Proton Automobile Malaysia: Performance and Practices in Internationalized Markets - Iloka Benneth Chiemelie, Vimala Tangavelu

EXECUTIVE SUMMARY

International business has been made a common practices due to many favorable polices being adopted by government of numerous nation in ever growing concept of globalization geared towards creating a more free market. Issues like this are behind the design of this project to analyze a Malaysian company internationalized in another country, detailing their performance and practices in the international market they operate in.

The company chosen for this project is Perusahaan Otomobil National known by its brand name as (Proton), an automobile industry envision and pillared to foundation by the then Prime Minister of Malaysia Dato Seri Dr Mahathir Mohamad. The project paper is basically divided into three sections.

Section one: this section presents a background analysis of Proton Bhd in Malaysia and the chosen international market. Under this section, the reasons behind internationalization of Proton into the global market were also highlighted and explained to highlight justifiable factors that lead to the success of the internationalization process.

Section two: haven discussed the reasons behind internationalization of Proton into the global market; this section further goes into detail on the entry strategies adopted by Proton during the initial internationalization stages. This section also provides justifiable evidence to why these strategies were successful.

Section three: this is the final section and it analyses the over functional elements that were required and utilized during the internationalization process. This section also contains the conclusion part of this project paper which further summarizes the overall content of the paper by pointing out relevant aspects. The projected project is concluded by a bibliography of all of citations contained in the whole paper.  

1.0 BACKGROUND ANALYSIS OF PROTON

1.1 PROTON MALAYSIA

The birth of Proton was conceived by the former Prime Minister of Malaysia Dato Seri Dr Mahathir Mohamad, and he proceeded to launch the Perusahaan Otomobil National (Proton) in 1983 manufacture, assemble and sell motor vehicles and related products, including accessories, spare parts and other components. By 1985, proton achieved its aim of building a national car by launching the Proton Saga (MPI). It was Malaysia's first domestically produced car, and is still available for sale in both Malaysia and other parts of the world today (Proton, 2011).

Source as adapted from: Proton (2011)

Since the launch of Saga, Proton cars have been exported to over 50 countries, with key markets including the UK, Australia, Singapore and the Far East. Proton's main and first plan, with 99,400 sq m, is located at Shah Alam a close proximity with Kuala Lumpur. The location is also the house for an engine and transmission factory, a casting plant, R&D center and a semi-high speed test track (Proton 2010).

Proton currently employ over 6, 000 personnel, and took a major step towards upgrading its engineering capability by acquiring 100% of Lotus share in 2003. Since the acquisition, personnel from Lotus have been in close collaboration with Proton's new model development, under the Lotus team that is permanently based at the design and development center in Malaysia (Proton 2010). Its model line-up includes the Waja, Satria GTi, Wira, Iswara, Arena, Perdana V6 and Juara. See appendix 1 for pictures of Proton's Models.  

1.2 PROTON'S OVERALL MISSION STATEMENT

The company's mission is to strive towards excellence in all aspects of proton's operations. In achieving its goal, Proton believes that it is necessary to promote and protect the health and safety of proton employees and ensure that the environment is unharmed (Proton 2011).

1.3 PROTON'S LATEST ACHIEVEMENTS

1. Proton Exora Best MPV – Overall Value-for-Money CIMB Autoworld Car of the Year Awards 2010	4. Proton Saga Best People's Car Asian Auto – Auto Industry Awards 2011
2. Proton Inspira Best Value-for-Money Family Car Asian Auto – Auto Industry Awards 2011	5. Gold Award for Car Category Reader's Digest Trusted Brand 2011
3. Quality Management Excellence Award MITI Industry Excellence Awar	6. Proton Persona Value-for-Money Car of the Year (1.3L and above) Frost & Sullivan Malaysia Excellence Awards 2011

2.0 OVERVIEW OF OTHER COUNTRIES PROTON HAVE INTERNATIONALIZED INTO

2.1 ASEAN COUNTRIES

Proton Wira was marketed in the Philippines through a joint-venture partnership with the establishment of Proton Philipina but the auto-maker pulled out of Philippines as a result of the 1997 Asian Financial Crises. Proton is also

Besides the Philippines, proton was also introduced in Indonesiathrough a subsidiary PT Proton Edar Indonesia (PT-PEI) at the 15^thIndonesian International Motorshow, which is the biggest automobile show in the country. The auto-maker has four models in Indonesia which include Wira, Waja, Gen 2 and Savvy.

Proton first entered Thailand through their line-up for the Thailand Motor Show in 2007. Their cars where later made available to the Thailand market via an authorized dealer Phranakom Auto Sales Co Ltd, a mega dealer that have been responsible for distributing famous auto brands such as Honda, Isuzu, Chevrolet, Daihatsu and Hyundai in the past.

United Motors is Proton's sole importer and reseller in Brunei Darussalam through a partnership agreement forged in 2011. Proton also maintains presence in Singapore with their Proton Holdings Pte Singapore subsidiary that imports fully built vehicles into the Singaporean market.

2.2 UNITED KINGDOM

Proton Cars (UK) Ltd started trading in the UK in 1987, and began importation of Proton vehicles in 1989. By 1995, it became a wholly owned subsidiary of Proton Bhd and now has sole distribution right for Proton vehicles and authorized spare parts in the United Kingdom. Between 1989 and 2008, it sold over 135, 000 cars in the UK. The UK division currently has 77 sales dealers and 19 service and parts only dealers (Proton 2010).

Proton is also available in Cyprus through Andy's Motors and inTurkey through Ulu Motors. Both compares are the sole distributor and reseller of all Proton products and accessories in their respective market.

2.3 AUSTRALIA

Proton was introduced into the Australian market in 2003, and their first car into the market was the Jumbuck known as Proton arena. Proton entered the Australian market through a wholly owned subsidiary (FDI) known as Proton Cars Australia Pty Limited. Proton has been exceptionally successful in Australia due to its high affordability and low maintenance cost.

2.4 CHINA

Proton previously started exporting to Guangdong, China but withdraw after poor result. However, in 2007, the auto-maker returned to Guangdong through an export merchant dealership agreement with Youngman Automobile Group Ltd. Co., where Youngman will import completely built Gen 2 units and resells them under their own EuropeStar brand.

2.5 MIDDLE EAST AND ARAB COUNTRIES

After the sigining of Memorandum of Understanding (MoU) in Tehran between Iranian President Mahmoud Ahmadinejad and Malaysian Prime Minister Abdullah Ahmad Badawi in 2002, Proton proceeded to supply 5, 000 units of Waja to be used as taxis in Iran through Zagross Khodro Goup and fully entered Iranian market the same year.

Zagross Khodro Group and Proton have been good business partners for years and recently inked an agreement for mass production of Proton cars with a private assembly section developed for assembly of Proton cars in Zagross Khodro Group's plant.

Modern Technology Trading Company, a subsidiary of Habbal Group of Syria peeved way for entrance of Proton into the Syrian Marketthrough a distributorship agreement. The company holds the full distribution right of Proton cars in Syria, Iraq and Lebanon. Proton has been selling in Syria since 2001.

