Motive of firms going international

The possible reason for DRB-HICOM to pursue international business is the company
With regard to the long-term view, DRB-HICOM is committed to constantly reviewing and
innovating their manufacturing processes and business plans, not only to ensure that they are
energy efficient, but also to ensure that they are one step ahead of our rivals in terms of
consumer demands. Furthermore, DRB-HICOM decided to implement the Infor ERP SyteLine
application which result in consolidated in financial data and the reports and scenarios are run
from a shared database. This means that the time taken for financial consolidation is reduced by
using the Infor ERP SyteLine. Besides, DRB-HICOM can provide a secured, personalized
service to its clients and the costs of doing business have been reduced. As economic chains put
pressure on businesses to be sustainable DRB-HICOM is committed to DRB-HICOM is
committed to strategizing and targeting their sustainability objectives through benchmarked
report.

DRB-HICOM is an oligopoly because they are a few big firms, have barriers to entry due
higher fixed cost and a few suppliers. A high barrier to entry limits the DRB-HICOM to enter the
market, thus DRB-HICOM must considerable the influence over the market price of their
product. However, a significant entry barriers face by DRB-HICOM will allow them to earn
sustained profits over long periods of time. Furthermore, DRB-HICOM plan to expand its
product portfolio for their export market potential.

The product life cycle of Proton Holdings Bhd owns by DRB-HICOM includes four
stages which is introduction, growth, maturity, and decline. At first, Proton is introduced in the
market with intention to build a clear identity, few customers and incurred more cost for
distribution in this stage. Proton set a high price for their product due to achieve the company
targets.

At the growth stage, the sales and profits of the Proton company initially rising, and
competitors also starts to increase. In year 2018, Proton officially launched a new model of car,
SUV X70, thus encouraging sales volume of Proton in year 2018 and 2019 leads to benefit DRB-
HICOM increasing in net profit for the year 2019. Proton have incurred advertising cost to attract
more customers. At the maturity stage, although Proton’s sales continuously increasing but at a
decline rate compared to the past. To solve this, Proton has offer sales promotion to attract more
customers rather than making the profit.

In five quarters during the January to March period in year 2020, DRB-HICOM Bhd
recorded its first net loss of RM173.27 due to Covid-19 disruptions. The properties sector of
DRB-HICOM had lower billings in the construction sub-sector, Proton’s sales in March 2020
showed a 67% decline from the sales report in February 2020 thus Proton will reduce its car
prices by 1.2% to 5.7% to boost the economy.

DRB-HICOM Automotive. (2019). Customer Profile. Retrieved from

https://godlan.com/wp-content/uploads/2019/09/DRB-HICOM-Automotive-case-study-
ERP-SyteLine-English-US.pdf

Mahalingam, E. (Feb 17, 2020). DRB-Hicom sees CKD X70 as welcome boost. Retrieved from
https://www.thestar.com.my/business/business-news/2020/02/17/drb-hicom-sees-ckd-
x70-as-welcome-boost

Lye, G. (April 8, 2020). Proton March sales down by 67% due to MCO, but Q1 2020 total up
20.4% - Iriz +602%, Saga +36%, X70 -48%. Retrieved from
https://paultan.org/2020/04/08/proton-march-sales-down-by-67-due-to-mco-but-q1-2020-
total-up-20-4/#:~:text=5%3A09%20pm-,Proton%20March%20sales%20down%20by
%2067%25%20due%20to%20MCO%2C%20but,a%20total%20of
%2021%2C757%20cars.

Murugiah, S. (June 15, 2020). Proton cars now cost 1.2%-5.7% less. Retrieved from
https://www.theedgemarkets.com/article/proton-cars-now-cost-1257-lower#:~:text=In
%20a%20statement%2C%20Proton%20said,Covid%2D19%2Dinduced%20lockdown.

DRB-HICOM BERHAD. (2019). Sustainability Report 2018. A variable bottom line from

sustainability. Retrieved from https://www.drb-hicom.com/wp-

content/uploads/2018/09/DRB-HICOM-AR-Sustainability-Report.pdf