. UNIQUE DESIGN


PROTON HOLDING BHD

In order to sustain in the current scenario of market, Proton must move towards unique

design. It will give an advantage to compete with its domestic as well as global competitors.

5. HYBRID CAR

Proton should go for hybrid as it will lead to low cost with a product differentiation in terms

of product development as presently their products are not going well and with the help of

well experienced and trained employees they can generate economies of scale by examining

customer needs.

CURRENT STRATEGY


PROTON HOLDING BHD

1. Vehicle Platform

This department is responsible for vehicle development programmers covering:

Product Strategic Planning.

Styling.

Supplier Development Programmer.

Natural Gas Vehicles (NGV)

Hybrid car


PROTON HOLDING BHD

2. Prototype Centre

Its leading-edge facilities and high precision tools allow error-free

prototypes to be built with extremely short lead times. The prototype centre is made up of the

following:-

Clay Modeling

3D scale models allow designers and engineers to conduct feasibility studies on

preliminary designs.

Rapid Prototyping

Extremely fast production of prototype samples is possible during the development

timing.

Prototype Shop .Full functioning prototypes are developed, as per vehicle design

specifications. This enables testing to be carried out.


PROTON HOLDING BHD

3. Engineering Development & Services

This Department will help proton to perform a regulatory and management function:

Vehicle Architecture

Maintaining a product engineering parts database for Vehicle Development plan

Managing data communication related to engineering designs with vehicle programs

and PROTON vendors

4. Proton lifecycle management (PLM)

As PROTON grows beyond the local market, we continue to employ innovative technology

which will help us to accelerate the development of our products in a more timely, and cost

effective manner. Product Lifecycle Management (PLM) solution is an initiative that

PROTON has adopted, to manage the entire product lifecycle processes right from

conceptual design through to after sales support. The program is being carried out together

with the support of Hewlett-Packard (HP) and Siemens PLM.


PROTON HOLDING BHD

RECOMMENDED STRATEGY

After doing this study I found that among Proton’s strategies, It should go for following

strategy:

(1) Attaining cost leadership and differentiation strategies by improving the R&D sector

and accelerating investment in product development.

(2) Exploring new niche market and strategic alliance in order to expand the distribution

channels.

(3) Providing new brand images to accelerate public confidence and brand loyalty in the

domestic and international market

(4) Diversifying parts component sources and selecting reputable suppliers would help in

achieving cost reduction effort of the company.

(5) Creating strategic alliance to improve technical Capability as well as to penetrating new

market and acquiring faster transfer of technology and technical-know-how.

(6) It should go for more customers’ responsiveness.

(7) To rationalizing its operations particularly in technological internalization efforts and

on continuous improvement programs in Malaysia and Thailand it should increase its

competitiveness.

(8) They should look at the possibility penetrating of direct exports to other assemblers

outside and within ASEAN, such as Japan (possibly through strategic alliance with

Katayama), and the growing markets such as in India and Turkey.

(9)According to BCG Analysis Proton falls under Question mark in a result of which it can

go for investing in new opportunities like Joint Venture. To be in capable of adapting the

Lean Manufacturing it should go with Toyota.


PROTON HOLDING BHD

CONCLUSION

This research conducted focused on the current and future strategy of proton with the

objective of obtaining better understanding of the current practices in the Current market

scenario of the Malaysian automotive industry.


COMPAY’S TIME FRAME

PROTON HOLDING BHD

TIME FRAME

This will help proton to identify the area of improvement


SUPPLY CHAINDEVELOP PRODUCT LINEINNOVATIONSTRATEGIC ALLAIANCE DIVERSIFICATION

2012 AND ONWARDS

2013 AND ONWARDS 2012 AND ONWARDS 2012 AND ONWARDS 2013 AND ONWARDS

ACCORDING TO THE ANALYSIS OF TIME FRAME OF PROTON, JUST AFTER 3 -4 YEARS, COMPANY WILL BE ABLE TO BOOST ITS COMPETITIVENESS ACROSS THE WORLD.

