The Car Manufacturing Industry in Malaysia - Case Study Example

The Car Manufacturing Industry in Malaysia Name Institution Date Table of Contents Table of Contents 2 The Car Manufacturing Industry in Malaysia 2 Case study: Proton 2 Introduction 2 About Pronton 3 Production Methods 4 Supply Chain Management 6 Branding and Distribution 6 Challenges Faced by Pronton Cars 7 Future Prospects of Pronton 8 Conclusion 8 References 10 The Car Manufacturing Industry in Malaysia Case study: Proton Introduction Car manufacturing industry in Malaysia started in the early 1960s and it has since grown to a huge industry (Business Monitor International Ltd, 2008). This was after Ford which is a major company in the industry began its operations in the country. The growth of the industry has since attracted several manufacturers in the country including the large companies like Toyota which holds about 19% of the market share in Malaysia. The rapid growth of the industry is also attributed to the government support for the sector. The government was actively involved in the industry during the early years as part of the national industrialization process. Pronton which is the largest automobile industry in the country was established in 1983. It has also experienced a lot of growth and development and it occupies a large markets share in the country. The company imports some of the products for manufacturing the automobiles (Datamonitor, 2003). It is also important to note that the company has also put in place growth strategies that have played significant role in stimulating growth. The paper discuses the car manufacturing industry in Malaysia in relation to Pronton which is the largest automobile in Malaysia. About Pronton Pronton is the largest automobile manufacturer in Malaysia and South East Asia. This is because of the growth strategies that have been put in place by the management of the company. Currently, the company occupies 862 000 square meters of space. The company is also a large scale employer in Malaysia and it employs 4,400 people with 2,400 being direct workers. The production capacity of the company is 15,000 per year which translates to about 36 units per hour. A multi model production system has been put in place in the company for the purposes of enhancing the production rate. Four main processes are involved in the production process which is also important in terms of ensuring efficiency within the production process. The first process involves the stamping of the body parts which is usually followed by assembling of the stamped body parts. Painting of the car body shell is the third step while the final assembly is the last process of production. It is also important to note that the company has embraced modern production methods in its operations. All the production process is usually carried out through the use of automation and robots. This has played an important role in terms of increasing the efficiency of the company. The production process in the company is usually carried out in shifts for the purpose of meeting the demands of the customers. The company usually maintains a close relationship with the other stakeholders for the purpose of enhancing the production process (Ahmed, et al, 2008). Production Methods The production methods during the manufacturing process play an important role in terms of meeting the aims and objectives of the company. Pronton has been able to meet its demand due to the use of the just in time method of production. This method is used for the purpose of reducing the wastages during the production process. Cost effectiveness ha also been achieved through the use of the method during the production process. The just in time method of production enables the company to required quantity of parts at the required time (Simpson, et al, 1998). The car parts are usually produced using a minimum amount of labor, human resources and equipment. This plays an important role in terms of reducing wastages which always leads to losses for a company during the manufacturing process. The use of the just in time method of production in the company is also dependant on the relationship with the suppliers. This is also considering that the company is at times faced with difficulties in obtaining some of the required raw materials. The company adopted the just in time method of production as it encourages simplicity during the production process. This method has also played an important role in terms of ensuring that the demands of the customers are met (Rasiah, 2009). A close working relationship with the suppliers has also been established through the use of the production method. The use of the production method however exposes the companies to some weaknesses as it does not solve some of the production problems. The use of technology during the manufacturing process is highly practiced in the company. This is for the purpose of improving on the quality of the cars produced. The use of technology also plays an important role in terms of increasing the efficiency of the production process. On the other hand, it is also important to note that technology plays an important role in terms of increasing the output of the company. Competition in the automobile industry is also high in the market. The use of technology has thus enabled the company to be more competitive through satisfying the needs of the customers. Technology transfer is also regarded highly in the company as it plays an important role in terms of increasing its competitiveness (Wad, 2009). It is for this reason that the company has put in place a vendor development program that is meant to ensure a closer relationship with the vendors. Through the program, the vendors have been able to work closely with the company in terms of technology and they have produced 900 different parts for Pronton. The use of technology in the manufacturing process has enabled the company to achieve the cost reduction objective. The Kanban system of production is also utilized during the production process. This is mainly considering that the just in time method of production cannot be used for all the manufacturing process in the