Proton was introduced to the Saudi Arabian market through partnership collaboration with Al Rashed Al Thunayan Auto Co., and the auto-marker also entered Egyptian market through a similar partnership with an Egyptian company Alpha Ezz Elarab Co as its distributors in both countries. Overall, Proton has been successful in the Middle East due to their aggressive marketing and penetration strategies.

Proton also maintains presence in Qatar through a distributorship with Doha Marketing Services Company W.L.L. besides the Arab countries mentioned above, Proton products are also available in Bahrainthrough International Motor Trading Agency W.L.L Bahrain, was their sole retailer, importer and distributor of all ranges of Proton cars and accessories. Proton forged a strategic alliance with Al Hashar Group of companies, and the company has the responsibility of making Proton cars available to Oman market.

Kuwait market also has the opportunity of using Proton's products through a distributorship via Bahrah Trading a Mohamed Naser Al-Sayer & Son Est in Kuwait. The last but not least Middle Eastern country penetrated is United Arab Emirate where Proton cars are marketed by Al Ghandi motors through another distributorship and reseller program.

2.6 JAPAN

Proton cars were debuted in Japan in 2011 with the showcase of Satria Neo R3 in the Tokyo Auto Salon. Carrosser Co., Ltd (CUSCO) started importing the 2011 Satria Neo and reequipping them with performance parts for resale to rally teams in Japan and Asia Pacific. CUSCO also holds the full right for importing and distributing of the Proton Satria Neo from Malaysia to Japan.

2.7 BANGLADESH

Proton Bangladesh started on December 26, 1986 just a year after the inauguration of the first Proton Saga in Malaysia. The Bangladesh brand started in the form of exportation and helped in the total accumulation of over 50, 000 units sold by 1987.

Besides Japan and Bangladesh, Proton cars are also available inTaiwan, Sri Lanka, Nepal, and Pakistan through a distributorship partnership program with local distributors in these countries to offer Proton cars to their respective markets.

2.8 AFRICA

In their quest to dominate the global automobile industry, Proton has extended their presence into the African continent through a Joint Venture with Pearl Automotive Pty Ltd. This joint-venture partnership is designed to provide Proton cars to the South African market, and also the Mauritius market. South African and Mauritius are currently the only nations Proton have entered in the African continent.

3.0 JUSTIFIABLE REASONS WHY PROTON INTERNATIONALIZED

3.1 INLINE WITH PROTON'S VISION

Proton's vision is to become a successful Malaysian Automobile Manufacturer that is globally recognized, and this is in line with their idea of internationalizing into the UK market. Since inception, Proton has worked hard towards this goal expanding their international presence into 27 countries across South-East Asia, the Middle-East, China, South Africa and the United Kingdom (Proton, 2012).

Thus, it is justifiable to highlight that this is one of the reasons for internationalizing Proton into the global market as it will great brand awareness for Proton and showcase what the Malaysian society stands for. This is also in their brand personality which states that Proton has challenging and unique opportunities to change people's perception of what the stand for by asserting a clear brand personality founded on a set of brand attributes that guides their activities and communication in line with the society they come from (Proton, 2012).

3.2 BUILDING COMPETITIVE ADVANTAGE

The automobile industry is operated on a very competitive environment due to numerous rising and already existing brands. These competitive market places have forced numerous companies in the industry to adopt business activities geared towards sustaining their turnover, defending their market share, maintaining their profitability, and protecting key measure of the company's success (Go¨ran, 2004).

Proton is no exception and this is one of the reasons behind their internationalization into numerous markets across the globe. The auto-maker seeks to remain competitive in the automobile industry by gaining new experience through operation in other markets, and finding potential s for maintaining their market share through improved sales. This has been achieved to a great extent as Proton cars are now available in Africa, Asia, Europe, Australia, Middle East and South America. Through the internationalization process, they can conduct new automobile related researches in these countries and combine the ideas together to develop a more competitive team, company and brand.

3.3 TO INCREASE THEIR MARKET SHARE

As Milton's Friedman's puts it, "the social responsibility of businesses is profit" ((Friedman, 1970). There is no doubt to the fact that businesses are formed with the idea of generating a return on the investments used for the formation of these businesses. Thus, profit is the main reason for formation of any businesses across the globe.

In this case, it can easily be deduced that the expansion and international of Proton into other markets across the globe was profit oriented. Most automobiles such as GM, Honda, and evens Proton's founding friend Mitsubishi have create huge profits due to internationalization of their brands in other countries besides their country of origin. This makes Proton's approach justifiable to either debate or factual agree that their internationalization process is profit oriented as it would help their to increase their market shares by serving customers who are underserved or not served at all by other automobile brands. This claim is reasonable as the internationalization of Proton into Bangladesh in 1986 just one year after formation helped them to rank 50, 000 units of cars sold in 1987 just two years after initial rollout of their first car.

3.4 GOOD ECONOMY PEEVED WAY FOR INTERNATIONALIZATION INTO UK

Another factor that triggered the possible expansion of Proton into the UK in 1985 was the rise in UK economy. Since 1900, UK's GDP per capita at constant market rose at an estimated 298%. Between 1948 (After World War 2) and 1998, per capita GDP increased by 191% with 1980 to 2000 witnessing the most rapid and dramatic increase.

Figure (2): GDP per capita of UK (1900 – 2000)

Source as adapted from: Jeo and Grahame (1999)

From the figure (2) above, it can be seen that the GDP per capita was at a very peak high in 1985. At the same time, costs of petroleum was on the decline as illustrated in the figure (3) below, and figure (4) further show an increase government expenditure in construction of roads and other infrastructures that will aid the use of automobile in the UK.  

Figure (3): UK petrol price (1902 – 1992)

Source as adapted from: Jeo and Grahame (1999)

Figure (4): UK government expenditure

Source as adapted from: Jeo and Grahame (1999)

The three factors highlighted above provided a successful atmosphere for Proton to expand into the UK market and it can be seen that their decision was one based on factual knowledge of the economic situation in the UK and intension to increase their market share while remaining competitive in the overall global automobile industry.

4.0 RESOURCES PROTON ADOPTED FOR INTERNATIONALIZATION

4.1 PROTON CHANGED LOGO TO MEET GLOBAL TASTE

Figure (5): History of Proton's Logo

PROTON's early logo back in 1983 was created to symbolize strength and Malaysian heritage.

In conjunction with PROTON's move to export its car to markets in Europe and Australia, among others, the PROTON badge needed to reflect international class and liberalism.

To incorporate the traits of the tiger and to unify all PROTON badges worldwide, Proton introduced a new badge in 2000.

The brief history of Proton's logo illustrates that even with the best team and partnership with international brands, formation of global businesses is not as easy as it could be said. In order to penetrate the international automobile market, Proton had to remove the Malaysian heritage attached to their brand and design a brand that is more related to automobile branding strategies in the sense of "international class and liberalism", as auto customers are more concerned on the quality of the product, efficient, reliable, safety and class.

