Strategy Analysis

...

• PTAC - Proton Technology Advisory Council. Task - timely preparation and risk mitigation of technology acquisition based on the information given by the panels. Purpose -advise and provide recommendation to PROTON on current, future technologies and global automotive directions.

• PTR - PROTON Technology Roadmap serves as a blueprint for the Company in shaping PROTON’s car of the future. It forms an integral part of the decision making process of the technologies that should be acquired so as to remain competitive and profitable in the domestic and global market within a ten year time frame.

• Technology Transfer Proton’s engineers were attracted in Saudi Arabia’s project - Develop the plan of totally automotive development and manufacturing capability. That project was run by King Abdulaziz City for Science and Technology (KACST), an independent scientific organisation in Saudi Arabia. Result: the prototype car was successfully completed by 22 October 2010 and was showcased during the Riyadh Motor Show from 4 – 9 December 2010. Procurement Supply chain.

Strategy Highlight

In 2010 Global Styling – Pahlawan Series Show Car Product Lifecycle Management An aggressive process improvement initiative for managing product developing (build the platform for collaboration and integration of business processes which help PROTON improve operational efficiency, refine product management and eliminate redundant processes.) The Aim: Convince that Company able to produce high quality cars for internal and external markets as well Vehicle Cost Reduction. Company’s main goals for achieve VCR are: 1) Minimise effect of material cost increase to the car price. 2) Consider cost improving activities even at designing stage.

Innovative-Driven Quality: Total Quality Ownership (TQO) Quality Improvement Team Quality Improvement Committee All Innovation Matters (AIM) all programs that were targeted to improve quality affected improving of supplier quality performance by 50%. Within one year QIT represented by 560 employees implemented more than 300 improvements for problems that were provided by customers. The Committee every week discuss, recommend and resolve issues are attended by all operational units Engineering, Group Procurement, Manufacturing, Quality and After Sales Division and chaired by Director of quality for achieve Company’s core values. Plan-Do-Check-Action (PDCA) cycle involve all individuals for innovation activities. It provided Company almost 60.000 suggestions in 2010 which allowed to reduce cost by MYR 50 million.

STRATEGY IMPLEMENTATION

Proton intends to five years to increase its annual output to 500,000 cars Malaysia's DRB-Hicom Group (DRB-Hicom) recently for its Proton cars set a mandatory target requiring Proton 5 years will raise its annual output to 500,000 cars DRB-Hicom Group general manager Datuk Seri Mohd Khamil Jamil said that the export market is very important for Proton cars, which plans to take a series of measures over the next five years, Proton consolidate position in export markets. Proton currently produces about 150,000 cars a year, the company plans to focus on relying on export markets in the next five years will increase its annual output to 500,000 cars. Proton currently sells vehicles in 55 countries worldwide, but its annual export volume of automobile only 20,000.

DRB-Hicom Group will initially targeting markets in Australia and Thailand, Datuk Seri Mohd Khamil Jamil said Proton needs to increase production to reduce the cost and price of each car, in order to promote sales, Proton will need to reduce the price at the same time, improve product quality and delivery efficiency.

In 2004, Mitsubishi sold a 16% stake it held in Proton. Today, Proton is struggling to find a foreign partner to obtain technical support and much-needed capital. "We cannot complete the work independently," Zain said. "We have to find a savvy partner." Proton and Volkswagen have (Volkswagen), Peugeot (Peugeot) negotiated, but persuasion extremely difficult. Malaysia's new car sold only 500,000 years, to focus on developing the market for Indian and Chinese market, foreign carmakers share is small and the cost is not low. Ownership is the key point in the negotiations. ── major shareholder of Proton Malaysia's state investment agency Khazanah company (Khazanah Holdings) is not the control of Proton to sell to a foreign group. However, no outsiders will make a financial and management commitment, without taking control of the situation. Currently Proton Cars is working with China to expand cooperation in own brands Huatai Automobile, and 50-50 in Inner Mongolia Erdos City construction.