company. However, it is important to note that the company usually utilize the just in time method of production in thirteen of its manufacturing processes (Kaoru, et al, 2009). Supply Chain Management Supply chain management is an important concept in the automobile industry. This is because it determines the ability of the company to meet the goals and objectives of the company in terms of manufacturing. An effective supply chain management requires a long term planning strategies as well as proper communication with the suppliers. The supply chain management at Pronton is efficient due to the good relationship that it has established with the suppliers. This has also played an important role in terms of increasing the competitive advantage of the company. The supply chain management at the company is also important in terms of creating value (Kasim, et al, 2010). Through the efficient supply chain management, the company has been able to link up with the suppliers and the customers. This has contributed to the customer satisfaction as the orders of the customers can be met at the required time. Materials management and logistics is an important component of supply chain management at the company. The company has been able to establish a good relationship with the suppliers through the efficient supply chain management. On the other hand, it is important to note that the supply chain management has led to the development of trust between the company and its suppliers. The employees are also involved in the supply chain management as they are actively involved in the manufacturing process. The company has also put in place an efficient communication process that is useful in terms of strengthening the supply chain management. Branding and Distribution The process of branding and distribution is important in the automobile industry. Branding plays an important role in Pronton in terms of building its public image and hence increasing its competitiveness. Brand awareness is important for the company in the domestic market in terms of ensuring that it is able to attract the domestic customers. The company also builds its brand image for the purpose of enabling it to become a recognized brand in terms of distribution. The company has thus build showrooms in different parts of the country where the customers can view its cars. Anew center of excellence was also constructed by the company for the purpose of serving as a flagship show room. The company also works with capable partners for the purposes of ensuring that it is able to build on its brand image. The strong brand image of the company has enabled it to occupy two thirds of the market share (Sun, et al, 2011). On the other hand, the company has been enlisted in the stock exchange which has played an important role in terms of building its brand in the domestic market. Pronton Edar which is a wholly owned distributor of the company plays an important role in terms of ensuring that the cars of the company can be distributed widely in the market. The distribution process has also seen the products of the company being distributed to all the continents. A strong distribution network of the company has thus continued to its growth and development. Challenges Faced by Pronton Cars One of the major challenges that the company is facing is competition in the domestic market. The markets share of the company in the domestic market has reduced since the year 2007. This has impacted negatively on the revenue generation process by the company. The dwindling profit margins of the company have also presented a challenge. The company suffered losses from the year 2007 to 2010 which had a negative impact on the revenues of the company (Tong, et al 2012). Pronton is also faced with the challenge of paying for the grants that it received from the government. The grants were for the purpose of boosting the financial performance of the company after it suffered from the losses. Competition is also a challenge that the company is facing internally. This is from companies like Toyota that has been able to increase its market share in Malaysia. Other companies are also forming mergers for the purposes of increasing their competitiveness. The company is thus under pressure die to the challenges that it is facing. The performance measurement of the company is also below the global market leader in the automobile industry. This means that the company is still facing challenges in terms of meeting the required standards. Future Prospects of Pronton The company is facing challenges but it is putting in place strategies that will ensure the success of the company in future. The company intends to capitalize on the free bi-lateral trade agreements between Malaysia, India and China. The company is also focused on increasing its share in the domestic market for the purpose of dealing with competition. On the other hand, the company also intends to increase it exports so as to increase its competitiveness in the market. The focus on entering the new markets is also an important strategy of the company in terms of improving on its competitiveness in future. Forming partnerships with other companies in the automobile industry is also a future strategy of the company. This is after it experienced some failures in the past in terms of forming partnerships (Hooi, 2006). The future of the company is however bright due to the good brand image. Conclusion In conclusion, it is evident that Pronton is a competitive company in the automobile industry. The company occupies the largest share of the market in Malaysia and South East Asia. Manufacturing strategies of the company are also efficient in terms of boosting productivity. Jus-in-Time method of production has impacted positively on the company. The supply chain of the company is also efficient which has impacted positively on the growth and development of the company. The company however, faces challenges in terms of the dwindling profits. It is evident that the company will have a bright future due to the strategies that it in putting in place. References Ahmed, Z. et al. (2008). 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