Perodua - Csr

Topics: Advertising, Social responsibility, Corporate social responsibility Pages: 7 (1860 words) Published: August 27, 2013
Perodua – Advertising with social dimension

Executive Summary

Perodua was set up as a national car project in the year 1993. In the initial years of its inception the company operated in a protected environment marked by both tariff and non-tariff barriers. By the year 1998 leveraging on its high local sourcing strategy the company, along with Proton, managed to capture up to 90% market share.

In 2001 the company set up a joint venture with Daihatsu Motor Co. and Mitsui & Co., the Japanese partners being responsible for manufacturing and engineering operations. Operating in an open economy post AFTA in year 2006, Perodua has found its niche in the small car segment and completely dominates the sub-1000 cc motor vehicle segment.

Perodua has been extensively using “cause related marketing approach” treating Government, suppliers and dealers, employees and customers as stakeholders in its business. It also has 2 different kinds of ad programs, product ads promote individual brands, whereas corporate ads carry social message and promote the company. 2 different departments handle the designing and positioning of these different ad types.

There are obvious benefits to using corporate ads with emotional appeal; studies have established that companies tend to realize enhanced relationship with their agencies. However on the flipside designing these ad campaigns is very complicated as sensibilities of all sections of the society have to be taken into consideration.

A major downside to Perodua’s corporate ad campaign is that no evaluation model has been adopted to measure the effect of such advertising on company’s short term goal i.e sales or long term goal of being a responsible corporate citizen. The company should immediately adopt both qualitative and quantitative measures to understand the benefit of its campaign. Depending on results obtained Perodua can decide on how to continue with its corporate ad campaign.

Industry Overview

The 80s and the 90s were the decades of “Industrial Nationalism” in Malaysia and the Government set up the national automotive programme. Prior to 1985 Malaysia was an importer of automobiles and the aim of the programme was to build a nationally owned and controlled automotive industry.

Proton was the first of the 2 national cars and was established in 1985. It was a joint venture between HICOM, Mitubishi Motor Corporation and Mitsubishi Corporation. Perusahaan Otomobil Kedua Sdn Bhd (Perodua) was established in 1993 and was the 2nd National car project. The Government also established a heavy vehicle company “Malaysian Bus and Truck (MTB) in 1994, a motorcycle manufacturer “MODENAS” in 1995 and a light commercial vehicle manufacturer “INOKOM” in 1997.

In order to protect the domestic industry the Malaysian Government imposed substantial import duty on all completely built-up imported cars or completely knocked down vehicles. Apart from the import duties, non-tariff barriers such as licensing and import quotas were also enforced. The 1980 “Mandatory Deletion Programme” (MDP) made local sourcing of components, between 45-60%, compulsory depending on the cubic capacity of the car.

In 2005-06 under the Common Effective Preferential Tariff (CEPT) scheme Malaysia was required to dismantle both tariff and non-tariff barriers. The applicable CEPT rate depending on the country of origination is shown below:

The most obvious consequence of implementing the CEPT for Malaysia’s car producer is the minimization of protective automotive policy and disappearance of price advantage. This will open up the market for greater competition from companies from other ASEAN countries like Japan and South Korea which are major automobile producers in the region. (see Exhibit 1 for breakup of vehicles produced and assembled in Malaysia)

Perodua – A background

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) was established in 1993, this was the second national car project...
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