4.2 PROTON WAJA SOLD INTERNATIONALY AS PROTON IMPIAN

This is more of an intellectual resource that is probably derived from market and marketing research to ensure right perception of the brand in the international scene. While one of Proton's cars is marketed and sold in Malaysia as "Waja" which is a Malay languages translated to mean "King" in English, the same brand is sold in the international markets such as Middle East and UK as "Impian" which means "Dream".

The whole ideas can be viewed on a perceptual level as Proton Waja was the first Malaysian automobile built by Malaysian is the fact that their first brand "Proton Saga" was entirely based on Mitsubishi Lancer modelling, it can easily be see that the name "King" symbolizes that it is the king of all Malaysian cars, as it is the first Malaysian made automobile. On the other hand, bringing an international brand into other countries with the name "King" can have some negative influence on the Brand as the market can fell disrespected or stereotypical as most societies will not appreciate the idea of another car being the king of cars in their country. Thus, Proton changed the name into "Impian" to mean "Dream" reflecting the fact that the Malaysian's dream of having a Malaysian automobile recognized and used internationally has finally become a reality with "Impian".

4.3 RESEARCH AND DEVELOPMENT

Proton's objectives which is a strategic component of Malaysia's industrial master plan include the development of research and development capabilities, to ensure world class manufacturing and production standards. The continuous process of improvement and global competitiveness through research and development has produced one of the largest streams of talented and trained engineers in Malaysia under Proton.

This human resource management approach was also essential for internationalization of Proton into foreign market as they needed to meet the standards and requirements of the market they are penetrating while differentiating their brand from other automobile brands in these countries. This approach was achieved through intensive research and development programs in Proton.  

4.4 PROTON'S SHAH ALAM PLANT OUTPUT TRIPLED IN 1997

Proton's main plant in Shah Alam, with an area of 923 900 sq metres, was originally designed for a capacity of 80 000 units per year. In 1997, capacity increased to 240 000 units per year with the construction of the Medium Volume Factory, which is next to the Main Plant.

The increase in their manpower and productivity resource is in line with meeting the demands of their markets. Since most of Proton's brands are sold internationally on a distributorship scheme, it is necessary that they meet the not just the local market demands but also the international market demands which ensure reduced overproduction. This is the main reason behind the expansion of their original plant to handle three times the same output it used to handle in their first decade of operation.

4.5 GLOBALIZATION ENABLED DISTRIBUTION

Georgios (2004) argued that globalization has made its way into history as a process which enriches interaction of people from different countries and societies by allowing them to: meet, swap goods and ideas and borrow or buy resources. It leads the path to privatization and customization of functions that were conventionally handled by government to suite individual and organizational criterions.

The contemporary phase of globalization was witnesses in the 1980s, when political policies where reformed in favor of neo-liberalistic economic strategies. Neo-liberalism to represent how globalization facilitated the adoption of free-market policies which promoted and advanced freedom of trade across notable developed and developing economies in the 1980s (Rachman, 2008).

Such polices include the WTO inter alia principles such as the MFN and the national treatment which requires member nations of the WTO not to discriminate among its trading partners, and in return cannot be discriminated by other member nations either. The principles also required member countries to treat imported and local goods exactly the same once the tariff has be paid for the imported goods (Dilip, 2010).

Besides the WTO acts, other trade acts that helped internationalize Proton can be related to the ASEAN trade act and the Memorandum of understanding signed between the Iranian President and Prime Minister of Malaysia in relation to internationalize the Proton brand into the Arab nation. Thus, globalization was a useful internationalization resource.

5.0 PROTON'S STRENGTHS FOR INTERNATIONALIZATION

5.1 JAPANESE TECHNOLOGY AND MALAYSIAN BRAND

The proton project was a joint-venture business between Mitsubishi Motors and the Malaysian government to produce a Malaysian car. The whole components of the car was manufactured by Mitsubishi using same standard of Japanese technology (Har, 2007) which was then known as one of the most reliable automobile manufacturing nations in the world. This business partnership offered Proton the much needed recognition to gain global reputation as a quality automobile manufacturer that follows similar standards with Japanese made cars (Mohd, 2006).

By the incorporation of a the joint-venture partnership between Mitsubishi and Proton, Mitsubishi Motors already have 15 years of operation on their belt, and experience in joint-venture business with famous car brands such as Chrysler and Hyundai. This experience together with a vast managerial and R&D years offer Mitsubishi the required human and intellectual capital to help pioneer Proton into a globally recognized brand.

Thus, it can be argued that this gave them a much needed strength to penetrated the global  market as the brand image of Mitsubishi will help make it a reliable product in the market and offer the automobile market the needed conviction to purchase Proton products.

5.2 HIGH GENERATED PROFIT OFFERED NEEDED FINANCIAL CAPITAL

By 1985 when Proton reach an agreement to distribute their products in the UK, the company had already gained 47% of the domestic market; and by 1989 when the agreement materialized with shipping of Proton's first automobile to the UK, product was already in control of 75% of Malaysian automobile market share (FundingUniverse, 2012).

This huge market share yielded high profit which peeved way for internationalization as it provided the much needed financial capital. This is a huge strength on the side of Proton because internationalization of industrial product such as automobiles requires huge start-up capital for both business operation and government taxes. Therefore, it can be concluded that Proton was in the atmosphere at proton in 1985 was key for their international success as they hard both needed trust gained through the joint-venture with Mitsubishi and financial capital gained through acquisition of huge domestic market share.  

5.3 LOTUS ACQUISITION INCREASE BRAND IMAGE

Proton gained full control of Lotus Group international with 100% acquisition of the group's share in 2003. Lotus Group is an international network which spans across 40 countries that works closely with clients to find the right solution to their automotive challenge. Lotus Group's clients include major automotive manufacturers in huge markets such as China, India and other emerging countries (Proton, 2012).  

The acquisition has played a major role in internationalization of Proton as their engineering capabilities have helped Proton develop more reliable and safe automobiles. On the other hand, having a subsidiary like Lotus also offers Proton numerous intellectual benefits as they can access their market and marketing research in all the respective countries they maintain presence in and also get a live view of their engineering challenges and expertize. Besides all the production related benefits, Lotus also offered Proton a high brand recognition and increase brand image because the group also engage in manufacturing and design of Luxury automobiles thus, this changed the perception of Proton in most European markets especially the UK.

5.4 HIGH INTELLECTUAL CAPITAL THROUGH RESEARCH AND DEVELOPMENT

Right from the start of Proton as an auto-maker, the company prioritized research and development as the core element of its objectives in line to propel Malaysia into the 21^st century as an industrialized nation, where technological knowledge acquisition, expertise and know-how would help the country achieve both short-term and long-tern goals (Proton 2012).

Thus, their high desire to acquire a huge research network is the key reason behind their stream of trained and talented engineers which make the largest of any single company in Malaysia. Many of these engineers specialize in diverse and highly-specified areas such as automotive, materials and design engineering.

