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Case Study Proton
Case Study Proton
OVERVIEW
Proton Holdings Berhad (PROTON) is a Malaysian automobile
manufacturer. It is headquartered in Shah Alam, Selangor and operates an
additional manufacturing plant in Tanjung Malim, Perak. The company was
established in 1983 as the sole national car company following the wishes
of former Prime Minister Tun Mahathir Mohammad until the advent of
Perodua in 1993. Proton is a Malay acronym for Perusahaan Otomobil
Nasional Sendirian Berhad. (National Automobile Company Private
Limited).
At first, parts and technology came from Mitsubishi but later on, as
experience accumulated, Proton became independent even if most of the
cars were still based on Mitsubishi models. Their first model which was
launched in 1985 was called the Proton Saga. Soon after the first Sagas
were rolling on Malaysian streets, exports started to Bangladesh (1986)
and by 1987 Proton had already made 50,000 units.
That same year a distribution agreement with a UK dealer was made in
order to ship Sagas over to the British Isles but that would materialize only
in 1989, when 150,000 units were already produced and plans for engine
assembly plant were already under way, the inauguration being celebrated
in 1991.
A new model, the Proton Iswara was launched in 1992 and then in 1993
the Wira, a model based on the Mitsubishi Colt, which enjoyed moderate
success with 220,000 units sold over 2 years. In 1994, the Proton Satria
joined the model line-up and in 1996 the Proton Tiara.
With thousands of models sold both domestically and internationally (in
about 31 countries around the world), Proton was gaining in financial power
which enabled it to purchase Lotus technologies in 1996, a move which
earned it a much needed technological infusion. a new sports model car
will emerge from this partnership, the Proton Ultimate, announced for the
first time in 2001.
Last but least, competitors always has been ultimate threat for Proton.
First, Proton and Perodua has been at each other's heels since December
2006 when Perodua outsold Proton in monthly sales by 99 cars. Perodua's
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 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.
Second, under policy like AFTA, (ASEAN Free Trade Area) the consumers
have more choices from Honda, Toyota, Chevrolet and other brands to be
selected at a more affordable prices, as Malaysia now has cut duties on
imports from other Southeast Asian countries to less than five percent.
During the economic downturn or inflation, the number of sales will
decrease and it will caused Proton faces the financial and manufacturing
problems.
PROBLEM IDENTIFICATION
In recent years, Protons sales performance and profits has been identified
in reducing manner. Although the firm is making good sales throughout the
year, yet they do not see a good profit at the end of the year. The product
and services are two major factor that contributing to the firms profit. Thus,
Proton is now concern over their corporate in the view of customers and
shareholders. Image is an overall view which represents a firms
effectiveness and efficiency.
The primary issue that Proton is facing in both product line as well as aftersale services is involving few critical aspects which are accounting,
marketing, productions, and human resource.
However, Proton also faces secondary issues which are involving third
parties such as competitors and the public.
1) Accounting Aspect
Proton only has 80% of service centers where else 20% is outsourced to
other dealers of proton such as proton EDAR and EON. Overall, proton has
583 authorized dealers just within Malaysia. First of all, the fundamental
issue of protons service department is authorized license given through
bribery to some dealers of proton and these dealers are mainly more to
profit than customer service.
Besides that license are given to friends and family which is very unethical
and unfair.
Thus, they sell the service bribery which turns out in poor service of cars. In
addition, dealers of proton are not evaluated before licensing it out and
these very absurd as proton does not know the capacity and skills of their
dealers. For an example an audit has been revealed there may be traces of
bribery between Proton and the media when it comes to review Proton
cars.
Apparently Proton had been very generous with the time spans it allows a
journalist to keep the review car, and had handed out more than 70 cars so
far - with 30 allocated to the media. There has been a case where NSTP
motoring journalists have been assigned Gen.2 and Savvy cars and were
told to keep it for an unlimited period. They were told to report back on any
problems over long-term use. This sounds like a plausible reason.
On the other hand, most of the proton advertisement is a mere invitation to
treat and their service is not good advertised. Proton gives a poor service
of consultation as well as for instance if a customer comes into their service
center for a solution for their problem, the staffs are delaying to solve the
issues that the customer brings in. The technical is not professional enough
and the customer comes back frequently in order to solve the same
problems of their cars. Moreover, higher maintenance fee is being charged
when customers comes into service their cars. Finally, all of these will result
to lack of service and lack of attitude of stuffs.
2) Marketing Aspect
Marketing the products to the market is one of the important areas that
need to undertake with effective in order to capture the market. The
problem and effect faced by Proton are also because of they fail to use and
after the production. The Proton agreed to failure and replaced the sensor.
