Proton Case Study

INTRODUCTION

Organization Background

Proton Holdings Berhad (PROTON) is an automobile industry in Malaysia. It headquarterd located at Shah Alam, Selangor. PROTON was established on 7 May 1983 which founded by the 4TH Prime Minister in Malaysia who known as YAB Tun Dr. Mahathir bin Mohamad. The first model of car that produce by PROTON was Proton Saga in September 1995. Proton Holdings Berhad, through its subsidiaries, manufactures, assembles or gather, and sells motor vehicles and common origin product primarily in Malaysia. The main activities of PROTON involved in the distribution, importation and wholesale of motor vehicles and others. The company’s portfolio of PROTON models include SAGA, PERSONA, GEN 2, SAVVY, SATRIA NEO, EXORA, and

Changes in quantity demanded is the quantity demanded for a good or product movement along the demand curve when price of a product changes occur. The factors of changes in the price wouldn’t affect the shift of the curve. If the movement is upwards along the demand curve, this means decrease in quantity demanded (contraction) occur. On the other hand, increase in quantity demanded (expansion) would make the movement is downward along the demand curve.

Therefore, one of the main factor that affect the changes in quantity demanded for a vehicle is the price. To protect the local automobile industry, National Automative launched a policy plans by extracting tax on the exports and imposing tax on imports, so the price of the PROTON cars will at the lower price and consumers are afford to purchase PROTON car.

Figure 1 shows a change in quantity demanded. The factor that causes a change in the quantity demanded is triggered by the vehicles price. The original price is MYR37000 and the quantity demanded is 52,000 unit of vehicles. When the price decreases from MYR37000 to MYR33000 and when other determinants remain the same (ceteris paribus), the quantity demanded will increases from 52,000 unit of vehicles to 78000 unit of vehicles. The movement along the demand curve from MYR37000 and 52,000 unit of vehicles (point A) to MYR33000 and 78,000 unit (point B), this illustrates

For example, a decrease in the price of tyre will cause the demand for PROTON SAGA. Therefore, the demand curve for PROTON SAGA will shift to the left.

Advertising

Advertising is defined as a activity of producing advertisements for commercial product or services that used by the firm to attract more customers. For example, PROTON launched the new third-generation of PROTON SAGA and PROTON advertise the news through the mass media at The STAR. This will cause the demand of the PROTON SAGA increase and the demand curve will shift to the right.

2.4 Price Elasticity of Demand Law of demand tells us that consumers will respond to a price drop by buying more, but it doesn’t mention that how much more. The degree of sensitivity of the quantity demanded due to a change in price measured by the concept of price elasticity of demand. The price elasticity of demand must be negative. The formula of the price elasticity of demand is as below:

Price elasticity of demand (ɛd) = (% Change in Quantity Demanded)/(% Change in Price) ɛd = ((Q"d1" -"Qd0)/Qd0 ×100" )/((P1-P0)/P0×100) ɛd = (Qd1-Qd0)/Qd0 x P0/(P1-P0)

For