Business Case Studies, Leadership Case Study, Tata Group,Ratan Tata

Code :LDS0021A

Year : 2006

Industry :Automobiles

Region : Malaysia

Teaching Note:Not Available

Structured Assignment :Not Available

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Introduction: In 1983, Perusahaan Otomobil Nasional Sdn. Bhd. (Proton) was founded to “symbolise country’s rapid industrialisation and aspirations to first-world status,”4 by the then prime minister Mahathir Mohamad. Since its inception, Proton grew consistently from a mere assembler to an integrated car company (Annexure I) and became a national icon. Even with the iconic status, cheap prices and imposition of heavy tariffs on rivals Proton’s domestic market share which once peaked at 74% in 19935, declined to 35% in 2005 (Exhibit I)as the sales decreased by 28% to 155,000 units

The profits of Proton declined from $113 million in 2004 to $7.6 million in 2005 and revenues decreased from $2.3 billion to $2.1 billion. In November 2005, 43-year old executive director of Perodua, Syed Zainal Abidin Syed Mohamed Tahir (Syed Zainal) was designated managing director, Proton to steer it into the AFTA era. In the first quarter (Apr-Jun) of 2006-2007, the losses were 58.6 million ringgit(US $16 million). On the other hand, another Malaysian national car company Perusahaan Otomobil Kedua Sdn. Bhd. (Perodua), established in 1993, performed well and overtook Proton for the first time in the Malaysian automobile industry history in terms of sales volume in the first six months of 2006. The market share of Perodua for the first six months reached 42.4% well ahead of Proton with 32.6%

Although, the Malaysian government owned 42% of Proton, it intended to withdraw the subsidies granted way back in 198515. Would Syed Zainal be able to steer Proton back on to the path of success?