TUGASANJANUARY 2013 SEMESTER

KOD KURSUS

NAMA KURSUS

PROGRAM

NAMA PELAJAR

NO. MATRIK

NAMA FASILITATORAKADEMIK

PUSAT PEMBELAJARAN

No.DescriptionPage

INTRODUCTIONDescriptiom of PROTON Holdings Berhad

PROTON Executive SummaryPERUSAHAAN OTOMOBIL NASIONAL BERHAD or PROTON was incorporated on May 7, 1983 to manufacture, assemble and sell motor vehicles and related products, including accessories, spare parts and other components. PROTON produced Malaysias first car, the Proton SAGA which was commercially launched on July 9, 1985 by Malaysian Prime Minister, Dato Seri Dr. Mahathir Mohamad who conceived the idea of a Malaysian car.

As the first Malaysian car manufacturer PROTON has well-known a very strong credentials in the Malaysia motorized market. However, the customers seeming that it has not supplied what is guaranteed and anticipated by them. As a result, PROTON is incapable to create optimistic response in the head and heart of its customers. PROTON still has wonderful prospective and capability to accomplish superior in offering its customers products and services of highest quality.

The new concept of Proton Inspira 2.0 is hope that the enhanced and new brand images and recommendations will be able to help PROTON establish a optimistic response in the customers memory which will lead the company to achieve its vision of becoming a Life Friend for its consumer. Based on its recent performance, PROTON has indeed working very hard to live up its working philosophy of making the right car at the right time, for the right market, at the right price. Possible solutions to mitigate the problems identified are by introducing additional value improvised features to enhance the performance and sales of Proton Inspira2.0 by focusing on fuel efficiency, convenience and safety and emphasizing on the environment friendly vehicle. Overall, the action plans recommended are based on 4Ps strategies and marketing mix models, is to increase its sales and promotions, and give more emphasis on continued research and development to meet the changing needs of the customers.

PROTON produced Malaysias first car, the Proton SAGA which was commercially launched on July 9, 1985 by Malaysian Prime Minister, Dato Seri Dr. Mahathir Mohamad who conceived the idea of a Malaysian car. In this regard it is important that the company to increase its appearance on print and electronic medians and on internet especially on social media networks. It is also important to measure the impacts of the marketing campaign and to take necessary corrective action time to time to improve effectiveness and efficiency of the campaigns undertaken.

PROTON was publicly listed on the Kuala Lumpur Stock Exchange (KLSE) in 1992 and its shareholders include Khazanah Nasional Berhad, Petroliam Nasional Berhad, Mitsubishi Corporation, Mitsubishi Motors Corporation, Employee Provident Fund Board and other local and foreign investors. Proton Holdings Bhd has swung into the black in 2008 with a cumulative net profit of RM202.9 million, compared with the loss of RM589.5 million it registered in 2007. PROTON aims to have a strong product portfolio by introducing the right car, for the right market, at the right price and at the right time. PROTON has also continued to update and refresh existing product lines to entice and attract customers.

PROTONs Missions Protons mission in its short-term goal is focusing on three main attributes that distinguish itself from its competitors as follows:

a) Economical providing cars which are affordable, cost efficient and value for money;b) Caring providing customer satisfaction and its social corporate responsibility as a truly Malaysian car manufacturer and to enhance its Customer Relationship Management (CRM)c) Quality providing a consistently improved product and customer experience.

Hence, by introducing new concept car known as Proton Exora 2, Proton expects that it will improve its market share in the automotive industry and improves its ranking in future.

PROTONs Core ValuesCORE VALUESDESCRIPTION

Quality

We make products that work the first time, every time.

Customer focusCustomers are the source of our income. We deliver on our promises to our customers satisfaction.

InnovationWe challenge convention, always seeking new and better ways of doing things. We view change as opportunity.

TeamworkWe trust, respect and share knowledge to foster teamwork at the workplace.

SpeedWe have a can do attitude and will not rest until the problem is solved. We have an inherent sense of urgency in everything we do.

CaringAs a responsible corporation citizen, we invest in safety, health and the environment.

