Proton Essay

Perusahaan Otomobil Nasional Berhad, or also known as Proton, was incorporated in Malaysia on 7th May 1983. Proton involves in manufacture, assemble and sell motor vehicles and related product such as spare part, accessories and other components. Proton launched their first car, the Proton SAGA on 9th July 1985 by then Malaysia Prime Minister, Tun Dr. Mahathir Mohamad. Proton has produced about fourteen models of car up to year 2009.

In the case of PROTON- from SAGA to EXORA, a consultant Saiful Alawi (Chartered Accountant) have been asked to review Proton and recommend on should international motor industry giant, Hyundai consider on an investment and/ or collaboration with Proton.

First factor to be considered is state of the automotive industry. Total automobile sales in selected ASEAN countries between Malaysia, Thailand and Indonesia has growth and declined by year to year. But automobile sales in Malaysia is second higher between them and increasing throughout the year until recently. So, Saiful Alawi can advice Hyundai to takes advantages on Proton with collaboration and investment because they can widen its market in Malaysia.

Second factor is Malaysia’s Market Outlook. Based on market position by make or franchise holder Proton in second ranking. Besides that, passenger vehicle will see a higher concentration of sales in entry level models. It will give benefits to the national carmakers in retaining their sales. So, through investment Hyundai on Proton, proton can market their car outside Malaysia especially in Korea automotive market. This is because Hyundai from Korea. Hyundai also can increase their market share in Malaysia.

Third factor to be considered by Saiful Alawi is the possibilities of overseas market ventures or collaborations. If consultant advice Hyundai to collaborate with Proton, Hyundai can established their plant in Malaysia and market their car as well as Proton also has high possibility to go outside market.

Fourth factor to be considered by Saiful Alawi is government policies. Under ASEAN Free Trade Area, the price of the automotive products will be lower between ASEAN countries. So, Hyundai may take advantage on setting up their plant in the ASEAN countries like Malaysia to export their cars in ASEAN countries. Besides that, protectionism policy. Proton is National Car Project that aims to increase bumiputera participations in the economy. They use local vendor for accessories Proton car. So, Saiful Alawi can advice Hyundai if their want legal control on Proton, they must invest more than 50% in Proton. So that, Hyundai can change government policies.

Fifth factor is managerial implications. According to the case, Proton sold MV Agusta only 1 Euro to GEVI SpA but BMW purchased MV Agusta from GEVI SpA 93 million Euro. It’s show that management not competent because they are not evaluate the value of MV Agusta. So, Board of Director Proton did not act with integrity.