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FACTS
Name Perusahan Otomobil Nasional Berhad (PROTON)
Year Founded 1983
• Profile of the company
Founder Mahathir Mohamad
Subsidiaries 11 Subsidiaries and 11 associated companies
• Year-founder-size of production-revenue
manufacturing, research and development, sales and
service activities.
Adopted Technology Technology and parts from Mitsubishi Motors
First Car Proton Saga 1985
First Plant Shah Alam
Actual Size Of Production 350,000 units per year two plants combined

Revenue For 2010 8227 million RM

Average Revenue From 2006 6571 million RM
Till 2010
International Market Right hand drive market: New Zealand, UK as well as the
Middle East, South-East Asia and Australasia, but it was
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mostly successful in UK PROTON Official Website
COLLABORATION/PARTNERSHIP
PROTON-MITSUBISHI PROTON SEPARATE PROTON + (?)
MISSED OPPORTUNITIES

1985 SAGA: 1.3 or 1.5 2001 WAJA: its first home- To expand its sales
litre engines. designed model. internationally and
Simpler model of domestically, Proton
the Lancer, a well- 2004 Mitsubishi sold off its need to improve its
established and stake in Proton. technology.
popular Purchased by the
Mitsubishi model Malaysian government 2004-2007
for the mass market Discussions with global
EFFECT: automotive original
• Deteriorating quality of proton products. Customers equipment
perceived the quality of proton vehicles to be better when manufacturers (OEMs),
they were still produced in partnership with Mitsubishi including General Motors
• Eventually, Mitsubishi agreed to form another alliance (GM), Peugeot and, more
with Proton, but only on a project basis. recently, Volkswagen AG
went nowhere as none.
2/7/2020 PROTON Annual Reports 2012
INDUSTRY OVERVIEW
 PROTON was Malaysia's
dominant auto manufacturer
until the establishment of
PERODUA, in the year 1993.

 Now the Malaysian auto

market is dominated by
Malaysia's national cars,
PROTON and PERODUA
which jointly accounted for
90 per cent of the vehicles
sold annually.

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INDUSTRY OVERVIEW-Local Market
Market Share for each Manufacturer
• in Malaysia as of Feb. 2013
Competitors
• (Maybank
Market share Research Sector Update
March 2013) Perodua

3% Proton
4%
Toyota
10%
37% Honda
8%
Nissan
12%
Hyundai

26% Volkswagen
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INDUSTRY OVERVIEW-International
Market
Cars Sold 1985 -2012
COUNTRY
NUMBER %
Malaysia 3,500,000 92%
United Kingdom 151,421 4%
China 85,922 2%
Australia 32,936 1%
Singapore 23,950 1%
TOTAL 3,794,229 100%
Summary : only 8% of all sold cars were exported and 92% were
purchased in internal market
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Source: (paultan.org - thestar.com.my- bernama.com.my- a4rzero.wordpress.com)
PROTON STRATEGY
As per its Official Website and Annual Reports, PROTON
listed the following values as its core strategy values:

1.
2.
Quality
Customer Focus
High
3. Innovation Quality
4. Team Work
5. Speed and Low
6. Caring
7. Honesty Price!
2/7/2020 PROTON Annual Reports 2012
2-Threat of New Entrant
Low:
-high capital and investments are needed for such industry
3-Threat of Substitutes
-Lack of availability of the distribution channels especially as proton is
supported by government There is a high threat from the competitor Perdoua, as prices are
more affordable. Motorcycles are also highly considered as a
-brand loyalty of the customers of proton as it has been for a long time substitute
in the market as the only option
High:
-As government is working towards reducing taxes on imported
automobiles of foreign manufacturers, and as friendly import laws are
more considered, the threat is very high of preferring the foreign
brands if prices are in the same range with other brands being more
favorable 1-Competitive Rivalry
As a local manufacturer who
advantages of high import taxes on
foreign automobile brands, and who is
selling prices are affordable, there is
only Perodua which does not even
compete to proton in certain car
types.

4-Supplier Power
-few dominant suppliers
-Since established, proton does not face serious problems from
suppliers and moreover, it has secured channels by the 5-Buyer Power
government and supported very well. The buyer will always choose the lower price car
-because the industry is directly connected to safety and quality
of life of the customers. The most important factor which add up
to the influence of the suppliers is the high cost of switching.
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 EXTERNAL STRATEGIC ANALYSIS
PORTER’S FIVE FORCES
1-Competitive Rivalry
As a local manufacturer who advantages of high import taxes on foreign automobile brands, and
who is selling prices are affordable, there is only Perodua which does not even compete to proton
in certain car types.