Once known as the king of the road, PROTON has seen its fortunes dwindle due to growing competition from local and foreign competitors as Malaysia opens up its auto market. Malaysia is Southeast Asia's largest passenger car market with 497,459 vehicles sold in the year 2008.

The Malaysias auto market is dominated by its national cars, PROTON and Perodua which in year 2000 accounted for market share of roughly 90 percent of the vehicles sold annually. Some 25 other manufacturers compete for the remaining 10 percent. But compare with last 2 years, market share of the national car makers has declined to roughly 63 percent.

When it comes to the knowledge of national car, the people of Malaysia will automatically glanced in their mind that PROTON is competing with Perodua as the two main national automotive companies. This has make an habit towards the people who is in the middle class and lower class income to compare cars produced by this two national automotive companies when they are about to buy car. During year 2000, PROTON conquered 63.4 per cent market share. It has eroded to below 30 percent in year 2007 and 2008. Perodua, the second national cars manufacturer has taken over the market of the king since two years ago with a market share of 33.6 percent in 2008.

PROTONs ProductsPROTONs model products include WAJA, SATRIA, GTi, WIRA, ISWARA, ARENA, PERDANA V6, JUARA, PERSONA and EXORA. The range of 1.3, 1.5, 1.6, 1.8 and 2.0 litre engines satisfies a wide spectrum of customers both locally and abroad. PROTONs model products include WAJA, SATRIA, GTi, WIRA, ISWARA, ARENA, PERDANA V6, JUARA, PERSONA and EXORA. The range of 1.3, 1.5, 1.6, 1.8 and 2.0 litre engines satisfies a wide spectrum of customers both locally and abroad.

Based on technology and parts from Mitsubishi Motors, production of the first model, the Proton Saga began in September 1985 at its first manufacturing plant in Shah Alam, Selangor. The 100,000th Proton Saga was produced in January 1989 and latest model is Inspira 2.0

THE PROTONs PRODUCTS

Proton PreveProton Suprima S

Proton ExoraSatria Neo

MACRO ENVIRONMENTDescription of Macro EnvironmentThe company and all of the other actors operate in a large macro environment of forces that shape opportunities and pose threats to the company is known as macro environment. Six largely uncountable external forces influence an organizations marketing activities and shape opportunities is known as macro environment. A macro environment comprises the external factors that can influence a business. These factors are often out of the control or management ability of a company.

Factors typically include economic, demographic, political, and technological forces in business. Business owners and managers often spend copious amount of time and effort to assess the overall economic environment in order to determine the number and strength of each factor.

Strategies and performance reviews can help owners and managers use the macro environment factors to create a competitive advantage for their respective companies. A factor that influence a company's or product's development but that is outside of the company's control is known as macro environment. For example, the macro environment could include competitors, changes in interest rates, changes in cultural tastes, or government regulations in a whole we can say that the factors that are major part of the company and uncountable factors which influence an organizations marketing are known as macro environment.

Political and Legal FactorsPolitical factors refer to the stability of the politicalenvironment and the attitudes of political parties or movements. This may manifest in governmentinfluence on tax policies, or government involvement in trading agreements. Political factors areinevitably entwined with Legal factors such as national employment laws, international traderegulations and restrictions, monopolies and mergers rules, and consumer protection.

The differencebetween Political and Legal factors is that Political refers to attitudes and approaches, whereas Legalfactors are those which have become law and regulations. Legal needs to be complied with whereasPolitical may represent influences, restrictions or opportunities, but they are not mandatory. Political forces typically represent the government agencies and policies responsible for governing a nations economy. These policies can relate to business taxes, interest rate regarding loans and availability of currency. Companies often make business decisions based on the tax liability or government involvement in a business industry or sector. Creating business divisions or departments in these areas can decrease a companys profits and subject it to more compliance laws and regulations, which often increase operating costs.

Economic FactorsEconomic factors represent the wider economy so may include economic growth rates, levels ofemployment and unemployment, costs of raw materials such as energy, petrol and steel, interest ratesand monetary policies, exchange rates and inflation rates. These may also vary from one country toanother. General economic factors in the macro environment can include supply and demand, number of competitors in the market, availability of economic resources, and efficient production methods employed by companies.