Their research ability has been recognized in numerous occasions such as 1) First prize (Poster) at 5th India/ASEAN Hyperworks Technology Conference, 2) Best Conference Paper at South East Asia ABAQUS Users' Conference, 3) Asia Pacific Innovation Award at MSC ASEAN Users' Conference, and 4) PROTON Innovation & Invention Competition. These recognitions further highlight Proton's strength in automobile research and development and were crucial in internationalization as it gave them the needed experience, expertise and capabilities to handle and compete in the overly competitively global automotive industry.

5.5 INCREASED SHAH ALAM PLANT'S OUTPUT

Proton's main plant in Shah Alam, with an area of 923 900 sq metres, was originally designed for a capacity of 80 000 units per year. In 1997, capacity increased to 240 000 units per year with the construction of the Medium Volume Factory, which is next to the Main Plant. As mentioned earlier on, this increase in their productivity offered them much needed strength and ability to handle the demand of their products in the international market as most of their internationalization strategies are based on exportation of fully built automobiles.

6.0 ENTRY STRATEGY PROTON USED FOR INTERNATIONALIZATION

6.1 WHOLLY OWNED SUBSIDIARY - UNITED KINGDOM

The strategy adopted by Proton for internationalization into the UK was a distribution network for their exported cars to be made available to the UK market. Thus, in 1987 (two years after the formation of a joint-venture with Mitsubishi), Proton signed an agreement with a distribution subsidiary named Proton Cars (UK), Ltd (Proton, 2010). Although Proton went on to win a number of awards at the international exhibition in Birmingham the preceding year, actual sales in the United Kingdom materialized only in 1989. Proton went on to fully acquire the distributor and turn it into a wholly owned subsidiary.

A distribution subsidiary is an agent that represents the manufacturer in their intended country of entry and have the sole responsibility of distributing their products in the market they reside in. depending on the type of agreement, the distribution subsidiary can buy the products by himself and gained full benefits of all generated profits, or he can sale the products on behalf of the manufacturer and get paid on a commission bases. Being a subsidiary, Proton Holdings Malaysia had full control of the distribution network in the UK, and this offered them the opportunity to study and understand the market before transforming it into a wholly owned subsidiary under Proton Bhd in 1995 (Proton, 2010).

Touching on the mainstream of internationalization process, they are three common strategies adopted by companies that wish to penetrate new markets outsides their market of origin and they include: the stage models (Johanson and Vahlne, 1977; Cavusgil, 1980), FDI logic (Hymer, 1976), and the network approach (Johanson and Vahlne, 1990; Coviello and Martin, 1999). Proton vividly adopted the stage model which proposed that companies should internationalize their activities and offering in stages, and in time, as they acquire more knowledge about the foreign market and increase their investment as well as commitment.

Adopting the stage process through a distribution subsidiary, Proton was not only able to sale its products and study the UK market, but the company was also able to wade off the high costs associated with FDIs and reduce risk of fluctuation in product standards by not adopting the networking strategy which would have allowed other companies to manufacture their cars under limited supervisions. Therefore, Proton was able to maintain the high level of automobile standards acquired through their Japanese joint-venture partner by producing all their automobiles in Malaysia and exporting it to the UK.

6.2 IMPORTING DISTRIBUTORSHIP

The internationalization process through which companies' starts from operating in domestic markets, expanding into international markets via exporting and entering new markets through foreign direct investment has been a topic of high importance towards understanding the success of a company in international scene, and it continues to be a significant topic in the interests of academicians and practitioners alike ((Bilkey and Tesar, 1977; Cavusgil, 1980; Gemser et al., 2004; Johanson and Wiedershein-Paul, 1975; Johanson and Vahlne, 1977, 1990; Kalantaridis, 2004). One of the mostly discusses entry mode for internationalization is importation.

One of the major entry strategy adopted by Proton is a distributorship network. An import distribution network basically involves an import distributor purchasing the products from the manufacturer under agreed terms to be either their sole or subsidiary distributor of all or some of their products. This strategy has numerous benefits to both the manufacturer and the distributor such as goo control over selection of foreign markets and choice of foreign representative companies, good information feedback from target market, better protection of trademarks, patents and goodwill (Li et al., 2004; O'Farrell et al., 1996, 1998; Roberts, 1999).

Proton used this strategy in many of their foreign markets such asTaiwan, Sri Lanka, Nepal, Pakistan, Bangladesh, Japan etc.Proton is represented in these countries through their sole distributors who buy their cars and accessories and resell them to their local markets. These distributors have the sole right to import and sell Proton's cars in their country and this helps Proton in understanding the market better through combined research, conference meetings and distributor's suggestion, while it also offer the distributors the needed protection of competition-free market for Proton brands as their sole distributors.

6.3 JOINT VENTURE - SOUTH AFRICA

Collaboration between different organizations offers them the ability of compensating for limitations in their knowledge and capacity to produce retail and resell goods and services (Walker and Johannes, 2003). These collaborative efforts can take the form of partnerships, strategic allegiance and joint ventures.

Joint venture is a type of business partnership formed with five common objectives which include new market entry, risk and reward sharing, technological sharing and combined development of new products, and conformity to government regulations. In 2004, proton formed a joint venture partnership with South Africa's Pearl Automotive Pty Ltd in order to penetrate the South African market. The joint venture can easily be considered a success most of Proton's cars are now available and on sale in South Africa.

Through joint venture, Proton is able to penetrate the South African market without the much needed funds in foreign direct investment and this have also helped them to increase their competitiveness through brand awareness in the African continent and profit maximization. Besides these benefits, joint venture allegiance also offers Proton an in-time study of the African market as they can be guided and briefed on their market performance and overall perception of the brand in the South African market by Pearl Automotive Pty Ltd.

6.4 FOREIGN DIRECT INVESTMENT – AUSTRALIA, SINGAPORE AND INDONESIA

The overall view of foreign direct investment especially in low income countries such as Indonesia has been somewhat controversial. While it is viewed as a major stimulus of economic growth (see, for example, Walden and Rosenfeld, 1990; Chowdhury and Islam, 1993; Rodan, 1997; Borensztein et al. 1998; Gries, 2002) on one hand as it can provide the capital, technical and marketing expertise needed for growth, it is also seen as an undermining process for development (Razin, et al., 1999).

Foreign direct investment basically involve establishment of a new company or buying over of an existing company in a foreign market. The benefits depends on the type of foreign direct investment chosen and in the case of Proton, they have chosen to establish a new subsidiary as their entry mode into Australia, Indonesia and Singapore as highlighted earlier on in the overview of countries Proton have internationalized into.

Foreign direct investment while it must be considered as expensive is the right entry approach for Proton in Singapore, Indonesia and Australia because they are established markets with huge potentials for sale and any money spent on internationalization into these markets through foreign direct investment has the potential of yielding a rewarding huge returns on all investments. This has been the case so far with the huge success of Proton in these markets.

