Proton Holdings Berhad - SWOT Analysis

Proton (National Automobile Enterprise) its name is a Malay acronym for Perusahaan Otomobil Nasional is a Malaysian automobile manufacturer headquartered in Subang Jaya and Shah Alam, Selangor, Malaysia, with a manufacturing plant in Tanjung 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 Malaysias capabilities in automobile engineering, research, development, and manufacturing. Therefore, from our group discussion we choose Proton company for this SWOT analysis.

Strengths Ties with other ASEAN markets are strengthening all the time through AFTA induced tariff reductions, which will provide advantages for carmakers basing themselves in Malaysia. The market continues to attract investment from major carmakers, with General Motors (GM) forming a tie-up with DRB-HICOM in August 2007. In addition to successes in product portfolio, Proton has also made commendable progress to bring about other operational improvements. The focus on cost management resulted in cost savings for new models, which were then passed on to the customers through competitive pricing. Emphasis on the elevation of the automotive eco-system saw the strengthening of the vendor base and dealer network. These rationalization initiatives enabled Proton together with vendors and dealers to deliver improved quality of service and be more competitive. Proton will continue to strengthen itself in all aspects to operational, financial and corporate to better equip itself in the years ahead. It will adopt a three-pronged thrust namely development of market-driven products, focus on high growth regional markets and a production strategy that achieves economies of scale.

Weaknesses The failure by Proton to find a foreign partner is a warning signal that it is no longer a competitive and economically viable entity with current market situation and questionable management decisions that causes Proton to lose money when other finds profits. Other than that, the national industry is in decline, with Proton losing market leadership for the first time in 2006 wheras albeit to fellow national producer Perodua. Protectionist measures are still barring new entrants; particularly Chinese manufacturers such 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 Indonesia After that, the existing quality issue can affecting brand image caused by active serviceunits such as political interference by Tun, Porsche on vendor selection, appointment of top management and design. Plant utilization low can also inability to retain and cultivate talent, inability to introduce real new models, no economies of scale, inability to penetrate export markets, inability to satisfy customers' needs, no sense urgency, corporate governance and complete numbness of developments in the auto industry. Funds shrinkage 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. Protons 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, Malaysias 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 carmakers 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 companys models already exists. According to Proton Managing Director Syed Zainal Abidin Syed Mohamed Tahir, Egypt provides a large market but could also act as a base to countries such as Saudi Arabia and Sudan. Starting in November 2007, Proton also plans to sell 30,000 units in China by end-2008. The models will be sold under the Europestar brand by distributor Youngman Automobile Group, which was appointed in July. Proton will initially export completely built 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 no concrete arrangements have been made. Elsewhere in Asia, Proton has also appointed a Thai distributor. Phranakorn Auto Sales will initially sell Proton models in 20 dealerships, with the network due to double within four years.

Threats Malaysias trade dispute with Thailand over non-trade barriers in the automotive industry could hamper the export projects of major carmakers Burgeoning capacity levels of around 700,000 units could result in a supply glut Thailands Detroit of Asia strategy threatens other manufacturing bases in the region. Other than, Proton and Perodua has been at each others heels since December 2006 when Perodua outsold Proton in monthly sales by 99 cars. Peroduas lead was short lived when Proton outsold Perodua the following month by 550 cars. In February, Perodua outsold Proton again, beating Proton monthly sales figures by 763 units. This time however, the Malaysian Automotive Association reports that Peroduas 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 protons 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 Weaknesses Proton has over 20 years of was given the title 'MILO tin cars' at experience in Automotive industry one time,becuase of product quality majority share in automobile market Proton can not move forward (left 5 years) currently producing 240,000 units per annum in the management of Proton technology is still weak cars has exported to more than 50 countries worldwide achievement of its competitors, PERODUA is far superior to his age have the ability to produce their own even younger Proton engines in the automotive industry Opportunities Threats have the ability to install and also the highly competitors are United design and build a car that is not only Kingdom and continental European for local but also foreign markets. acquire the technology from a Competitors company in same region, subsidiary of Proton, such as Lotus PERODUA. need to market their products overseas in the management of Proton to grow and move forward technology is still weak understand the market and to interpret people have more choices, more it to a car discerning and knowledgeable about cars. working with Lotus and other companies to understand the consequences of the car and to some extent in hybrid and electric

REFERRENCES 1. http://www.utusan.com.my/utusan/info.asp?y=2010&dt=0705&pub=Utusan_Malaysia &sec=Ekonomi&pg=ek_06.htm 2. http://www.auto.com.my/content.php/1037-Lotus-saga-No-feelings-lost-betweenProton-and-Air-Asia-its-purely-business

3. http://www.arenakereta.com/kemasukan-pelabur-automotif-asing-akanmemperkasakan-syarikat-automotif-tempatan/ 4. http://www.proton.com/Communities/Corprate-Social-Responsibility/MalaysianSkills-PROTON-Skills.aspx

5. http://sean-the-man.blogspot.com/2007/02/problem-with-proton.html 6. http://en.wikipedia.org/wiki/Proton_Holdings_Berhad