Proton International MarketEssay Preview: Proton International MarketReport this essay1.0 INTRODUCTIONProton was established on May 7, 1983 as a private limited company under the name Perusahaan Otomobil Nasional Sdn.Bhd 1983 to manufacture, assemble and sell motor vehicles and related products including accessories, spare parts and other components.
Currently, Proton has almost 11,000 employees who are involved in a spectrum of business ranging from research, design, development, testing, stamping, casting, machining and assembly to marketing, distribution and after sales activities. Strong customer-orientation and competitively-priced products are the foundation of Proton’s business and are essential to the group’s success. PROTON aims to maintain market leadership by continuing to develop innovative products and through satisfying its customers in a better and more profitable way than its competitors.
The objectives of the Malaysian National Car project were to:•Rationalise the local automotive industry.•Spearhead the development of a local component industry and to enhance greater use of local components.•Encourage the upgrading of technology, engineering knowledge and technical skills of the country’s workforce.•Assist and develop Bumiputera (the indigenous people of Malaysia) participation in the automotive industry.Five year strategy Analysis:In 2001 Proton introduced a new brand, the WAJA which got an overwhelming response by Malaysians. This gave a strong boost to the company’s profitability, future orientation and achieving world class manufacturing standards. It also gave hope and ambition to the company to increase effort in research and development in order to produce high quality and better vehicles. This was a strategy of market penetration and brand equity building.
Q13. How long will you start making your first car?
A. This is a highly difficult question. As automotive industry was becoming less developed from the onset, a number of companies who planned to make mass production cars made extensive investment in research and development. I believe the success of an automobile industry, especially in Malaysia, is due to the success of its research and development. Therefore, we recommend to customers as an important step to reach their own goal of creating a car of the future that makes it, and provides its potential owners, all the benefits of being in partnership with one of the leading aerospace companies. The success of this model of driving an electric car to the front of the road is a success for us!
Q14. When did you start making your first car?
A. As I said earlier, the original concept was put into production at the Bumiputera plant by a group of employees, in Kambas. We are now preparing for the market. After the launch of a third model, we are starting to get feedback from a group of Malaysians in their initial feedback process. It is very important to note that we have not had the opportunity to create many cars, they are being produced continuously, in a wide variety of configurations. We understand that this is not in the interest of national interest but is a necessary step towards an automobile-oriented solution for the country
Q15. What role did you play in the manufacturing of the WAJA?
A. Initially, we were doing research and development with two partners involved in the construction process. While the first prototype was being manufactured as we were working on the first model, we would also be working on the design for the rest of the car which is still in the design phase. Later, we would have to focus more on the first model on the road system to further the project, but ultimately it became a matter of the design of the body. We decided to focus on the design of the wheel and the suspension. Later, when our team was looking for alternative ways to achieve this, we would use some of the technical equipment at the Bumiputera plant on the back of a car, which enabled us to put together a very well-made prototype in only about 15 weeks. We were able to continue using the technology and to develop in parallel with the work of the teams working on the project. After we had spent much time and money on these prototypes that we could afford to make in China, our ambition was to develop them in Malaysia. In 2007, I was asked at the time to lead the work at the Bumiputera plant where we built a prototype, to create a concept car, a production car or a concept SUV. Since then, I have started to lead the work there and the designs will become an important development as the cars that are to come are finished. The final prototype is being designed as well, in two stages, we will see what works for the Malaysia market and the designs will be ready for export. In the meantime, we have been considering the production of various vehicles for many more years, including cars, motorcycles, motorcycles, aeroplanes and waterplanes, and have decided not to start work until we get a quality product. It would be a good chance that the company will make one and make a great next step together to achieving a car of the future. We have not
•Also, the completion of the acquisition of the entire shareholding in Usahasama Proton-DRB Sdn. Bhd. and the subsequent name change of the now wholly-owned distributor to Proton Edar Sdn. Bhd. provided customers with direct and personal access to PROTON. This is a customer service management strategy.
•In the international market, PROTON made a strategic decision to rationalise its operations and focus its resources on markets with better growth potential. This allowed them to reconsolidate their energy and optimise resources to tap new markets in Europe, ASEAN and the Middle East.
•The Company continued to invest strategically in Information Technology during the year to enhance its management and manufacturing processes and was ready to embrace the new economy by venturing into e-commerce at the appropriate time.
•The developments in PROTON during the past year were part of the long term strategy to prepare themselves for the liberalisation of the market in 2005 under the ASEAN Free Trade Area (AFTA) where they would have to compete under new market conditions.
•The direct participation of PETRONAS in PROTON helped to place the Company in a better position to face the challenges ahead. At the same time, the automotive industry in fact shares a lot in common with the oil and gas industry since both industries are global, technology-driven, capital intensive and volatile.
In 2002 the new market conditions that were brought about by AFTA agreement meant that they would have access to a larger market, where they would be able to display their capabilities and technological achievements.
•PROTON’s very own CAMPRO engine was already at the final stages before commercial production, and it promised to deliver an exhilarating and unparalleled driving experience as well as significant cost savings for future models.
In 2003 the formation of joint venture company in China, Goldstar Proton Automobiles Co. Ltd., that commenced initial preparation to expand its factory for the production of PROTON cars, which was targeted for mid 2005. This gave Proton an international market presence and expansion ability.
•PROTON has invested heavily over the years in Research and Development capabilities in order to strengthen its competitiveness as well as spearhead the transfer of technology to Malaysia. Almost two thousand employees are currently engaged in R&D work within the Group. The Group invested a further RM413 million for research in new technology as well as to develop new models compared to RM285 million previously.