PROTON HOLDING BHD

STRATEGIC ACTIVITY MAP OF PROTON

This is an activity mapping tools that allows you to plot lower & higher order thinking skills

against application in a unit of work, a subject or cross circulation across several subjects.

Then in predictable & unpredictable real world situation and scenarios which almost

universally call on knowledge, process and skills from many area. This map can be helpful in

informing managers what they can do to preserve and strategic capability.


PROTON HOLDING BHD


CRM

EFFICIENCY

R&DL

OW

COST

BENCH

MARKING

AFTER

SALES SERVICE

STRATEGIC COLLABORATION

ECONOMIES OF SCALE

EXPERIENCE

CURV

E

PROFIT

GLOBALISATION

HYBRID

EFFECTIVENESS

MARKET SHARE

DEREGULATION

INNOVATION

GOOD NETWORK

SUPPLIERS

BRAND

BUILDING

PROTON HOLDING BHD

LEVELS OF STRATEGY

Now, we can conclude that PROTON has indeed working very hard for total quality

management, customer responsiveness, product development and strategic collaboration. Due

to the hyper competition in market it will be important to focus on the Best Product

positioning. To have this they must have a good R&D at their inbound logistic. In order to get

sustainability in market they must focus on low cost or differentiation of the products. In

order to maintain the process of engineering and designing passenger cars which will suit the

taste and preferences of the customers this is affected by different demographics, economics


CORE

COMPETENCIES

UNIQUE RESOURCES

DISTINCTIVE CAPABLITY

FUNCTIONAL LEVELINNOVATION

QUALITY

CUSTOME

R RESPONSIVENESS

PRODUC

T DEVELOPMENT

BUSINESS LEVEL

INTERNATIONAL LEVEL

CORPORATE LEVEL

HYBRID CAR

COST LEADERSHIP

DIFFRENCIATITONSTRATEGY

FOCUS STRATEGY

MARKET PENETRATION

WORLDWIDE OPERATION

INDIA&CHINIA

EGYPT&INDONESIA

SBUSTRATEGIC ALLAINCES

PLANNING NEW BUSINESS

DIVERSIFICATIONVALUE

CREATION

INCREASE MARKET SHARE

CASH FLOW

COMPANY IS WORKING ON THIS

COMPANY IS NOT WORKING ON THIS

PROTON HOLDING BHD

and social factors. Apart from this, managing key risks and identifying emerging risks

especially in export markets will also play an important role for being a major international

player. Thus, Company should go for right product, at right place, at right price and right

time.

REFRENCES

BOOKS

C,Sunil,M,Peter,and D,Kalara,2010,Supply chain management, 4th Edition,South

Asia,Dorling Kindersley.

Kotler, P. and Keller, K.L, 2009, Marketing Management, South Asia, New Jersey,

(pp 53, 77-84)

A. Pierre, et al 2007, International supply chain management, Canada, Nelson.

D, Garry and W, Margareta, .2007, The management of technology and innovation, 1st

Edition, Canada, Nelson.

G,Vipin,G,Kamal,R.srinivasan.,2009,Business policy ad strategic

management,India,PHI Pvt Ltd.

H, Jones, 2009, Essentials of management, Canada, Nelson.

Johnson, Schools, K and Whittington.richard, 2011, Exploring corporate strategy,

seventh Edition, India, Dorling Kindersley

K, Azhar., 2010,Strategic management and business policy,India,Tata Mc Graw.

K, Philip, 2009, Marketing management, 13th Edition,South Asia,Dorling Kindersley.

NL, Charles. 2010,.Integrated approach to strategic management, South Asia,

Pearson.

Prahalad, C. K, and Hamel, .1990, The core competence of the organization.

HARVARD BUSINESS REVIEW, (90, 79–93)

R,Duane et al, 2009,Strategic management,Canada,Nelson.