PORTER’S
Five Forces
2-Threat of New Entrant
Low:
-high capital and investments are needed for such industry
-Lack of availability of the distribution channels especially as proton is supported by government
-brand loyalty of the customers of proton as it has been for a long time in the market as the only
option
High:
-As government is working towards reducing taxes on imported automobiles of foreign
manufacturers, and as friendly import laws are more considered, the threat is very high of
preferring the foreign brands if prices are in the same range with other brands being more
favorable

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 EXTERNAL STRATEGIC ANALYSIS
PORTER’S FIVE FORCES Cont.

3-Threat of Substitutes
There is a high threat from the competitor Perdoua, as prices are more affordable.
Motorcycles are also highly considered as a substitute

4-Supplier Power
-few dominant suppliers
PORTER’S -Since established, proton does not face serious problems from suppliers and moreover,
it has secured channels by the government and supported very well.
Five Forces -because the industry is directly connected to safety and quality of life of the customers.
The most important factor which add up to the influence of the suppliers is the high cost
of switching.

5-Buyer Power
The buyer will always choose the lower price car.

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EXTERNAL STRATEGIC ANALYSIS :PESTEL ANALYSIS
POLITICAL ECONOMICAL
• AFTA *(Asian Free Trade • Highly competitive
Area) (eradication of tax Automotive Market
barriers (+&-)) • Effect of financial crisis
• National Automobile • Pure consumer
Policy (NAP) segmentation
SOCIAL
• Growing concern toward TECHNOLOGICAL
the environmental issues • Poor introduction of new
• Growing Population technologies
• Customer loyalty- • Intellectual property
“Proton is National • Potential for
Brand” development

LEGAL
• Commitment for safety
ENVIRONMENTAL
and environmental
• Growing concern toward
friendly cars
the environmental issues
• Government protection
• New tariffs
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Jane Terpstra Tong, Robert H. Terpstra, and Ngat Chin Lim, (2012)
 Asean Free Trade Area (AFTA)
The establishing of AFTA council has raised challenges
and opportunities for PROTON:

Challenge:
Lose their Shares on Local Market

Opportunities:
• Entrance To External Markets
• Increase Export
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Jane Terpstra Tong, Robert H. Terpstra, and Ngat Chin Lim, (2012)
 INTERNAL STRATEGIC ANALYSIS
VALUE CHAIN

Firm Infrastructure

Human Resource Management

Support
Activities Technology Development

Procurement MARGIN

Inbound Operations Outbound Marketing Service

Logistics Logistics And Sales

Primary Activities
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INTERNAL STRATEGIC ANALYSIS :SUPPORT ACTIVITIES
• Manufacturing plants, operating divisions - domination in a local market
• Geographical location- opportunity for global investment and integration in business environment
Firm • Government protection
Infrastructure
• Collaboration with Universities (ratio of MS’s and PhD among Employees),
• Skills Development and Training (overseas trainings – RESULT – create new models and built new
HR Hybrid Engines)
Management • PIIC - Proton Innovation & Invention Competition 2010 (annual event which enables PROTON staff to
generate new ideas and interest in creating next generation cars among employees)
• PTAC - Proton Technology Advisory Council .
Task - timely preparation and risk mitigation of technology acquisition based on the information given by the
Technology panels.
Purpose -advise and provide recommendation to PROTON on current, future technologies and global automotive
Development directions.
• PTR - PROTON Technology Roadmap
Serves as a blueprint for the Company in shaping PROTON’s car of the future. It forms an integral part of the
decision making process of the technologies that should be acquired so as to remain competitive and profitable
in the domestic and global market within a ten year time frame.

• Technology Transfer
Proton’s engineers were attracted in Saudi Arabia’s project - Develop the plan of totally automotive development
and manufacturing capability. That project was run by King Abdulaziz City for Science and Technology (KACST), an
independent scientific organisation in Saudi Arabia.
Result :
the prototype car was successfully completed by 22 October 2010 and was showcased during the Riyadh Motor
Show from 4 – 9 December 2010.