6.5 STRATEGIC ALLIANCE - IRAN

Strategic alliance have become a common occurrence in modern business studies as firms rely on alliance to facilitate market entry, initiate new product development and share associated risks. Organizations across the globe are attempting to enhance their competitiveness by creating and merging new source of technologies and skills together, which helps in building of new and more reliable organizational structures (Hamel, 1996; Prahalad and Hamel, 1990; Yoshimo and Rangan, 1995).

Hamel and Prahalad (1989), viewed strategic alliance as the right answer for companies attempting to acquire highly advanced resources while maintaining their control of other strategic priories (such as domestic markets), and increasing their global competitive strengths through sharing of resources needed for entering new markets.

This case is with Proton in relation to its strategic alliance with Zagross Khodro Goup in Iran, where product is offered the chance to assemble its cars in Zagross Khodro Group's plan in Iran and market the assembled cars directly to the Iranian market. Through this strategic partnership, Proton is able to reduce the import tax applicable for imported fully-built automobile, and gain full access into the market in order to understand better ways to increase its market shares. While on the other hand, Zagross Khodro Group is offered access into Proton's technologies as their products are assembled in the Group's plant.

The mostly argued case against strategic alliance is on trust and possibility of a partner turning into competitor with knowledge and expertise acquired from fellow partner. While this case is reasonably true, it is worthy to note that Zagross Khodro Group is not an auto-maker and the partnership is more of a national agreement following the Memorandum of Understanding signed between leaders of both nations. Thus, it is expected that the strategic partnership will continue to forge new benefits for Proton in Iran.

7.0 POLICIES THAT HELPED PROTON TO INTERNATIONALIZE

7.1 THE PROTON WAY – ORGANIZATIONAL CULTURE

Besides quality management system, advancement in research and development and high financial capitals, organizations need a corporate culture that constantly reminds its employees of the company's main objectives. According to Proton (2012), each employee practices the company's shared values of guiding their behavior with other employees and customers. These shared values can be further discussed below as adapted from Proton (2012).

7.1.1 Quality - Proton ensures continuous quality improvements for its customers through delivering of products that positively conceptualized and manufactures.

7.1.2 Customer focus – the company maintains that customers' remains their priority and they deliver all promises made towards customers' satisfaction.

7.1.3 Innovation – Proton continues to challenge automobile conventions by seeking new and better ways to undertake their day-to-day activities through viewing change as an opportunity.

7.1.4 Teamwork – the workforces trust, share and respect knowledge as a means of fostering productivity through teamwork.

7.1.5 Speed – Proton claims to operate on a "can-do" attitude and will never rest until they find solutions to each challenge.

7.1.6 Caring – in their quest to always be a responsible corporate citizen, Proton invest in safety and health of its workforce and the environment.

7.1.7 Honesty – Proton allows transparency in their organizational system and takes responsibilities for their own actions.

Their corporate culture which is highlighted in their value above is an essential police for internationalizing as customers need quality products and customer oriented services in order to make purchases, while Proton needs to innovation, teamwork and speed as a way of maintaining and gaining competitive advantage, and finally caring and honesty is essential to gain the full trust of the stakeholders in international markets. Thus, it can be argued that such organizational policy made internationalization easy for Proton Holdings Bhd.

7.2 GOVERNMENT'S PROTECTIVE CBU TARIFFS ON IMPORTED VEHICLES

While proton launched the commercialization of Saga in 1985, they were on the other hand backed by subsidized pricing policies and hefty trade barriers such as CBU tariffs on imported vehicles (Malaysia, 1969), and this peeved way for them to gain 47 percent of the Malaysian automobile market within just two years of operation. They went on to acquire 70 percent of Malaysian automobiles market by 1989, making them the largest sole producer, distributor and agent of automobiles in Malaysia.

Table (1): Tariff on imported cars in Malaysia

	ASEAN tariff (%)	Non-ASEAN Tarif	Excise (%
Automobiles (CBU)	15	30	80-200
Automobile (CKD)	0	10	80-200
Multipurpose Vehicles (CBU)	15	30	55-160
Multipurpose Vehicles (CKD)	0	0-10	55-160
4WD (CBU)	15	30	55-160
4WD (CKD)	0	10	55-160
Motorcycles (CBU)	15	30	20-50
Motorcycles (CKD)	0	0-10	20-50

Source as adapted from: FTAMalaysia (2012)

Such government polices as illustrated in table (1) above, discouraged automobile consumers for purchasing imported brands and yielded success for Proton in the Malaysian market and lead to internationalization into Bangladesh and Singapore markets in quick successive years. From the sales generated as a result of protectionisms policies in Malaysia and success in Singapore and Bangladesh, Proton was inevitably ready to take the UK market by the storm as they have enough financial capital to support their entry operations.

While the polices helped Proton acquire huge domestic market shares, the same polices when reversed in 2007 to reduce the cost on imported vehicles also resulted in Proton losing most of its market share and thus making internationalization the only possible way to generate higher profit and meet their financial objectives.

8.0 PROTON'S FUNCTIONAL ASPECT TOWARDS INTERNATIONALIZATION

As is common in business, they are functional elements that determine how successful a business will be and these elements becomes more significant in the international market as difference with the elements available in their intended market of penetration can exert failure on the overall business even before it starts. In the case of Proton, the functional elements which helped pioneer their expansion into the global market is as disused below.

8.1 PRODUCTION

8.1.1 INCREASED PRODUCTION TO MEET DEMAND

Figure (6): Proton rollout 10,000th Saga barely a year from launch date

Source as adapted from: Proton (2011)

By 1986, barely a year after the launch of Proton's first car, the auto-maker celebrated the official rollout of 10, 000^th Proton Saga. The following year saw the launch of Proton Saga 1.5l saloon and Aeroback models, with over 50, 000 units of Proton Saga already manufactured and sold in Bangladesh, Brunei, New Zealand and Sri Lanka (Proton, 2012).

Thus, it can easily be deduced that prior to expansion into their earlier markets, Proton was already capable of huge production per annum with their original Shah Alam factory that was built to handle 80, 000 units of production per annum within 1985 to 1996. The ability to handle huge production ensures that the auto-maker was able to meet demand of their products in both local and international market. While the company might still be considered to be at its infancy, their production capability ensured smooth internationalization into the UK in 1989 with 150, 000 units sold before the first car (MPI) was exported to UK.

8.1.2 TECHNOLOGICAL UPGRADE

In order to further stamp its mark as a global automobile brand to reckon with, Proton unveiled its Prototype CamPro engine in 2000 at their Lotus (subsidiary) factory in Norwich, United Kingdom. The engine is meant to show Proton's ability of designing and building its own engine that produces good power output while meeting the current emission standards for automobile engines (Proton 2012).

The idea of a Proton made engine is easily justifiable as it will help reduce the cost associated with using Mitsubishi engines, while also further increase their competitiveness as the prototype engine meets world's current requirement for automobile engines. On the other hand, it can also increase their brand image as customer will view them as a reliable auto-maker and not just a Japanese and Malaysian partnership.

