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GSM 5160STRATEGIC MANAGEMENT

Perodua: Improving Customer Satisfaction

through Efficiency focused internal changes GROUP MEMBERS:

HASLINA HASSAN GM05320SHAMINI SELVARAJ GM05289NOR SHAMRI ITHNIN GM05312DR RAIMOND SELKE GM05322

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CONTENT

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•INTRODUCTION

2

•PERODUA BACKGROUND

3

•ASSUMPTIONS

4

•ANALYSIS

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•RECOMMENDATION

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•CONCLUSION

INTRODUCTION

IT TAKES THREE MONTHS FOR CUSTOMERS TO GET THEIR CARS ONCE ORDERS HAVE BEEN PLACED.

WE WILL IDENTIFY AND ADDRESS RELEVANT INTERNAL AND EXTERNAL ISSUES AND TO RESOLVE THIS MATTER ACCORDINGLY.

OBJECTIVE: TO ENSURE THAT THE CUSTOMERS WILL GET THEIR ORDERS WITHIN ONE MONTH ie 50% REDUCTION IN WAITING TIME.

ISSUE!!

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PERODUA BACKGROUND

ESTABLISH

• Perusahaan Otomobil Kedua Sdn Bhd (Perodua) was set-up in 1992

• 2nd national car

GROUPS

• Perodua Manufactu-ring Sdn Bhd (Manufactu-rer)

• Perodua Sales sdn Bhd (Sales & distribution arm)

• Perusahaan Otomobil Kedua Sdn Bhd (Holding co)

CAPITAL

• Authorized: RM500Mil

• and paid-up capital: RM140Mil

PRODUCT

• 5 different products that’s affordable, compact and practical car for growing motoring population.

ASSUMPTIONS

Financial institution has certain limitation on aggregate amount of loan given out to buyers.

About 80% or orders were obtained during month end - rush to register vehicles with local authorities.Computer Systems – the databases between the retailers and production warehouse are not link ie lack of communication between warehouse and retailers.

Inexperience in handling deliveries to places especially in rural areas. No third party service providers are hired.

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BCG MATRIX

MOVING FORWARD

PRE & POST PERODUA POSITION

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TOWS MATRIXTOWS MATRIX Internal Strength

1. Producing compact cars, value for money and affordable price.

2. Excellent reliability and build quality.

3. Impressive standard equipment specification.

4. Fuel saving cars.5. Easy to drift for beginners.6. Suitable for couples.7. Low cost leader in Asia.

Internal Weakness1. Weak distribution system. 2. Low productivity.3. Delay in receiving spare parts.4. Poor or standard design.5. Notorious for low safety standards.6. Excessively dependant on Toyota for

upgrade. 7. Low research and development.8. Not innovative.9. Over dependence on the domestic

market and weak brand image in the international market.

External Opportunities1. Financial market 2. New technology 3. New market as home market is

saturated.4. Increasing fuel price will drive

people to prefer smaller cars. 

SOSO 1. Acquire the core technical

competency to design and manufacture its own automobiles, and eventually propel Malaysia into the international arena as a full-scale manufacturer of motor vehicles.

WOWO 1. Computerized network, which

would link Perodua 's operation starting from getting the order from customer to manufacturing, to invoicing and to prompt delivery.

WO 2. Hire and train people with required technical capabilities and expertise.

WO 3. Invest more on research & development on design, technology and system.

External Threats1. Economic crisis2. Competitor like proton have higher

investment capabilities.3. Competitors can overtake R & D

investment.4. Low cost substitutes being marketed

by Chinese manufacturer.5. Macro-economic situations leads to

lower sales for all automobile manufacturer.

STST 1. innovative advertising and sales

promotion campaign so as to create a 'pull sales‘ environment

ST 2. To maintain low cost leadership and fuel saving car at affordable price.

WTWT 1. Improve customer service through

integrated facilities, which include the setting up of a registration center, a pre-delivery inspection center, customer service center, and delivery center altogether under one roof.

WT 2. More expose to safety hazards.