Supply chain ( raw materials, parts and components) from foreign a

Procurement well as local manufacturing
INTERNAL STRATEGIC ANALYSIS: PRIMARY ACTIVITIES
Inbound Operations Outbound Marketing and Service
Logistics Logistics Sales
In 2005: In 2010: In 2012 In 2005 Pre-purchasing
• 287 vendors 1 ) ENGINEERING SERVICES* 2 CLASS-es special category of customer Financial
• 3000 sub- * (comments in next slide) (The Centre for Logistics, “dealers” — the service ( agreement
suppliers Allocation, Storage and Approved Permit (AP) between Proton and
• 5000 Services ) holders. CIMB) [5]
2) MANUFACTURING
components In 2009 Government support
• Only 10% of National Automotive (loans in
• PROTON Shah Alam ACCOMODATION
them hold Policy (open APs would 2010 were available for
Capacity is 150,000 units CAPACITY
“Grade A” be phased out by 2015 less than 2–3% per
MVF’s capacity is 50,000 annum)
ranking and
Total capacity of • Sijangkang – 7.000 cars franchise APs by 2020)
200,000 units per year. • Tanjung A genuine Proton
RESULT: Malim – 6.000 cars service guarantees
• 60% defects – EXPECTATION Without
• PROTON Tanjung Malim
because of poor Annual capacity of 150,000 service internal market and
open APs, most used car (Service,
quality of suppliers dealers would not be design,consultancy,
units. preparing cars for shipment able to operate and maintenance
to the export
CHANGE STRATEGY: PROSPECTS centres which located
• Reduce number of plan to deliver 189,900units up RESULT in Kuala Lumpur,
vendors to 180 to 91%. The CLASS process enables Selangor, Kedah,
• Increase inbound to reduce a host of Perlis, Kelantan,
control 3) QUALITY CONTROL** problems, including multiple Penang, Terengganu,
Strategy vision: handling by 40%, Perak, Pahang, Melaka,
Quality Improvement – as a unnecessary waiting time to Sembilan, Johor,
cost reduction a maximum of three days, Sarawak, Sabah, WP
** (see comments next to eng. secondary defects and Labuan) 3*
services comments) excess inventory at staging
points

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 INTERNAL STRATEGIC ANALYSIS:PRIMARY ACTIVITIES
cont.
ENGINERING PROCESS
PRODUCT & STYLING & TECHNOLOGY PROCESS
DEVELOPMENT DEVELOPMENT IMPROVEMENTS
In 2009 In 2010 Product Lifecycle Management
Global Styling – Pahlawan Series An aggressive process improvement
Proton continues to improve and Show Car initiative for managing product
made new models: developing (build the platform for
SAGA and Inspira. collaboration and integration of
business processes which help
PROTON improve operational
efficiency, refine product
management and eliminate
redundant processes.)

The Aim: Vehicle Cost Reduction.

Convince that Company able to
produce high quality cars for
internal and external markets as
well
Company’s main goals for achieve
VCR are:
1) Minimise effect of material cost
increase to the car price.
2) Consider cost improving activities
even at designing stage.

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 INTERNAL STRATEGIC ANALYSIS: PRIMARY ACTIVITIES
Cont.
QUALITY CONTROL
‘RIGHT CULTURE & RIGHT ATTITUDE in PEOPLE’
Customer Focus: Towards Quality Innovative-Driven Total Quality
Culture: Quality: Ownership (TQO)

Quality Improvement Quality Improvement All Innovation Matters

Team Committee (AIM)

Within one year QIT The Committee every Plan-Do-Check-Action

represented by 560 week discuss,
employees implemented recommend and resolve
more than 300 Issues. are attended by all
improvements for operational units
problems that were Engineering, Group
provided by customers. Procurement,
Manufacturing, Quality
and After Sales Division
and chaired by Director of
quality for achieve
Company’s core values.
(PDCA) cycle involve all All programs that were
individuals for innovation targeted to improve
activities. It provided quality affected
Company almost 60.000 improving of supplier
suggestions in 2010 quality performance by
which allowed to reduce 50%.
cost by 50 mln. MYR

