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Case 1 Proton
Case 1 Proton
22 September 2016
Case of PROTON
The Industry
PROTON exports to over 26 countries and has over a dozen models. It produced its 3 millionth
care in 2008. The headquarters of PROTON located in Shah Alam, Selangor and it operates an
additional manufacturing plant in Tanjung Malim, Perak. The company was founded in 1983 and
was the sole vehicle manufacturer in Malaysia until the establishment of Perodua in 1993.
The success of PROTON was a national proud and the starting point of a heavy industrialization
effort. PROTON has difficult starting point since the first car got into the assembly line during a
recession. The first year 17,000 cars were produced. However the company only managed to
survive through government subsidies and tariffs that made other car prohibitively expensive.
At first, PROTON did not make profits. Sales was largely due to tariffs and nationalist pressures.
Fortunately, in the mid 1900s things were improved. There was a backlog for deliveries of
several months. When PROTON becomes profitable, it employed 4,800 people. In 1995,
PROTON produced 180,000 cars and more than 10,000 cars were sold in Britain. Locally
manufactured components also increased from 42 percent in 1985 to 80 percent in 1995. Because
of the high profitability, Proton built a second, $800 million plant in 2000 that tripled production
capacity.
Despite of the PROTONs success, its officials admit privately that negative public perception is
the greatest challenge to increase sales and penetrating foreign markets. They need to change the
mindset and improve after-sales service. They want to move away from this image saying they
are selling cars that are cheap, or even cheaper than cheap. In the face of the flood of imports,
PROTON aimed to bolster its bottom line by selling at least 100,000 vehicles abroad annually by
2008. Exports have doubled from a tiny 8,000 units in 2003 to 17,000 in 2004 and it has set a
goal to double overseas sales in 2005. However, the analysis by industry analysts says that
despite its plans, PROTON is slow on its feet, with a long time lag between new offerings. Also,
the poor quality of some models is hurting its overall reputation.
SWOT Analysis
SWOT Analysis
2. Brand recall and market share is quite less as compared to global leaders
technology
Threats
bureaucratic issues
Competition
1. Toyota
2. Honda
Competitors
3. Nissan Motors
Related Issues
We can observe that there are two issues that circulated in this case study.
1) Management of Customers Perception
2) Quality of Proton Saga
As the first ever product to be launched by PROTON, the Proton Saga should be ready and
prepared for all the unexpected things. Rumors that saying Proton Saga has bad quality which
unable the vehicle to climb up the hill showing that PROTON team was not prepared. They are
not fully testing the real ability of the car. They might be too excited to launch the product to the
public without proper preparation. Adequate preparation is very important in managing the
perception of the customers in seeing and criticizing the new product. To manage customers
perception is an important aspect when introducing product which uses our own brand.
The competitors will take advantage on our weakness and use this opportunity to spread the
false news regarding the bad quality of PROTON.
Second issue is regarding the quality of Proton Saga which has been the main topic in the
rumors. PROTON should investigate whether or not the rumors which stated Proton Saga has
low ability in climbing hill is true or not. Customers will feel reluctant to purchase product with
low quality thus PROTON must do something to prove all the rumors are false. To prove the
customers that PROTON has good quality is important in order to regain the trust from the
customers.
4
Problem Statement
PROTON for the first time has launched its first and new automobile product to the Malaysia
market segment. They received many feedback from the people about Proton Saga. The feedback
comes from positive and negative side. The positive side because of the spirit to become national
car producer as well as to be independent in making national car. However, there are negative
feedback on this move such as PROTON produced low quality product since the technology
used was old and obsolete.
In one of the event held to promote Proton Saga massively which called as Sagarama, there were
rumors spread out regarding the ability of Proton Saga to climb up the hill. Proton Saga has been
accused to have small cc and small radiator that can cause overheating if any exertion happens
when it try to climb the hill. The CEO of EON was panicked about the rumors and called out the
emergency meeting to solve the issues.
Several Options
There are two options for PROTONs CEO to consider in order saving the company from bad
perception or rumors from the public.
1) Wait for complaints or any incidents by customers
2) Do the vehicle test on the hill
fix this situation. Whether they need to inform the customers and recall the sold car or not.
Whether they need to ask for customers apology or not and others. If the result of the test
showing the Proton Saga can successfully climbing the hill, PROTON should announce the news
to all the customers in the Malaysia. PROTON should held one more bigger Sagarama and busy
telling people about the success of Proton Saga climbing the hill. The impact of this success will
cause PROTON to have higher reputation and increase the sales of its first ever product. Thus,
to choose option number two should be the choice of PROTON in solving this problem.