S, Janat, 2009, Supply chain management, South Asia, Pearson.

S, Robbins,. 2007, Management, 9th Edition,Us,Prentice Hall.

Tyagi.R., Available from: www.ProcessExcellenceNetwork.com/, [Accessed: 12th

Nov, 2011]( BALANCE SCORE CARD)


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JOURNALS

Garth, S, at el, 2008, Strategic Management, Delhi: John Wiley and Sons Inc.

Hax, A. and Wilde II, D, 2003, ‘The Delta Model- A New Framework of Strategy’.

Journal of Strategic Management Education ,vol. 1, no. 1. Available

fromhttp://pesona.mmu.edu.my/~wruslan/MISP2/Readings/detail/Reading-37.pdf.

Kuemmerle, W., 2001, Home base and knowledge management in international

ventures. JOURNAL OF BUSINESS VENTURING, 17, 99–122; Lorenzoni, G.,

&Lipparini, A. 1999.

Prahalad, C. K., and Hamel, G, 1990, Thecore competence of the organization,

Harvard Business Review, 90, 79–93.

ARTICLE

2003, LG CNS Automotive Consulting Service

2010, “Market Watch 2010”,The Malaysian Automotive and Supplier Industry, p34- 46.

Abidin A.S.Z., 2011, Exploratory Study: Design Capabilities Development for

Malaysian Vendors in Automotive Industry,Proceedings of the 2011 International

Conference on Industrial Engineering and Operations Management Kuala Lumpur,

Malaysia, p45-46.

Abidin, A., 2011, Proceedings of the World Congress on Engineering, Assessing Proton

and Vendors Design Capabilities towards Internationalization, 1 (2), p5-6.

Arshad, S., 1996, The history of the Malaysian automotive industry, p67-69.

Mokhtar, M., 2010, Proton Annual Report.


http://pesona.mmu.edu.my/~wruslan/MISP2/Readings/detail/Reading-37.pdf

PROTON HOLDING BHD

WEBSITE

Strategic Management , Available

from:http://www.emeraldinsight.com/products/journals/journals.htm?id=jsma,

[Accessed- 11thOct, 2011]

Business Strategy , Available from:

http://tutor2u.net/business/strategy/ansoff_matrix.htm[Accessed- 25th Oct, 2011]

Proton , Available from: www.proton.com, [Accessed-17th Oct, 2011]

Proton , Available from: www.proton-edar.com.my, [Accessed- 23th Oct,

2011]

Investopedia, Available

from:http://www.investopedia.com/terms/v/valuechain.asp#axzz1daBEIoBh,

[Accessed- 01stNov, 2011]

Businessdictonary, Available from:

http://www.businessdictionary.com/definition/capability.html, [Accessed- 07th Nov,

2011].

Proton, Available from:

http://www.hoovers.com/proton-holdings/--ID103957--/freeuk-co-factsheet.xhtml,

[Accessed-26nd Oct, 2011].

Investopidia , Available from: http://www.investopedia.com/terms/1/80-20-

rule.asp#ixzz1deOo97Pb, [Accessed- 11th Nov, 2011].


http://www.investopedia.com/terms/1/80-20-rule.asp#ixzz1deOo97Pb

http://www.investopedia.com/terms/1/80-20-rule.asp#ixzz1deOo97Pb

http://www.hoovers.com/proton-holdings/--ID103957--/freeuk-co-factsheet.xhtml

http://www.businessdictionary.com/definition/capability.html

http://www.proton-edar.com.my/

http://www.proton.com/

http://tutor2u.net/business/strategy/ansoff_matrix.htm

http://www.emeraldinsight.com/products/journals/journals.htm?id=jsma

PROTON HOLDING BHD

Trading Economics , Available from:

http://www.tradingeconomics.com/malaysia/inflation-cpi, [Accessed- 12th Nov,

2011]