8.1.3 CONSTRUCTION OF A NEW PLAN - TANJUNG MALIM PLANT

In 2003, Proton finished the construction of a new plant named Tanjung Malim Plant situated in the northern state of Perak. The plant has an annual capacity of 150, 000 units with 60 percent automation, increasing efficient and output through reduction of human related production errors (Proton 2012).

The plant is made up of five main buildings; the Engine & Transmission (ETM), Stamping, Body Assembly, Painting and Trim and Final Assembly. These buildings are equipped with an Automatic Line Control or error-proof system that assists workers to enhance built up quality and achieves production efficiency.

With the internationalization of Proton into South Africa in 2004 just a year after the new plant was complete, then China in 2007, Japan in 2010 and Brunei in 2011, it can easily see that the plant was constructed with internationalization in mind. With the new plant, Proton is now able to handle 410, 000 Units of fully-built cars in a year with a combination of the unit output from their Shah Alam plant.  

8.2 MARKETING

8.2.1 BRAND IMAGE MARKETING: JAPANESE TECHNOLOGY, MALAYSIAN STYLE

In the early inceptions, Proton was marketed with the slogan "Japanese technology, Malaysian style". The whole idea behind the slogan is to create a quality image for the brand as Japanese automobiles are considered globally to be of high quality, reliable, efficient and low maintenance cost. Up till to day however, this whole concept is still written in people's mind because of their earlier advertisements in the 1980s and early 2000s and the fact that some of Proton engines are still made by Mitsubishi Motors.

8.2.2 REPOSITIONING STRATEGY: ACQUISITION OF LOTUS GROUP INTERNATIONAL LTD

While Proton worked hard to encourage the UK market that their products are of high quality and standards, the car suffered somewhat from a poor public image. They were considered poor quality products with poor residual values compared to other cheap Pacific Rim cars from Kia, Chevrolet and Hyundai. This image was mainly as a result of lack of technological transfer from the side of Mitsubishi which did not allow Proton access into their brand technological secrets.

By 1988, Proton attempted to change this image by launching of the Proton Satria GTi, but the attempted was not considered as success as it put their products out of the reach of younger drivers due to high insurance premiums. On the other hand, the Satria GTi also sported a "Lotus Ride and Handling" badge, which when combined with an average security component made the car attractive for thieves.

However, with the full acquisition of Lotus Group International Ltd, a British automobile engineering company and manufacturer of Luxury Sports car in 1996 (Proton, 2012), Proton has been able to slowly reposition its brand as a world class auto-marker. The company also adopted aggressive advertisement and marketing as they continued to penetrate into more Asian, Middle East and European markets.

8.2.3 AFTER SALES AND WARRANTY SERVICES

One unique aspect of Proton is the establishment of after sales services centers and offering of warranties based on certain conditions to all the markets they exist in. This features is essential what an auto buyer will put into consideration and Proton does it to perfection with free training offered to their customers on how to take better of their cars, genuine products and accessories for all their cars available at all their distribution and sale centers across the world and warranties for all their cars.

Common after services and warranty include 5 year oil referring and engine check which is also common in the Malaysian market. This is a unique marketing strategy because it tries to persuade the customers that Proton is not all about the sales but also about ensuring that they have quality services after sales through free maintenance check and oil change for their automobiles at Proton sales and distribution centers. The after sales services centers are available in all their websites across the globe.

8.2.4 MOTORSPORTS PRESENCE

Proton gained presence in the motorsports right from the earlier days of its collaboration with Mitsubishi motors and it eventually led to the formation of Petronas EON Racing Team (PERT) which is a result of the partnership between PETRONAS Malaysia and EON Group.

Since the formation, Proton Team (PERT) has involved in numerous circuit racing such as rallying. Rally events are contested for several days under adverse terrain and unpredictable weather and it is a perfection condition to showcase the performance and durability of Proton cars. The team currently has numerous titles under their belt and the recent title was in 2011, where Proton took an unprecedented 8 titles in the FIA Asia Pacific Rally Championship together with its 2WD group N team.

Notable titles included the Manufacturer's Title, Overall Driver's Title, 2WD Manufacturer's Title, 2WD Driver's title, and Junior Drivers Title. Their presence in the rally teams have gained them much needed brand awareness as the competition is watched globally and winning numerous titles also fosters their Brans Image.

8.3.5 LAUNCH OF NEW PRODUCTS

The most common key towards meeting the challenging competitive atmosphere of the automobile industry in the world is the ability to launch new products and services that meet latest demands, standards and requirements with the industry. Proton took this to a great extent by creating new products that are equipped with latest technologies of the automobile industry and this was essential towards market growth. Some these products can be seen in relation to the year it was launched below:

Table (2): list of Proton Cars

Proton Saga (1983)	Perdana V6 (1998)
Proton Iswara (1992)	Proton Juara (2001)
Proton Wira (1993)	Proton Waja (2001)
Proton Staria GTi (1994)	Arena (2002)
Proton Putra (1995)	Gen-2 (2004)
Proton Tiara (1996)	Proton Savvy (2005)
Proton Persona (2007)

 From the Table (1), it can be seen that Proton took its aspect of innovation and creativity serious and this today is offering customers a list of numerous brands under Proton to choose from. Through creation of variety, Proton is able to target numerous market segments and thus increase their sales through high customer loyalty.

8.3 FINANCE

Proton Saga was nicknamed "Protong Harga" after the successful commercialization of the car in Malaysia. The nickname which is a Malaysian language means "Cut Price". The car was made available with at least 20% price cut compared to international brands. This price cuts policy and government's protectionism policy brought huge financial profits to Proton.

Figure (8): forecast and outcome growth of vehicles in emerging markets (1996 – 1998)

Figure as adopted from: Zainal and Deepak (2008)

The outcomes of the above figure with an increased 68.5 percent between 1996 – 1998 stands as evidence of the increasing demand for automobiles in ASEAN countries. As highlighted earlier, Proton had gained 47% of Malaysian automobile industry market share by 1985, and quickly internationalized into Singapore, Bangladesh and New Zealand with UK as the next country in line. Within these time, they have sold over 150, 000 units and this provided them with needed financial capital to finalize their decision of penetrating into the UK market.

8.3.1 PROTON'S FINANCIAL PERFORMANCE AND ANALYSES - MALAYSIA

Proton maintained huge financial profit thought the 1980s till 2000 due to their high market share in Malaysia. But with the launch of an arch rival Perodua in 1993, Proton was about to have a big run for its money and this came to reality in the 2000s. Proton's market share dropped in 2006 to 30.4% for the Malaysian market. Their generated revenue of 7,796 ( Million in Malaysian Ringgit) in 2006 was the second lowest in the last seven years as the company have always hit the billion Ringgit mark in the previous 7 years.

This fall allowed Perodua to overtake Proton as the country's largest passenger carmaker for the first time in history, with a 41.6% market share while Proton fell from 40% in 2005 to 32% in 2006. Their market share continued to reduce down to 23.1% in 2010 mainly due to new government policies. For example, under AFTA, Malaysia has reduced import tariffs, admittedly after having secured a two-year deferral from ASEAN.  Import tariffs on completely built-up (CBU) unites were reduced from a band of 70 – 90 percent to 20 percent at the start of 2005.   Below is the overall market share of major automobile manufacturers in Malaysia.

