PEST growth of the company. But the ability

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PEST analysis refers to political, economic, social
and Technology. It is important and necessary to implement in a company. PEST
analysis can understand the positive and negative impact towards the business.
The environment and the technology keep changing and it cause Perodua to think
carefully and make decision faster. It is the long term planning that all the
organization has to consider with.



Our country is currently undergoing a major
transformation due to the current economic slowdown. The company must prepare
themselves to face with whatever challenges that may arise due to political
uncertainties. This segment also relates to how organizations try to influence
government and how government entities influence them. Perodua company has the
potential to become a major contributor to gross domestic product, employment,
technology upgrading, and foreign exchange earner. But with this economic
slowdown, the ability of the government to continue its support of the Perodua
company is greatly in doubts. The tight credit squeezing by the financial
institutions due to declining liquidity and the subsequent reduction in the
purchasing power on the buyers have affected the company.

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            The deteriorating fundamentals of
Malaysia characterized by the instability of ringgit, lack of confidence in
overall economies, up-surging inflationary pressures, inadequate corporate
governance, lack of transparency and weakened financial system are becoming
great challenges to the Perodua company in at least few years to come. Due to
the heavy reliance on imported raw materials and finished good, the company is
hit by escalating inflation.          Furthermore,
the increasing interest rate has also asserted pressure on the operating cost
of business and therefore further aggravate the inflationary pressure. Prices
of vehicles will not be spared from this effect as the prices are expected to
go up further by another 50% to 60%. This will reduce the demand of the automobiles
in the already shrinking market due to credit squeeze, declining wages, and
increasing unemployment.

            Moreover, supply of fuel and
electricity is abundant, and is supported by a well-established delivery system
in this country. This could provide a further incentive to motivate the growth
of the company. But the ability of the related utility agencies and companies
to maintain a dependable and reliable source of supply will be another
challenge confronting the company in the years to come.


Work force in Perodua company has enjoyed a vibrant
labor market over the past eight years when the economy was booming. Wages were
under pressure for upward adjustment which unfortunately was not correlated to
the improvement in productivity. Furthermore, the volatile labor market has
prevented management from implementing process re-engineering as the employees
would threaten the management with resignation should the pressure for changes
in attitude, role or productivity deemed too high. In addition, there is
resistance to change from the management itself. The company need to stave off
this challenge of implementing changes so that the workers will realize that
the company is facing economic slowdown. Thus, the need for them to increase
productivity and reduce costs.


In the local company, there is still an apparent lack
of local technological innovation in the manufacturing of component, parts and
technological capabilities in product design and engineering. The manufacturing
capabilities of the sector are yet to be fully developed to support the
domestic and overseas market.

As far as the company is concerned, the increasing
rate of technological change and diffusion is tremendous. The shorter product
life cycle especially the newer models introduced due to ever increasing rapid
diffusion of new technologies place a competitive premium on being able to
quickly introduce new goods and services into marketplace. For example, a few
years ago the models of 2.0L were considered the best at that time. But today, this
model has slowly been replaced by a newest and latest model of higher capacity
of 3.0L. Therefore, it is becoming extremely important for Perodua company in
Malaysia to be able to adopt newer technology in every facet of their operation,
be it new product development or customer service are.

In customer service care, investments in information
technology, computerization and technological advances for better services are
critically important. For instance, using a fully integrated computerization
machinery to inspect and service an automobile can reduce greatly customer
waiting time and thus better service in the eyes of the buyers.



            Intensive competition is becoming
more and more synonymous with the company of Perodua in Malaysia. Although the
number of players in the company is not that many, the intensity of competition
is immense and stiff. Therefore, for a local company to survive in this ever
changing condition of competition in the local scenario and the inevitable
incoming of intensive competition, the strategy of globalization is imminent. The
players of local company are lacking in their ability to successfully formulate
and implement value creating strategy. Instead, they are more concerned with
short term results in gaining immediate sales using various sales and marketing
strategies, often at the expense long terms results which are always critically
more important strategically. For our national company to compete
internationally, it is necessary to have a close linkage among major global
automobile manufacturers through capital investment and business collaboration.


            With the advancement of information
technology, consumers are changing their expectation, taste and preferences in
new product development faster than before. Furthermore, consumers as well as
government are more demanding in terms of product safety requirement,
environmental friendliness and speed in styling changes. This pose a serious
threat to the Perodua company especially when it is not well equipped with the
necessary facilities, management skills, creativity to response quickly to this
new competition and market’s needs. For example, consumers nowadays demand
additional safety features in their automobiles such as airbags, anti-brake
system and protected windscreen which do not shatter easily. Unfortunately, the
local producers do not have the ability and know how to produce these parts.
Therefore one of the challenges faced by the company is to keep abreast with
the changing needs and preferences of these customers and at the same time
attempt to acquire the knowledge transfer to manufacture locally at lower


3.4 SWOT Analysis

1. Established in 1992
& total employee strength of 10000 employees
2. Malaysia’s second
largest automobile manufacturer after Proton Cars
3. Among largest small
car manufacturers in Asia
4. Indirectly linked to
Toyota which gives an image of Japanese association

1.They are notorious for low safety standards due to
their design
2.They are excessively dependent on Toyota for
3.A local Malaysian player thus currently limited

1.They should look at newer markets as their home
markets are getting saturated
2.Increasing fuel prices will drive people to prefer
smaller cars, thus Perodua will benefit from the change
3.It can look at newer markets which are favourable
for small cars

1.Competitors like
Proton Cars have higher investment capabilities thus can overtake in terms of
R&D investments
2. Low cost substitutes being marketed by
Chinese manufacturers
3. The macro-economic situations are leading
to lower sales for all automobile manufacturers


Categories: Management


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