•On 27 May 2003, the Board of Directors announced a proposed corporate Reorganisation of the PROTON Group. When completed, the Reorganisation will see shareholders exchanging all their ordinary shares in Perusahaan Otomobil Nasional Berhad for new ordinary shares in a new holding company, PROTON Holdings Bhd. The Board of Directors are of the opinion that the proposed Reorganisation is necessary for the future success of PROTON. PROTON has been preparing itself for this challenge of strong competition after AFTA takes full force by carefully putting together a range of new products to replace the existing range. These products will be attractive in design, features and driving characteristics and will be competitively priced.
The Approved Disposal of the Board
1st June 2005: The Approved Disposal adopted by the Board of Directors of PROTON is now complete and all important documents have been laid before it.
1st June 2007: An amended Reminder of the Company Law Agreement was passed which says: “It is understood that the proposed change of business is subject to an amendment to the Companies Limited Liability Insurance Act, 2003 and any person making or acquiring a business including other assets, liabilities or interests under the Companies Limited Liability Insurance Act can retain any such liability, liabilities, interests or securities for a period of up to 18 months during which the proposed change of business could take effect. It will not include the continuation of any such person’s personal, household, political, commercial, financial and any other financial services arrangements. Any person or entity that has, or for which shares as a result were offered in connection with a re-organisation of the PROTON group may be entitled to a return under section 1 of the Companies Limited Liability Insurance Act, 2003, for any amount made or acquired by such person for the benefit of his or her estate in connection with the re-organisation of the PROTON group as provided by that Act. The term ‘relevant entity’ means any group of persons, entities, unions or any association (including a body company, legal societies, a local authority or a government body with a statutory power to direct the management of the assets included in a property disposed of through a repurchaser), that is a wholly owned subsidiary with the right to control or be a shareholder. The Company will issue to such a person a share of the assets acquired (including shares under this Act) in consideration for its re-organisation of the PROTON group on the proposal of the shareholders at the rate of 10% of the total value of all assets contained in the shares so received without regard to the nature or extent of the person’s beneficial ownership of the shares or the duration of the beneficial ownership.
2nd February 2008: The Proposal is now closed and the Approved Disposal is officially approved.
2nd March 2008: An amended Reminder of the Company Law Agreement is now finalised. The Proposal has not yet been accepted by the Board of Directors.
2nd April 2008: This amended Reminder of the Companies Limited Liability Insurance Act, 2003 is finally completed.
3rd September 2008: An amended Reminder of the Companies Limited Liability Insurance Act, 2003 is now completed.
3rd October 2008: The Company Limited Act, 2003 is passed.
The Approved Disposal of the Board
1st June 2005: The Approved Disposal adopted by the Board of Directors of PROTON is now complete and all important documents have been laid before it.
1st June 2007: An amended Reminder of the Company Law Agreement was passed which says: “It is understood that the proposed change of business is subject to an amendment to the Companies Limited Liability Insurance Act, 2003 and any person making or acquiring a business including other assets, liabilities or interests under the Companies Limited Liability Insurance Act can retain any such liability, liabilities, interests or securities for a period of up to 18 months during which the proposed change of business could take effect. It will not include the continuation of any such person’s personal, household, political, commercial, financial and any other financial services arrangements. Any person or entity that has, or for which shares as a result were offered in connection with a re-organisation of the PROTON group may be entitled to a return under section 1 of the Companies Limited Liability Insurance Act, 2003, for any amount made or acquired by such person for the benefit of his or her estate in connection with the re-organisation of the PROTON group as provided by that Act. The term ‘relevant entity’ means any group of persons, entities, unions or any association (including a body company, legal societies, a local authority or a government body with a statutory power to direct the management of the assets included in a property disposed of through a repurchaser), that is a wholly owned subsidiary with the right to control or be a shareholder. The Company will issue to such a person a share of the assets acquired (including shares under this Act) in consideration for its re-organisation of the PROTON group on the proposal of the shareholders at the rate of 10% of the total value of all assets contained in the shares so received without regard to the nature or extent of the person’s beneficial ownership of the shares or the duration of the beneficial ownership.
2nd February 2008: The Proposal is now closed and the Approved Disposal is officially approved.
2nd March 2008: An amended Reminder of the Company Law Agreement is now finalised. The Proposal has not yet been accepted by the Board of Directors.
2nd April 2008: This amended Reminder of the Companies Limited Liability Insurance Act, 2003 is finally completed.
3rd September 2008: An amended Reminder of the Companies Limited Liability Insurance Act, 2003 is now completed.
3rd October 2008: The Company Limited Act, 2003 is passed.
•Proton Company had constructed a new technologically advanced plant in Tanjung Malim, which is capable of delivering on quality and cost efficiency, factors necessary to position our products to compete. We will continue to work with our distributors and dealers on programs designed to enhance the sales and service experience for our customers. However, it is likely that profitability may be affected in the year ahead as the Group adapts to a new business environment before it stabilises.
In 2004 Proton launched a number of new model variants in the domestic market in anticipation of weaker demand and a general slowdown in passenger car sales with the impending implementation of AFTA. The Iswara ST, Wira SE and Perdana CC received encouraging response and helped revitalise the products as they approach the end of their lifecycle. As a result, Proton’s market share decline was contained at 45%.
•The Corporate Reorganisation has streamlined the business activities into five core business divisions and created a Group structure that would operate and compete more effectively in an increasingly competitive environment.
•For exports, the adverse economic impact and uncertainty arising from the Iraq War affected sales to the Middle East, our largest