Source as adapted from: Malaysian-German Chamber of Commerce & Industry (2011)

While the figure might be shocking, it is necessary to note that Proton rolled out its 3 millionth automobile in 2008 (Proton 2012), two years before the figure above. This implies that reduction in market share might not necessary imply reduction in sales as the demand and affordability of automobiles today is much higher than it was in the 1983 when Proton was formed.

 However, it is important to understanding that Proton losing its market share to Perodua, another Malaysian automobile that was formed a decade after full operation of Proton could hint some gaps in their management system. In other to justify these claims, it is necessary to have a look at their in-depth financial performance since the 2000s and how they have coped with loses in relation to their internationalization project.

Figure (10): Proton's Financial Performance

Source as adapted from: Proton (2011)

From the figure above, it can be seen that Proton's revenue continued to drop in 2007 before regaining a grip in 2008, and this drop resulted in 589.5 million Ringgit lose after tax. However, subsequent years yielded more rewarding results in terms of profit generated. On the other hand, Proton's internationalization was not affected as the company has an over 4.2 billion in accumulated revenues carried over each year and such a huge figure will post any business internationalization plan.

8.3.2 FINANCIAL OVERVIEW OF INTERNATIONAL MARKETS

8.3.2.1 China

2010 saw China continue its robust growth in the consumption of automobiles with 18.1 million vehicles sold which is a representative of 33% increase in comparison with the 2009 record. This growth was a result of favorable government incentives, urban economic development and the stimulus package to boost China's economy. This growth is expected to continue for more years ahead due to low motorization rate and China's buoyant economy (Proton, 2011).

Proton have chosen to capitalize on tax saving for locally manufactured cars by changing their dealership agreement with Youngman Automobile Group offered the opportunity to assemble Proton products in China instead of importing fully built cars from Malaysia. Youngman have handled car production for many years and their Hangzhou plant produces the Youngman L5 model which utilizes the modified Gen•2 platform and CamPro CPS engine (Proton, 2011).

Protons sales in china have been boosted with 100 dealers appointed by Youngman Automobile Groups to market the car in China. Since Proton chooses dealership agreement as a means of penetrating into the Chinese market, it reduced the cost associated with FDI as Youngman have to buy their products and resale those under their own brand name. Thus, it ensures more guaranteed profit as Youngman will handle all risks associated with low sales in China.

8.3.2.2 Thailand

Thailand's automobile industry showed a significant increase of 46% in 2010 as compared to the 2009 report. Just like their Chinese counterpart, this remarkable growth is a result of reduction in excise duties for small passenger cars. Subsequently, it resulted in reduction of the price of cars in Thailand and added credit advantage to further persuade customers  (Proton, 2011).

Proton continues its success in Thailand with their strategy of practical result at affordable price. The Proton Exora which was introduced in December 2009 was voted as a Top 10 model by Bangkok Post for the year 2010. Saga FL was also introduced into the Thai market same year. Through its Thailand distributor, Phranakorn Auto Sales Co., Ltd (PAS), Proton has a network of 40 dealers (all 3S outlets) throughout Thailand currently.

Within their three year of operation in Thailand, Proton have been able to establish itself as the number 8 passenger car brand and number 10 of overall TIV in the Thai market. The financial year ended 31 March 2010, saw Proton achieve a remarkable result for FY 2010/11 with 5,615 units exported to Thailand which exceeds the target of 4,060 units. In terms of retail sales, the Proton brand achieved 5,080 units or a 46% increase against the target of 3,488 units. Total sales revenue improved as well and was recorded at RM259.9 million, a 43% increase against the target of RM181.36 million (Proton, 2011).

8.3.2.3 Indonesia

Following the full commencement of PT Proton Edar Indonesia (PT PEI) in 2007 as a wholly owned subsidiary under Proton, the auto-maker has provided the Indonesian market with seven brands to choose from. These brands include Savvy, launched in July 2007 and received 2 Awards for Best City Car from Majalah Mobil Motor and Auto Bild Indonesia; Gen•2 and Neo (launched in 2007), Gen•2 Persona, and Waja (launched July 2007) and the Saga (launched March 2009). Saga won the "2009 Best Budget Sedan", awarded by Indonesia Otomotif Awards. And finally, the Proton Exora which also was launched in 2009 and won the "2011 Best Budget MPV", awarded by Indonesian Otomotif Awards (Proton, 2011).  

On the sales aspect, PT PEI has appointed 17 sales outlet and 30 after-sales service centers through Indonesia, and has established itself as the 12^th top brand in the Indonesian automotive market Chevrolet and Hyundai. For the year ended 2010, Proton was able to increase its growth in the Indonesian market by 23.45% which is a total of 2,060 units sold. The Exora was the best-selling model racking up a mammoth 1, 038 units sold out of the total units sold in 2010.

This continued growth in Indonesian markets point only to the fact that Proton have been successful in ensuring continued improvement and growth. Considering businesses reviews expecting Indonesian market to continue growing, it is expected that if Proton should adopt the right strategies and effectively market their products in Indonesia, they will continue to produce excellent sales results with continued growth of their Indonesian market sales.

8.3.2.4 Singapore

The new car market in Singapore is regulated by the Certificate of Entitlement quota (COE) which is issue by the Land Transport Authority (LTA). Total Industry Volume (TIV) has consistently outgrown the road space development which made the LTA to introduce a drastic change in the formulation of quota supply. This new measure has created a drastic decline of quota supply and as a result, the quota premium (Category A for 1.6L and below) witnessed a jump of 157% (from S$18,502 to S$47,604) within the year 2010 which is a ten year record high (Proton, 2011).

This dramatic change in the price of automobile left numerous brands frustrated with low sales and losses in 2010 and Proton was not an exception. However, the Proton Singapore subsidiary is now focused on redesigning the further with an eye placed on ways to move ahead and ensure sustainability by adjusting themselves to the new rules while persuading customer to make purchase.

8.3.2.5 Australia

In 2010, Australia's automobile sales volume increased by 10.5% compared to the previous year. Improved economic conditions and heavy promotion by industry competitors lead to an overall volume of 1.035 million sales. This result was the second largest volume per annum recorded in Australia's market.

Proton Cars Australia racked a 16.1% increase in sales as a result of the improved trading environment. The main sales increase came from the successful launch of the S16 (Saga) which was tremendously acknowledged by the Australian market. However, with the new entries of Chinese and Indian automobiles due to improved economy of Australia, other auto-maker has been put with the challenges of matching their low price tags.

Proton is not keen on joining in the price cut and has developed new effective ways of promoting its brand for a better successful future. Such strategies adopted include: sponsorship of the West Tigers Rugby League Football team, who qualified for the finals series for the first time in the five-year sponsorship, Proton Australia also continued the Miss Universe Australia pageant association where the winner acts as PROTON's ambassador in Australia, the Australian subsidiary also continued its support for safe driving training program available for Queensland and New South wales students and it also continues overhead reduction through innovation supply chain improvement (Proton, 2011).

