Proton Holdings Berhad - SWOT Analysis
Proton (National Automobile Enterprise) its name is a Malayacronym
for Perusahaan Otomobil
Nasional is a Malaysianautomobile manufacturerheadquartered inSubang
JayaandShah Alam, Selangor, Malaysia,with a manufacturing plant
inTanjung Malim,Perak. PROTON was established in 1985 as part of an
ambitious national industrialisation plan.PROTON also known as a full
fledged car manufacturer drove automobile ownership among
Malaysians and pioneered Malaysia’s capabilities in automobile
engineering, r
esearch,development, and manufacturing.Therefore, from our group
discussion we choose Proton company for this SWOTanalysis.
Strengths
Ties with other ASEAN markets are strengthening all the time through
AFTA inducedtariff reductions, which will provide advantages for
carmakers basing themselves inMalaysia. The market continues to
attract investment from major carmakers, with GeneralMotors (GM)
forming a tie-up with DRB-HICOM in August
2007.In addition to successes in product portfolio, Proton
has also madecommendable progress to bring about other operational im
provements. The focus on costmanagement resulted in cost savings for n
ew models, which were then passed on to thecustomers through
competitive pricing.Emphasis on the elevation of the automotive eco-
system saw the strengthening of
thevendor base and dealer network. These rationalization initiatives enab
led Proton togetherwith vendors and dealers to deliver improved quality
of service and be more competitive.Proton will continue to strengthen
itself in all aspects to operational, financialand corporate to better
equip itself in the years ahead. It will adopt a three-prongedthrust
namely development of market-driven products, focus on high growth
regional marketsand a production strategy that achieves economies of
scale.
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Weaknesses
The failure by Proton to find a foreign partner is a warning signal that it
is no longer acompetitive and economically viable entity with current
market situation and questionablemanagement decisions that causes
Proton to lose money when other finds
profits.Other than that, the national industry is in decline, with Proton lo
sing marketleadership for the first time in 2006 wheras albeit to fellow n
ational producer Perodua.Protectionist measures are still barring new ent
rants; particularly Chinese manufacturerssuch as Geely Car ownership
levels are relatively high at one car for every four people,compared with
one for every 30 in neighboring Thailand and IndonesiaAfter that, the
existing quality issue can affecting brand image caused by
activeserviceunits such as political interference by Tun, Porsche on
vendor selection, appointmentof top management and
design. Plant utilization low can also inability to retain andcultivate
talent, inability to introduce real new models, no economies of scale,
inability topenetrate export markets, inability to satisfy customers'
needs, no sense urgency,corporate governance and complete numbness
of developments in the auto industry. Fundsshrinkage can influence
result in Proton inability to introduce new models.
Opportunities :
The entry of Danish vehicle tuner Kleeman could provide a boost for the
premium
vehicle segment. Proton’s export plans could help to offset its declining
domestic influence
and improve its global performance.Faced with declining domestic sales
and uncertainty regarding a strategic partnership,
Malaysia’s Proton has set its sights overseas. The company is evaluating
a plan to build a
production plant in Egypt, which would act as a gateway to Africa and
West Asia and boost
the carmaker’s exports.
Proton already sells its Gen. 2 and Savvy models in African
markets, such as Egypt
and South Africa, confirming that a market for the company’s
models already exists. According to Proton Managing Director
Syed Zainal Abidin SyedMohamed Tahir, Egypt provides a large market
but could also act as a base to countries suchas Saudi Arabia and
Sudan.Starting in November 2007, Proton also plans to sell 30,000 units
in China byend-2008. The models will be sold under the Europestar
brand by distributor
YoungmanAutomobile Group, which was appointed in July. Proton
will initially export completelybuilt units (CBUs) to China, although this
will change to completely knocked down (CKD)kits for assembly
from mid-2008. Talks with Indian distributors are underway
but noconcrete arrangements have been made. Elsewhere in Asia, Proton
has also appointed aThai distributor. Phranakorn Auto Sales will
initially sell Proton models in 20 dealerships,with the network due to
double within four years.
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Threats :
Malaysia’s trade dispute with Thailand over non
-trade barriers in the automotiveindustry could hamper the export
projects of major carmakers Burgeoning capacity levels of around
700,000 units c
ould result in a supply glut Thailand’s ‘Detroit of Asia’ strategy
threatens other manufacturing bases in the region.
Other than, Proton and Perodua has been at each other’s heels since
December 2006
when Perodua outsold Proton in monthly sales by 99 c
ars. Perodua’s lead was short lived
when Proton outsold Perodua the following month by 550 cars. In
February, Peroduaoutsold Proton again, beating Proton monthly sales
figures by 763 units. This time however,the Malaysian Automotive
Associatio
n reports that Perodua’s monthly sales have topped
Proton by a massive 4,284 units, making it have a market share of 44%
(13,574 units) as
opposed to proton’s 30.35% is 9,290 units. For every Proton Savvy sold
by Proton, Perodua
sold Perodua Myvi. The Myvi has proven to be a stunning success.
Strengths :
Proton has over 20 years of experience in Automotive industry
majority share in automobile market
currently producing 240,000 units perannum
cars has exported to more than 50countries worldwide
have the ability to produce their ownengines in the automotive industry
Weaknesses:
was given the title 'MILO tin cars' atone time,becuase of product quality
Proton can not move forward (left 5years)
in the management of Protontechnology is still weak
achievement of its competitors,PERODUA is far superior to his ageeven
younger Proton
Opportunities
have the ability to install and alsodesign and build a car that is not
onlyfor local but also foreign
acquire the technology from asubsidiary of Proton, such as Lotus
need to market their products overseasto grow and move forward
understand the market and to interpretit to a car
working with Lotus and othercompanies to understand theconsequences
of the car and to someextent in hybrid and electric
Threats
the highly competitors are UnitedKingdom and continental
Europeanmarkets.
Competitors company in same region,PERODUA.
in the management of Protontechnology is still weak
people have more choices, morediscerning and knowledgeable
aboutcars.
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REFERRENCES1.
http://www.utusan.com.my/utusan/info.asp?y=2010&dt=0705&pub=Utu
san_Malaysia&sec=Ekonomi&pg=ek_06.htm2.
http://www.auto.com.my/content.php/1037-Lotus-saga-No-feelings-lost-
between-Proton-and-Air-Asia-its-purely-business3.
http://www.arenakereta.com/kemasukan-pelabur-automotif-asing-akan-
memperkasakan-syarikat-automotif-tempatan/ 4.
http://www.proton.com/Communities/Corprate-Social-
Responsibility/Malaysian-Skills-PROTON-Skills.aspx5.
http://sean-the-man.blogspot.com/2007/02/problem-with-proton.html6.
http://en.wikipedia.org/wiki/Proton_Holdings_Berhad
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