The fault here is the sensor car part which was manufactured and
supplied by third-party. Proton isnt responsible for the sensor production.
But yet Proton is being blames for the failure and yet impacts on their
image pretty well.
4) Human Resource Aspect
There is a lot of problem and effect faced by Proton in their product and
services. The cause of this problem is arising from ineffective management
of human resource. This is because most of the employee and staff
employed by the management are lack of skill and knowledge about the
product and businesses.
Besides that, the management fails to give an adequate training to the
employee especially on the field that involving of manufacturing cars such
as fixing the cars spare parts, testing the cars performance and others. As
mentioned above its important to give an adequate training because as we
all know not all employees hired by the management is full of knowledge of
the industry they step in.
Furthermore, most the staff and labor employed by Proton management
based on recommendation or they are related to the top management
people. When the employee is employed based on recommendation, their
academic and experience qualification is not given a priority by the top
management.
Other than that, most of the employees in Proton are not happy when
performing their duty. This is because the management is not fully
appreciating the contribution given by the employee to Proton by paying
them a lower salary and allowances. When the management never takes
care of their employees well, the employee feel unhappy and gives a poor
performance to the company which lead to defective product and services.
From here, we can see that human resources management of Proton is not
effective enough in hiring, managing, and supervising the staff into a right
direction which at the end lead to a failure of product and services.
5) Competitors
The International Trade and Industry Ministry (MITI) has been scaling back
on its influence on manufacturers, in line with the governments change in
automotive policy to be more open and allow market forces to govern the
industry. This means industry players have a freer hand in determining their
selling prices and compete more aggressively with one another based on
supply and demand.
The market has become dynamic as Toyota, Honda and Nissan battle it out
among themselves. Joining the fray are companies representing the
Koreans, like Naza Kia and Hyundai-Sime Darby Motors as well as
continental makes such as Peugeot, Ford and Volkswagen, all putting
affordable price tags on their offerings in the hope of carving a share of the
Malaysian automotive pie that is valued at more than RM145 billion.
It is just unfortunate that Proton suffers high losses because of the fight
between these mega players which, in all likelihood do not even consider
Proton as their competitor in the first place.
6) Public
Sadly in the last three decades, there is no CEO or MD of Proton has been
critical enough of the company to push it higher position. Proton has and in
all probability will always be a low price offering. Unfortunately, that also
comes with the psychological belief of you-get-what-you-pay, the cheaper it
is, the less quality youll get. Therefore, if Proton suddenly decides to
increase the selling price across the board to address this issue, it will just
send them to the grave sooner since no consumer would be willing to pay
for things they do not perceive as improvements.
Since DRB-Hicom took over, there has not been any coherent branding
exercise for Proton. There is no advertisement about Proton anymore. The
Thai distributor has complained that there has not been any activity from
Proton in their country anymore. British dealerships are complaining lack of
stocks and marketing programs. It is as though DRB-HiCom is likening
Proton to some sort of milk cow where it should sell by itself.
RECOMMENDATION
Reduction in leakage of company fund/assets
In producing the cars, the components are obtained from the various
suppliers. In choosing supplier, Proton has to implement strict policies. For
example choosing supplier with good reputation in the field, able to supply
high quality of components, and able to give full warranty or guarantee on
the components supplied.
This is because Proton function has manufacturer who assemblies the cars
components and produce a final product in form of cars and other vehicles.
The car components are the individual parts that play a primary role in
achieving the final quality which represent the Proton image in term quality
itself. Thus, if the component failed, the image will fail as well and the
image of the firm is back laying on the fundamental element which is the
car component.
Sufficient Training and Clear Organizational Structure
The staffs often have the capability of performing well, but they might be
lack of knowledge and experience. This is a disadvantage and to overcome
this, Proton must conduct training sessions to all their employees
especially unskilled and semi-skilled employees. For example, the
manufacturing staffs can be classified into skilled, semiskilled and unskilled
staffs, and the major workers consist of semi-skilled and unskilled staffs.
These staffs need to be trained continuously in order to keep their
knowledge of the production up to the standard. This is to ensure the labors
are aware and updated with the latest development in the manufacturing
industry which impacts the technologies as well as their skills. On the other,
providing continuous training helps the employer to benchmark the latest
manufacturing skills in the industry and stay ahead of competitions.
Moreover, organization structure is basically used by every organization in
showing the relationship between the top management and its
subordinates. It also shows the various divisions in the organization and the
line authority. Besides this, organization structure also defines on how task
and duties are delegated in the management. The communication flow
depends on this structure in terms of upward and downward
communication. Thus, the decision making power and the commanding
power lies on this structure as well. Proton should reconstruct their
organization structure in order to enhance their communication flow and