APPENDIX

Appendix-1

PEST ANALYSIS

Factors Could include

Political e.g. International trade, the euro, taxation policy, government trade regulations

Economical e.g. Interest rates, exchange rates, national income, inflation, unemployment, stock market,

Social – cultural factors

e.g. Ageing population, attitude to work, income distribution

Technological e.g. Innovation, new product development, rate of technological obsolescence , R & D


http://www.tradingeconomics.com/malaysia/inflation-cpi

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Environmental e.g. Global warming, environmental issues, waste disposal, energy consumption

Legal e.g. Competition law, health and safety, employment law, product safety

A P P E N D I X - 2

V a l u e c h a i n a n a l y s i : Value Chain Analysis describes the activities that take

place in a business and relates them to an analysis of the competitive strength of the business.

Influential work by Michael Porter suggested that the activities of a business could be

grouped under two headings:

(1) Primary Activities - those that are directly concerned with creating and delivering a

product (e.g. component assembly); and

(2) Support Activities, which whilst they are not directly involved in production, may

increase effectiveness or efficiency (e.g. human resource management). It is rare for a

business to undertake all primary and support activities.

Value Chain Analysis is one way of identifying which activities are best undertaken by a

business and which are best provided by others ("out sourced").

Linking Value Chain Analysis to Competitive Advantage

What activities a business undertakes is directly linked to achieving competitive advantage.

For example, a business which wishes to outperform its competitors

through differentiating itself through higher quality will have to perform its value chain

activities better than the opposition. By contrast, a strategy based on seeking cost


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leadership will require a reduction in the costs associated with the value chain activities, or a

reduction in the total amount of resources used.

Primary Activities

Primary value chain activities include:

Primary

Activity

Description

Inbound

logistics

All those activities concerned with receiving and storing externally sourced

materials

Operations The manufacture of products and services - the way in which

resource inputs (e.g. materials) are converted to outputs (e.g. products)

Outbound

logistics

All those activities associated with getting finished goods and services to

buyers

Marketing and

sales

Essentially an information activity - informing buyers and consumers about

products and services (benefits, use, price etc.)

Service All those activities associated with maintaining product performance after

the product has been sold

Support Activities

Support activities include:

Secondary

Activity

Description

Procurement This concerns how resources are acquired for a business (e.g. sourcing and

negotiating with materials suppliers)

Human

Resource

Management

Those activities concerned with recruiting, developing, motivating and

rewarding the workforce of a business

Technology

Development

Activities concerned with managing information processing and the

development and protection of "knowledge" in a business

Infrastructure Concerned with a wide range of support systems and functions such as


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finance, planning, quality control and general senior management

Steps in Value Chain Analysis

Value chain analysis can be broken down into a three sequential steps:

(1) Break down a market/organization into its key activities under each of the major headings

in the model;

(2) Assess the potential for adding value via cost advantage or differentiation, or identify

current activities where a business appears to be at a competitive disadvantage;

(3) Determine strategies built around focusing on activities where competitive advantage can

be sustained

A P P E N D I X - 3

SWOT analysis: SWOT analysis is a method for analyzing a business, its resources, and its environment.


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SWOT is commonly used as part of strategic planning and looks at:

Internal strengths

Internal weaknesses

Opportunities in the external environment

Threats in the external environment

SWOT can help management in a business discover:

What the business does better than the competition

What competitors do better than the business

Whether the business is making the most of the opportunities available

How a business should respond to changes in its external environment


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The result of the analysis is a matrix of positive and negative factors for management to

address:

Are internal to the business

Relate to the present situation

Opportunities and threats

Are external to the business

Relate to changes in the environment which will impact the business

Using SWOT analysis

The key words are match and convert:

A key challenge for any business is to convert weaknesses into strengths. For example:

Weakness Possible Response

Outdated technology Acquire competitor with leading technology

Skills gap Invest in training & more effective recruitment


Positive factors Negative factors

Internal factors Strengths Weaknesses

External factors Opportunities Threats

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Overdependence on a single product Diversify the product portfolio by entering new markets

Poor quality Invest in quality assurance

High fixed costs Examine potential for outsourcing or off shoring

APPENDIX-4

P o r t e r ' s F i v e F o r c e s M o d e l : a n a l y z i n g i n d u s t r y s t r u c t u r e

Defining an industry

An industry is a group of firms that market products which are close substitutes for each other

(e.g. the car industry, the travel industry).