These new measure will ensure continued boost for Proton's sales in Australia as it offers them the needed public image of good corporate citizen through their safe driving training for students, create brand awareness through their sponsorship programs, and a good public relationship as the winner of Miss Universe Australia acts as their ambassador.

8.3.2.6 United Kingdom

The UK car market in 2010 was certainly a ball played from two courts. The Total Industry Volume (TIV) saw over 2% growths in 2009 but the increase was entirely due to the strong performance of the fleet/business buyer segment which accounted for over 50% of UK sales.  The retail buyer segment saw a 7% decrease in sales and would have been considerably lower had it not been supported by the government scrappage scheme which ended in the first half of 2010.

High fuel prices and economic factors throng demand for smaller more fuel-efficient cars, with "B" segment (Supermini) vehicles booking for 37% market share and diesel vehicles increasing market share to over 46%. Such an atmosphere saw Proton's UK sales fall by 20% in 2010 compared to the 2009 sales. On the other hand, Proton remains positive with their UK market and is currently designing more ways to cut cost in order to make their vehicles more affordable as a means of increasing their overall sales performance (Proton, 2011).

Based on the financial analyses above, it can easily be seen that while Proton have spent less capital (both financial and human resource) internationalization into the global market as most of their penetrated markets where based on dealership agreements, the company have been able to rack up huge sales and improved growth in all the countries discussed above except for UK and Singapore where the sales where significantly low mainly due to government policies and tough economic situations.

Thus, it is justifiable to say that all money and effort spent on internationalizing Proton into the global market is well spent as further strategies developed to market their products in these markets will ensure improvements in countries they are currently making loses and increase profits in countries they are currently on the green line. Proton surely understanding this whole concept with the development of new ideas and strategies to ensure continued growth for all the respective countries discussed above.

8.4 HUMAN RESOURCE MANAGEMENT

8.4.1 EFFICIENCY THROUGH JAPANIZATION OF PROTON'S HUMAN RESOURCE MANAGEMENT STRATEGIES

Having a life formed through partnership with a Japanese automaker, Proton's human resource management has been influenced in many ways by the Japanese human resource management style and this will be further discussed below.

8.4.1.1 Job classification

At Proton, there are two types of workers: non-executive and executives. Foremen in the production line, executive officers from production and non-production line are classified as executives, while other personnel below this category are classified as non-executives. This is a minimum job classification many big Japanese companies (Milkman 1991; Abo, 1992), including auto makers such as Nissan Motor Manufacturing where all manual tasks are done by only two titles, manufacturing staff and technician.

This form of job classification is applied in Proton (Bratton, 1992). By classifying job positions into just two categories, it ensure easier recruitment of staffs, proper and effective training programs are employees are either in the production and manufacturing unit or in the technical department which requires different skills for different department but similar amongst the undertakings of each departments.

8.4.1.2 Job entries and recruitment process

They are two points of entry in Proton, one for operatives and another one for executives. Both positions target new school or college level graduates. This is an imitation of Japanese automotive manufacturing companies, which specifically recruit young workforces, fresh school graduates who are ready to be uncalculated in the company's strong work ethic that stresses dedicated performance of tasks, discipline, productivity and total commitment to quality of product features (Dore and Sako, 1989).

By recruiting young and enthusiastic staffs, Proton is able to reduce the huge salary associated with the more experienced personnel, while also increase their productivity level through an integrated workforce system that promotes dedicated and selfless services towards maintaining quality and standards of their brand.

8.4.1.3 Human resource education and training

Training and development is considered as a prime responsibility by Japanese companies (Inohara, 1990). The training is a face-to-face interpersonal training acquire through a hands-on-desk approach. The development process for Proton's staffs are not only initiated in the human resource department but also in other departments of concern such as unions, club, the welfare committee, the prayer room committee, and housing apartments association. This is because working is also considered as part of someone's religion within the Malaysian society.

Through the third human resource approach, Proton is able to induct a spirit of dedication in their workforce, as the mostly religious Malaysian see the act of working for them as being of a spiritual commitment to their religion. Thus, this in return ensured continued productivity and low employment turnover with most employees willing to work for the company for the rest of their lives.

8.5 NEW CHALLENGES EQUAL NEW MANAGEMENT

Proton Holdings Berhad appointed John Doody Chacko as their new Director of Marketing in August 2011. Mr. Chacko will oversee the branding, marketing motorsports in a bid to re-stage Proton brand locally and internationally. Chacko is a graduate in Management Studies from the University of Waikato in New Zealand, and is a recognized senior marketing and commercial leader haven worked with multinational companies such as Kraft and Coca Cola across Australia, New Zealand, UK, Africa, Middle East, Latin America and Asia during the past 25 years (MotorTrader, 2011).

Such a bold idea is a reflection of all the points highlighted earlier on that Proton is in no mood of diverging from their quest to be a world power to reckon with, but in so doing they must re-stamp their authority as Malaysia's first choice in terms of market share in order to expand based on the increased revenue generated from home. With his experience and achievements, it can also be argued that Mr. Chacko is the right man for the position and while he is living his dreams of being a part of Malaysia's iconic history making growth in industrialization, he is expected to lead Proton back to where it belongs in the highest rank of Malaysia's largest automobile company.  

9.0 CONCLUSION

Globalization has peeved way for success of numerous enterprises, as many companies who are capable of handling foreign markets have chosen to internationalize due to the more friendly global market presented by numerous economic policies and international agreements between governments of different nations.

The success of Proton is no different as it started as a joint-venture business with Japanese automotive big brother Mitsubishi Motors in the early 1985 and quickly climbed the success ladder due to huge price cuts compared to foreign brands and government's protectionism polices meant to protect local automotive brands.

Proton quickly internationalized into the global market through a distribution and wholly owned subsidiaries, strategic alliance, joint venture and foreign direct investments across the globe. Each chosen strategy was discovered to be a choice based on numerous researches designed to find the most effective and efficient entry mode in the respective market.

Although proton faced numerous setbacks during internationalization, such as the perception of the brand as being low quality and low residual value, changing government policies and huge competitions, Proton was quick to identify this issue and deploy solutions towards finding the right way forward in order to maintain and increase their financial and intellectual benefits.  

In other to ensure consistent productivity and maintenance of their brand quality, Proton has developed numerous human resource management strategies which are closely related to those adopted by Japanese automobile manufacturers. Such strategies includes recruitment of the best and brightest, classification of their job positions into two main categories to ensure efficiency and inculcating dedication through human resource education and training. The company recently hired Mr. Chacko Dooby a renowned marketer who has worked with global brands such as Coca-Cola and Kraft across the globe as their director of marketing with the sole responsibility of rediscovering their domestic market dominance force.

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11.0 APPENDIX 1

Pictures of Proton's car models