Restructuring / Turnaround Strategies Case Study

Proton: Way to Survive

Abstract:
Proton, the Malaysian national car company, had been the market leader in the Malaysian automobile market since its inception in 1983. During 2004, it witnessed a rapid slip of its market share from 74% in 1993 to 41% in 2005. Moreover, with the abolition of tariff barrier against foreign cars, Proton was exposed to stiff competition. In 1993, the members of Association of Southeast Asian Nations (ASEAN) agreed to cut tariffs on imported cars to 5% but Malaysia was the exception and was allowed to cut tariff rate to 20% in 2005 and to 0-5% in 2007. In 2005, The ASEAN Free Trade Agreement (AFTA) was promulgated, making Proton vulnerable to foreign competition. This case deals with the challenges facing Proton and tries to investigate whether Proton will be able to survive the increased competition and tough market conditions.

Pedagogical Objectives:

• To understand the automobile market in Malaysia
• To analyse Proton’s competitive positioning
• To discuss the causes for its poor performance
• To analyse the strategies adopted by Proton to overcome the challenges.

Keywords : Car; Automobile; Malaysia; ASEAN (Association of Southeast Asian Nations); Restructuring / Turnaround Strategies Case Study; AFTA (ASEAN Free Trade Area); Trade; Market leader; Mitsubishi; HICOM (Heavy Industries Corporation of Malaysia); Assembly; Perodua; Inokom; Competition; Technology; Quality