Each of these factors impact a companys production output and potential profit margins when selling goods and services to consumers. Free market economies often have more competition because more individuals and businesses can avail themselves to the raw materials, labour, and facilities in the market.

Demographic or Social FactorSocio-cultural factors or Demographic factors represent the culture of the society that an organization operates within. Theymay include demographics, age distribution, population growth rates, level of education, distribution ofwealth and social classes, living conditions and lifestyle. Demographics relates to information about the consumers in an economic market. This information includes statistics on consumer age, sex, race, religion, education, household size, marital status, and other similar information.

Companies use this information to create products and marketing strategies to meet the needs of each consumer in the macro environment. This information also plays a role into general economic factors. Companies must be able to determine consumer supply and demand by measuring consumer income and the desire to spend money on various goods and services.Technological FactorTechnological factors refer to the rate of new inventions and development, changes in information andmobile technology, changes in internet and e-commerce or even mobile commerce, and governmentspending on research. There is often a tendency to focus Technological developments on digital and internet-related areas, but it should also include materials development and new methods ofmanufacture, distribution and logistics.

Technological changes in the last few decades have transformed the way companies do business in the macro environment. Websites, Internet-based software, and fulfilment centres allow companies to sell goods and services in national and international economic markets. Companies can also improve production output and lower costs through technological additions to their company. Companies who implement business technology can force competitors in the marketplace to adjust their practices to meet new product improvements. Developing an in-house custom software package or application can also shift the macro environment if other companies cannot replicate this technology.

MACRO ENVIRONMENT FOR PROTONEvery industry is being affected by the developments in the macro-environment. Fundamentally, all organizations are affected by the same developments. However, the extent to which organizations successfully cope or take advantage of these developments differs in substantial manner. Furthermore, developments may potentially influence one industry more severely than other. Therefore, it is vital for organizations to identify or anticipate the macro-developments in order to assess their potential impact on the industry and the organization.

It is hard to see PROTON ever making money consistently with the current business model that it operates. At the heart of the car business is all about two basic things: cost structure and product, and it is difficult to get advantages of both factors. This could be best explained by example of General Motors which failed because it messed up on both counts.Margins are generally so thin in the auto business that car factories really only make money when they are running at or near full capacity. PROTON has not one, but two factories that can output a combined maximum of 1.2 million cars a year, yet it builds only 156,845 units.

The macro environment plays big role for PROTON in making marketing environment. Create the new marketing need for PROTON in full scale of observation for what are community and the public needs to ensure make best demand from customer. Macro environment would be a larger factor that could affect the business of PROTON since it is developing from year to year. The top management of PROTON have to stay alert on this issue as it will play an important role for the company to grow in the future.

Macro Environment Element for PROTONPolitical Factor

The act and policies of Asian Free Trade Area (AFTA).

The different environmental Policies in different countries.Economic Factor

Global and local economic crisis which might affected the

Slowing growth of Malaysian economy recently

Poor consumer sentiment and changing buying behaviour of the consumer

Very competitive market to be penetrated

Social Factor

Huge population

Car ownership (1:5)

Growing knowledge and concern of the people towards the environment

Impact of the image of the brand

Slowing or decreasing buying pattern of the consumer.Technological Factor

Competing development in technology

Maturity of technology

Intellectual property

Potential for innovation and development

Maturity and capacity of manufacturing

Political FactorsPROTON is more of a political hot potato and it is the Malaysias biggest carmaker and brings the big incentive to economic growth Malaysia. However, PROTON has become worse and faces several problems nowadays. It can demonstrated by the report of September 2006, it had showed that Protons loss widened to RM58.6 million in the first quarter ended June 30 from 12.4 million ringgit a year earlier as customers bought fewer Proton cars because the company lacked new models. Sales of the company based in Shah Alam, outside Kuala Lumpur, fell 31 percent to RM1.42 billion.

Besides that, according to the industry expert, Malaysian carmaker Perodua has overtaken its lumbering competitor Proton to become the nation's leading manufacturer thanks to a nifty new model. In a telling tale, Proton's new Savvy model launched a year ago has been ignored while Perodua's Myvi with its better looks and high-quality interior has a nine-month waiting list and is outselling the Savvy by six to one. "Most people perceive the Savvy as less reliable, more problems with the quality. It's all hearsay though, possibly because of previous Proton models being that way," said AmResearch analyst Gan Kim Khoon.