POOR DISTRIBUTION /DELIVERY

EXTERNAL

INTERNAL

SYSTEM

MARKETSYSTEM

PEOPLE LOCATION MANAGEMENT

Ineffective communication

Bureaucracy Inconsistent

demand patternAgencies involve

Redundance requirement

Loan provider requirement

Lack of trainingIneffective communication

Lack of incentiveLate in

delivery

Poor condition

Limited storage space

Transportation

Lack of efficiency

Conflict situation

Peripheral areaExcess inventory

ISHIKAWA DIAGRAM

GOVERNMENT

Less customer satisfaction

Excessive hierarchy

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No Problem (step 1) Cause (step 2) Score (step 3)

1. Ineffective distribution Late in delivery of cars, Over demand, Insufficient raw material, Ineffective communication, Location

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2. Wrong delivery of cars (specs)

Ineffective communication

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3. Surplus in inventory Late in delivery of cars, Ineffective communication

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4. Increase in customer’s complaints

Late in delivery of cars, Ineffective communication

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PARETO ANALYSIS

* Scores are based on verbal survey done on 30 Perodua clients.

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PARETO ANALYSIS

Causes of poor distribution of cars in PeroduaBy handling ineffective communication having a effective communication, Perodua can solve 80% of problem such as distribution of cars (specs), surplus in inventory and customer’s complaints. One solution (20%) to solve many problems (80%).

Ineffective communication Late in delivery Insufficient raw material Location 0

5

10

15

20

25

30

35

40

45

0

10

20

30

40

50

60

70

80

90

100

No of peopleCumulative %

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IFE MATRIXINTERNAL STRENGTH WEIGHT

(Market)RATING

(Company)WEIGHTED SCORE

1. Strong market player 30% 4 1.20

2. Supplies compact and affordable cars

10% 3 0.30

3. Good reputation and image

6% 3 0.18

4. Excellent reliability and build quality

4% 3 0.12

5. Low cost leader 10% 4 0.40

6. Strong marketing and promotion

4% 3 0.12

INTERNAL WEAKNESSES WEIGHT RATING WEIGHTED SCORE

1. Supply on-time delivery decreased

6% 1 0.06

2. Low productivity 6% 1 0.06

3. Poor or standard design 6% 1 0.06

4. Notorious for low safety standards.

6% 2 0.12

5.Sensitive to oil prices 8% 2 0.16

6. Customer complaint increases

4% 1 0.04

Total 100% 2.82 (internal position)

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EFE MATRIXOPPORTUNITY WEIGHT

(Market)RATING

(Company)WEIGHTED SCORE

1. New technology 15% 4 0.60

2. Supplier from local 10% 4 0.40

3. Newer market favorable of small cars

8% 3 0.24

4. Internationalization 10% 3 0.30

5. Decline in customer loyalty

6% 3 0.18

THREATS WEIGHT RATING WEIGHTED SCORE

1. Competitive price of other brand in the market

15% 3 0.45

2. Decline in customer loyalty

6% 3 0.18

3. Multiple and diverse regulatory environment to contend with from international and domestic

8% 2 0.16

4. Macro-economic situation 10% 3 0.30

5. Low cost substitutes 12% 2 0.24

Total 100% 3.05 (strong external position)

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IE MATRIX

Suggestion – Grow and Build strategy

The strategies should focus on market penetration, market development, and product development. From the operational perspective, a backward integration, forward integration, and horizontal integration should also be considered.

IFE2.82

EFE3.05

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FINANCIAL

CUSTOMER

INTERNAL PROCESS

LEARNING & GROWTH

PIONEER E-COMMERCE IN THE AUTOMOTIVE SECTOR

e- Daftar e- Excise

Electronic data interchange

Entreprene-urial Dev

University /Industry staff Bridging gap

Internship Industry

Advisory Panel

PIONEER THE PROJECT VIA JOINT EFFORT & TECHNOLOGY IMPROVEMENT

INCREASING MARKET SHARES FROM 14% (1995) TO 35% (2020)

Investment

Domestic Direct Investment

Foreign Direct Investment

STRATEGY MAP

SMART PARTNERSHIP

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RECOMMENDATION

1Improve computer mainframe capacity to cope with peaks submission

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4

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Outsource the delivery activities to third party

Negotiation with Local Authorities in expediting car registration

Switch from Batching system submission from outlets to Online vehicle registration to RTD HQ

2Empower organization change via: Online excise duties payment Online vehicle registration to RTD HQ

6MOU with Financial Institutions on the aggregate amount of loans to buyers.

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CONCLUSION

1 We have looked into the issue in the introduction stage – distribution/delivery

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4

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We have identified the causes to the issue by using Ishikawa – cause and effect Diagram

We have done Pareto Analysis and identified that ineffective communication is a major issue for Perodua.

We have looked into EFE and IFE that shows weak internal position while EFE shows strong position to overcome the issue.

2We have studied the BCG Matrix of Perodua - at cash cow quadrant that aimed to be in star.

6We have studied the Strategic Map and Perodua will be able to reach its target market shares if the distribution/delivery issues be handled accordingly.