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 INTERNAL STRATEGIC ANALYSIS: PRIMARY ACTIVITIES
Perusahaan Otomobil
Nasional
PROTON Tanjung Malim Sdn
Proton Edar Sdn Bhd
Proton Parts Centre Sdn Bhd
Miyazu(M) Sdn Bhd
Lotus Engineering Malaysia
Sdn
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Cont.
SERVICE
PROTON Shah Alam manufacturing
complex
PROTON City
Distribution Service Centre ???? [3]
joint venture company between
PROTON, EON and HICOM
leading die provider for Proton cars
Lotus Cars, Lotus Engineering and
Lotus Racing
product development, styling and
technology development,
collaborations,
industrial, commercial and residential
activities
Motor Vehicle and Motor Vehicle Parts
and Supplies Merchant Wholesalers as
well as retail sales
Wholesale And Retail Sale Of All Kinds
Of Parts, Components, Supplies, Tools
And Accessories For Motor Vehicles
Determined to be the logistic base
company that engages in sourcing,
warehousing and distributing of Proton
genuine parts for PROTON's market in
domestic as well as overseas
speciallizing in Automotive Tooling
Engineering, Design and Manufacturing
services
consultancy services
 Grow or DISAPPEAR?
• The company doesn’t have a
choice but Increasing their Place where
Markets. (For this purpose they HAVE TO
they have to Develop BE
external Markets (AFTA
Countries) Place where
• Developing technologies by they COULD
attracting global automotive BE
original equipment
manufacturers could bring
additional competitive
advantage – by
differentiation.
• And All THIS ACTIONS for: CURRENT
POSITION
Increasing Quality by
Decreasing Cost!!!
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 RECOMMENDATIONS
Conqueror external markets (AFTA members - Brunei, Indonesia,
Malaysia, Philippines, Singapore, Thailand, Cambodia, Myanmar,
Laos and Vietnam).– increase export of manufactured cars!
Option1 Option 2 Option 3
High Quality – High Low price – Poor quality High – Price and High
Price Quality – by free
technologies

1. Be independent : collaborate with strategic partners who

will provide technologies for:
a) Improve quality: apply strict control over their suppliers in means of
timing and quality level
b) Decrease COST!
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 CONCLUSION
After analyzing Proton’s strategy vision which is
increasing quality along with decreasing cost,
they will not be able to implement it because
they still depend on acquiring external
technologies which is too costly for them.
However, their efforts for getting engaged with
Global Automotive Original Equipment
Manufacturers (OEMs) is one of the best
available options for solving their issue.
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 REFERENCES
[1] Malaysia
• http://paultan.org/2008/08/03/proton-produced-3000000-cars-since-1985/
UK
• http://www.thestar.com.my/story.aspx?file=%2f2009%2f10%2f1%2fbusiness%2f20091001141452&sec=business
• http://a4rzero.wordpress.com/2012/11/29/proton-intl-sales/
• http://bestsellingcarsblog.com/2013/02/01/uk-full-year-2012-now-with-top-350-all-models-ranking/
China
• https://commons.wikimedia.org/wiki/File:Sales_of_Proton_Gen-
2_and_Persona_%28EuropeStar_L3%29_and_EuropeStar_L5_in_China,_2010_-_mid_2013.png
Australia
• New straits time- banks team up in money changing business 26/8/1996 Newspaper
• http://news.google.com/newspapers?id=lQhPAAAAIBAJ&sjid=WRUEAAAAIBAJ&pg=4135,582145&dq=proton+australia&hl=
en
• http://www.bernama.com.my/bernama/v3/news_lite.php?id=256973
• http://bestsellingcarsblog.com/2013/01/05/australia-full-year-2012-mazda3-leads-again-in-record-market-no-local-model-
on-podium-for-the-first-time-since-1930s/
Singapore
• http://a4rzero.wordpress.com/2012/11/29/proton-intl-sales/
• http://media.straitstimes.com/coe1/annual_registration.html

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 REFERENCES Cont.
• 1. Ir.chartnexus.com. 2013. Proton Holdings Berhad - Annual Reports 2011. [online] Available at:
http://ir.chartnexus.com/proton/flash/ar_2011/index.html [Accessed: 13 Nov 2013]
• 2. Careers-proton.com. 2013. Careers at PROTON. [online] Available at: http://www.careers-
proton.com/workingforproton.html [Accessed: 13 Nov 2013]
• 3. http://www.servicecenter.com.my/proton-service-centre-list
• 4. http://alpha-auto-service.com/service/
• 5. http://www.proton.com.au/about-proton/aftersales/service/
• 6. http://www.freemalaysiatoday.com/category/business/2013/09/23/sales-down-for-perodua-proton-in-august/
• 7. 1st sustainable conference (pdf)

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