Therefore, it may imply that PROTON has the bad reputation or bad image among the customer perception. PROTON really needs to accelerate its model line-up, said Wan Azhar Wan Mustapha, an analyst at OKS Research Sdn. Bhd. As the result of introduce more new and nifty model, it will easier attract more customer to purchase PROTON car and increase the market share of PROTON. Moreover, according the carmaker expert stated that this is not a good year for Proton. This is because competition for PROTON is stiffer, and consumers are become wiser nowadays.

Furthermore, Proton will likely suffer because of the high bank loan and standard of living in Malaysia is low. Due to the low to low-medium income of certain population in Malaysia, Some of them are unable to buy a new car because they have to handle a high interest rate that set by the bank when they want to borrow loan.

Besides that, some of the consumer have other loans on hand like house loan, thus it make them not having a strong credit rating. People are already reluctant to buy new cars because they get very low unattractive price from their used cars, now they face another problem which is getting a loan to buy a car to replace their traded-in used car. In this situation, show that consumer has meet a lot of obstacles they want to purchase a new car. Therefore, it directly influence the sales of PROTON is going down.

Economic FactorThe automotive industry is considered the single largest manufacturing sector in the world (Turnbull, 1992) and specially Malaysia. Since National Economic Policy was implemented in 1971, government played main roles in automotive industry development. In early 1980s, government started another phase in NEP policies by promoting heavy industry such as national car project (Proton) and steel plant (Perwaja). Investments in these projects were supported by increases in import duties on both automobiles and steel. To strengthen automotive industry in Malaysia, government introduced National Automotive Policy (NAP) in 2006 to facilitate the required transformation and optimal integration of local automotive industry.

Despite the fact that Proton had not successful start due to the 1985-86 recession which caused the decrease in demand and increased vehicle prices because of the Japanese yen appreciation against the national currency, the recovery of the Malaysian economy contributed to the increase in Proton's production and market share, making it the best selling passenger car in Malaysia, with market share of 73%. The success story of Proton can be directly attributed to the government policy, which is said to be the most interventionist regime among the ASEAN countries. The national car manufacturers enjoy a certain amount of protection against foreign competition in the form of tariff and other non-tariff barriers.

The vehicle sales in the country are expected to fall by year by year 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 behaviour of the customers. Furthermore, due to the AFTA, it had increased the competition, which will impact the performance of Proton. In late 1997, Malaysian automotive sector was badly hit by economic slowdown and the growth trend has reversed as a result of the currency turmoil, which was led to substantial market contraction. In 1995, unit vehicle sales were approximately 286,000 units. Sales in 1996 were 365,000. Malaysia did not begin to feel the effects of the economic crisis until late in 1997. Vehicle sales were in 1997 to a record 405,000 units. The economic crisis dramatically affected vehicle sales in Malaysia for 1998, with vehicle sales dropped by 60 percent, to 164,000.

Demographic or Social FactorThe growing population in the country is one of the factors which can affect the automobile industry. 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 (Asean One Monitoring 2009).

Proton was known for its cheap cars. The assumption is that it can never produce cars of quality as represented by European, Japanese and even Korean cars. The people at Proton are unhappy over this reputation. They feel it is wrong to think that they cannot produce high end cars. It is just that the company policy was to produce run-of-the-mill cars. The Malaysian public expect Malaysian cars to be cheap. Cheap cars just cannot have the quality and the features of the more costly imports.

The local car market was also served by imported brands especially from Japan. Toyota was the most preferred brand by Malaysian and ranked number one among the imported cars. Its market share from January to April 2002 was 5.70%, 7.76% in the same period of 2003 and further increased to 12.22% from January to Mac 2004 (Auto Resources Asia, 2004). On top of that, foreign investors may retain up to 100 percent equity if the firm either exports 50 percent of its output or employs 350 Malaysians full-time. Another requirement is Malaysian companies must be 30 percent Bumiputera (native Malay) owned.