Some industries are more profitable than others. Why? The answer lies in understanding the

dynamics of competitive structure in an industry.

The most influential analytical model for assessing the nature of competition in an industry is

Michael Porter's Five Forces Model, which is described below:

Porter explains that there are five forces that determine industry attractiveness and long-run

industry profitability. These five "competitive forces" are


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Threat of New Entrants

New entrants to an industry can raise the level of competition, thereby reducing its

attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry

barriers exist in some industries (e.g. shipbuilding) whereas other industries are very easy to

enter (e.g. estate agency, restaurants). Key barriers to entry include

1. Economies of scale

2. Capital investment requairements

3. Customer switching cost

Threat of Substitutes

The presence of substitute products can lower industry attractiveness and profitability

because they limit price levels. The threat of substitute products depends on:

1.The relative price and performance of substitutes

2.The costs of switching to substitutes

Bargaining Power of Suppliers

Suppliers are the businesses that supply materials & other products into the industry.

The cost of items bought from suppliers (e.g. raw materials, components) can have a

significant impact on a company's profitability. If suppliers have high bargaining power over

a company, then in theory the company's industry is less attractive.

Bargaining Power of Buyers

Buyers are the people / organizations who create demand in an industry

There are few dominant buyers and many sellers in the industry.

Buyers threaten to integrate backward into the industry

Suppliers do not threaten to integrate forward into the buyer's industry.

The industry is not a key supplying group for buyers.


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Intensity of Rivalry

The intensity of rivalry between competitors in an industry will depend on:

The structure of competition - for example, rivalry is more intense where there are many

small or equally sized competitors; rivalry is less when an industry has a clear market leader

The structure of industry costs - for example, industries with high fixed costs encourage

competitors to fill unused capacity by price cutting

Degree of differentiation - industries where products are commodities (e.g. steel, coal) have

greater rivalry; industries where competitors can differentiate their products have less rivalry

Switching costs - rivalry is reduced where buyers have high switching costs - i.e. there is a

significant cost associated with the decision to buy a product from an alternative supplier

Strategic objectives - when competitors are pursuing aggressive growth strategies, rivalry is

more intense. Where competitors are "milking" profits in a mature industry, the degree of

rivalry is less

Exit barriers - when barriers to leaving an industry are high (e.g. the cost of closing down

factories) - then competitors tend to exhibit greater rivalry.

APPENDIX-5

Competitive Advantage: A competitive advantage is an advantage over competitors gained

by offering consumers greater value, either by means of lower prices or by providing greater

benefits and service that justifies higher prices.

Competitive Strategies: Following on from his work analyzing the competitive forces in an

industry, Michael Porter suggested four "generic" business strategies that could be adopted in

order to gain competitive advantage. The four strategies relate to the extent to which the

scope of businesses' activities are narrow versus broad and the extent to which a business

seeks to differentiate its products.

The four strategies are summarized in the figure below:


http://tutor2u.net/business/strategy/porter_five_forces.htm

http://tutor2u.net/business/strategy/porter_five_forces.htm

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The differentiation and cost leadership strategies seek competitive advantage in a broad

range of market or industry segments. By contrast, the differentiation focus and cost

focus strategies are adopted in a narrow market or industry.

