TUGASAN

JANUARY 2013 SEMESTER

KOD KURSUS

NAMA KURSUS

PROGRAM

NAMA PELAJAR

NO. MATRIK

NAMA FASILITATOR
AKADEMIK
PUSAT PEMBELAJARAN

No.

Description

Page

INTRODUCTION
Descriptiom of PROTON Holdings Berhad

PROTON Executive Summary

PERUSAHAAN 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
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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 Values
CORE VALUES
Quality

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

Customer focus

Customers are the source of our income. We deliver on our promises to

our customers satisfaction.

Innovation

We challenge convention, always seeking new and better ways of doing

things. We view change as opportunity.

Teamwork

We trust, respect and share knowledge to foster teamwork at the

workplace.

Speed

We 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.

Caring

As 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 Products
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. 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 Suprima S

Proton Preve

Satria Neo

Proton Exora

MACRO ENVIRONMENT
Description of Macro Environment

The 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 Factors
Political factors refer to the stability of the political environment and the attitudes of political
parties or movements. This may manifest in government influence on tax policies, or
government involvement in trading agreements. Political factors are inevitably entwined with
Legal factors such as national employment laws, international trade regulations and
restrictions, monopolies and mergers rules, and consumer protection.
The difference between Political and Legal factors is that Political refers to attitudes and
approaches, whereas Legal factors are those which have become law and regulations. Legal
needs to be complied with whereas Political 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
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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 Factors
Economic factors represent the wider economy so may include economic growth rates, levels
of employment and unemployment, costs of raw materials such as energy, petrol and steel,
interest rates and monetary policies, exchange rates and inflation rates. These may also vary
from one country to another. 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 Factor
Socio-cultural factors or Demographic factors represent the culture of the society that an
organization operates within. They may include demographics, age distribution, population
growth rates, level of education, distribution of wealth 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 Factor
Technological factors refer to the rate of new inventions and development, changes in
information and mobile technology, changes in internet and e-commerce or even mobile
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commerce, and government spending 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 of manufacture, 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 PROTON

Every 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 macrodevelopments 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 PROTON

Political Factor

Economic Factor

The act and policies of Asian Free

Trade Area (AFTA).

Global and local economic crisis which

might affected the

The different environmental Policies

in different countries.

Slowing growth of Malaysian economy

recently

Poor consumer sentiment and changing

buying behaviour of the consumer

Very competitive market to be

penetrated

Social Factor

Technological Factor

Huge population

Competing development in technology

Car ownership (1:5)

Maturity of technology

Growing knowledge and concern of

the people towards the environment

Intellectual property

Impact of the image of the brand

Potential for innovation and

development

Slowing or decreasing buying pattern

of the consumer.

Maturity and capacity of manufacturing

Political Factors
PROTON 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
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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 Factor
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The 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 Factor

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The 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 Factor
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. 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

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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 1015 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.

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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.

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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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