Technological FactorDue 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. Due to the different technologies, primarily the help of computer and the Internet, the potential for innovation and development is increasing.

Based on technology and parts from Mitsubishi Motors, PROTONs first national car, Proton Saga was released on 9th July 1985. It received encouraging response from Malaysian with 100,000 unit of car sold. With this successful, Proton introduced Proton Saga 1.5 litre and Aero back model. More than 50,000 units were sold in the country. At this stage, Proton has penetrated various international markets such as Brunei, New Zealand and Sri Lanka.

After the acquisition of Lotus which is a United Kingdom car manufacturer in 1996. Proton utilized its technology and engineering in helping it develops several new models to replace its old models. In 2004, with technology and engineering of Lotus, Proton developed its own engine called Campro which using by its first replacement model called Proton Gen-2. In 2007, Proton comes out with second replacement model called Proton Persona, a sedan model of Proton Gen-2 which both to replace Proton Wira. By 18 January 2008, after more than 20 years of Proton Saga being launched, Proton launched its replacement model of Proton Saga. By 2010, Proton once again has entered into talks with Mitsubishi Motors which is going successfully and led to another replacement model being produced, Proton Inspira which based on platform and technology from Mitsubishi latest generation Lancer is replacement model for Proton Waja.

Proton has always been committed to manufacturing cars locally that are recognized internationally. The use of automation and robotics in the manufacturing process has contributed to increased cost-efficiency, reliability, and quality. Research and Development is considered Proton's most important activity, and innovation is fundamental to the company's development. PROTON has under taken the following measures to remain competitive:

a) The development of its own engine, Campro which will reduce production cost by 10-15 per cent as no royalty will be paid by Proton to any party, as presently being done

b) PROTON will increase its investment in R & D for product development and improvement and currently, they invest RM 350 million for this purpose

c) The adoption modular type of production to help reduce assembly time and inventory costs

d) The establishment of a dedicated cost improvement unit is taking place as to focus on costs reduction measures.

The establishment of Proton's Tanjong Malim plant (coined as Proton City) is also expected to cut costs and improve quality. The plant has the initial capacity to produce 100,000 units annually with the potential to churn out as many as one million cars. This is in comparison to just 230,000 units produced by its plant in Shah Alam yearly.

CONCLUSION

PROTON as the first Malaysian car manufacturer has established a very strong empathy in the Malaysia automotive market. However, the consumers had perceived that it has not delivered what is promised and expected. As a result, PROTON is still unable to fully a create positive response in the head and heart of its consumers. PROTON still has wonderful potential and capacity to perform better in offering its customers products and services of premier quality.

In order for PROTON gains its credibility from the public whether local or foreign, PROTON needs to complete the restructuring exercise year by year once it gets the approval from the board and shareholders. The restructuring is aimed at strengthening its operations in line with the liberalisation of the automotive industry. Through this restructuring exercise, PROTON would be the company which is more flexible and focus on whatever they do. PROTON will have the breadth but not the depth.

PROTON needs to be prepared to face the challenges and opportunities when the planned liberalisation of the domestic automotive industry comes into play in the short year to come. Liberalisation is opening the economy for the car industry to become more competitive. PROTON has a five years journey and whatever PROTON does, it must make sure that the cars become much cheaper and its product design and quality will get better in order to gain the economy better.

Based on its recent performance, PROTON has indeed working very hard to live up its working philosophy and viewpoint of producing the right car at the right time, for the right market, at the right price.

REFERENCES

PROTONs official homepage.(www.proton.com) & (www.proton-edar.com.my).

Quirk, J. (2008, January 28). Car Technology: The Latest Innovations In Engine Development And Safety.Sky Motoring.

The Star, Wednesday 21,2007, Many Issues Still for Proton to Address.

The Malaysian Insider, Sunday, March 28 2010, Low Export Not Protons Real Problem.

Kotler, P. and Keller, K.L. (2009).Marketing Management.Pearson Prentice Hall: New Jersey, United States of America.

The Malay Mail, The Problem with Proton, by editorLeowJu-Len, June 12, 2009.

PROTONs Annual Reports.

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