Differentiation

This strategy involves selecting one or more criteria used by buyers in a market - and then

positioning the business uniquely to meet those criteria. This strategy is usually associated

with charging a premium price for the product - often to reflect the higher production costs

and extra value-added features provided for the consumer. Differentiation is about charging a

premium price that more than covers the additional production costs, and about giving

customers clear reasons to prefer the product over other, less differentiated products.

Examples of Differentiation Strategy: Mercedes cars; Bang & Olufsen

Strategy - Cost Leadership

With this strategy, the objective is to become the lowest-cost producer in the industry. Many

(perhaps all) market segments in the industry are supplied with the emphasis placed

minimizing costs. If the achieved selling price can at least equal (or near)the average for the

market, then the lowest-cost producer will (in theory) enjoy the best profits. This strategy is

usually associated with large-scale businesses offering "standard" products with relatively

little differentiation that are perfectly acceptable to the majority of customers. Occasionally, a


http://tutor2u.net/business/strategy/www.bang-olufsen.com

http://www.mercedes.com/

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low-cost leader will also discount its product to maximize sales, particularly if it has a

significant cost advantage over the competition and, in doing so, it can further increase its

market share. Examples of Cost Leadership: Nissan; Tesco; Dell Computers

Strategy - Differentiation Focus

In the differentiation focus strategy, a business aims to differentiate within just one or a small

number of target market segments. The special customer needs of the segment mean that

there are opportunities to provide products that are clearly different from competitors who

may be targeting a broader group of customers. The important issue for any business

adopting this strategy is to ensure that customers really do have different needs and wants - in

other words that there is a valid basis for differentiation - and that existing competitor

products are not meeting those needs and wants.

Examples of Differentiation Focus: any successful niche retailers; (e.g. The Perfume Shop);

or specialist holiday operator (e.g. Carrier)

Strategy - Cost Focus: Here a business seeks a lower-cost advantage in just on or a small

number of market segments. The product will be basic - perhaps a similar product to the

higher-priced and featured market leader, but acceptable to sufficient consumers. Such

products are often called "me-too's".Examples of Cost Focus: Many smaller retailers

featuring own-label or discounted label products. Culture and attitudes.

APPENDIX- 6

Balance score card: This method is very much effective to analyze the position of Proton

when compared to its competitors on different scale like holdings from share holders,

customer satisfaction level. According to balance score card (appendix) it is important for

proton to revamp its strategy as in many a cases Proton is stronger but in some it is weak too.

It has a good position in share market but it is losing it because of Perodua’s low cost product

and with good quality.

Balance Shareholder Look Operational Organization Customer


http://www.theperfumeshop.com/

http://www.dell.com/

http://www.tesco.com/

http://www.nissandriven.com/

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Score

Card

Effectiveness al Learning targeting

Proton Volume, revenue,

gross margin by

technology segment

and market segment

Revenue and turnover

by geographical

segment (Asia, Europe,

Middle East, Africa

and Pacific)

Wholly-owned

subsidiary Lotus

Engineering UK –

leading automotive

engineering

consultancy company

Application of

Information

Technology in the

R&D

% of sales from

new technology

and models;

Training as a %

of sales;

Customer market share

by tier

Profitability by

customer tier

Customer satisfaction

by tier

Strategic

and

Integrate

d Partner

companie

s

Volume, revenue,

turnover, gross margin

by individual client

Year over year sales

and turnovers growth

by individual clients;

Cost to serve clients; Number of

clients on each

country and

partner;

Return on

investment on

collaboration

tools per

selected clients;

Customer satisfaction;

Joint revenue and

turnover from

complementary

relationship

Relationship

Body

Shopper

Volume, revenue,

turnover, gross margin

by individual clients;

Return on investment

per head;

% revenue and sales

from new clients

Time needed in order

to complete

thetransaction from

start to finish per

model or

project;Return on

investment on

collaboration;Direct

selling.

Cost of the

collaboration

tool in order to

facilitate transfer

of knowledge

Cost to serve clients per

channel;

Customer satisfaction

on the models,

relationship and cost of

products.

APPENDIX-7

Porter Diamond Model

According to Porter, as a rule competitive advantage of nations is the outcome of 4

interlinked advanced factors and activities in and between companies in these clusters. These


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can be influenced in a pro-active way by government. PORTER argued that a nation can

create new advanced factor endowments such as skilled labor, a strong technology and

knowledge base, government support, and culture. PORTER used a diamond shaped diagram

as a basis of a frame work to illustrate the determinants of national advantage. The diamond

represents the national playing field that the countries establish for their industries. The points

of the diamond are described as follows

1. FACTOR CONDITIONS-a country creates its own important factors such as skilled

resources and technological base. These factors are upgraded / deployed over time to meet

the demand. Local disadvantages force innovations. new methods and Hence comparative

advantage.

2. DEMAND CONDITIONS-A more demanding local market leads to national advantage.

A strong trend setting local market helps local firms anticipate global trends.

3. RELATED AND SUPPORTING INDUSTRIES-Local competition creates innovations

and cost effectiveness. This also puts pressure on local suppliers to lift their game.

4. FIRM STRATEGY, STRUCTURE AND RIVALRY-Local conditions affect firm

strategy. Local rivalry forces firm to move beyond basic advantages.

APPENDIX-8

The Boston Consulting Group Box ("BCG Box")


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BCG MATRIX OF PROTON

Using the BCG Box (an example is illustrated above) a company classifies all its SBU's

according to two dimensions:

On the horizontal axis: relative market share - this serves as a measure of SBU strength in

the market

On the vertical axis: market growth rate - this provides a measure of market attractiveness

By dividing the matrix into four areas, four types of SBU can be distinguished:

Stars - Stars are high growth businesses or products competing in markets where they are

relatively strong compared with the competition. Often they need heavy investment to sustain

their growth. Eventually their growth will slow and, assuming they maintain their relative

market share, will become cash cows.


MARKET SHAREHIGH LOW

MA

RK

ET

GR

OW

TH

LO

W

H

IGH

STARS

Proton can use its cash cow position to

reach up to this category as it has now

started to bring on new technology to

increase its market share in new global

market.

QUESTION MARKS

Proton can invest in increasing its market share

in that country where the growth of market is

high as currently does not fall in this category to

move itself to STAR.

CASH COW

Proton should work to get position in this

cell. It has less percentage in this cell as the

growth of other automobile industry has

now started increasing and the holding

market share.

DOG

In this category Proton should invest more on

those product that are very old in technology

and have poor performance, as it is bringing up

new version of Exora (Exora 2)

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Cash Cows - Cash cows are low-growth businesses or products with a relatively high market

share. These are mature, successful businesses with relatively little need for investment. They

need to be managed for continued profit - so that they continue to generate the strong cash

flows that the company needs for its Stars.

Question marks - Question marks are businesses or products with low market share but

which operate in higher growth markets. This suggests that they have potential, but may

require substantial investment in order to grow market share at the expense of more powerful

competitors. Management have to think hard about "question marks" - which ones should

they invest in? Which ones should they allow to fail or shrink?

Dogs - Unsurprisingly, the term "dogs" refers to businesses or products that have low relative

share in unattractive, low-growth markets. Dogs may generate enough cash to break-even,

but they are rarely, if ever, worth investing in.

APPENDIX-9

ACTIVITY MAP: strategic involves continuity of direction.(porter 2001,p.71).in

essence porter argues that strategy involves defining a company will and will not do to the

market place making the hard trade off replicate fit among parts of the activity system the

firm constructs to deliver value to customers al with a view to making a superior return on

investment Graphic represent for representation to business modlesand strategy are important

to this paper porter has develop three representation of strategy. First is five fame work

Activity map show that how the company. Activity system map show a company’s strategic

positioning in contained in a set of trailed activities designed to deliver it.


Prerna Shree

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