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INTRODUCTION
1.0 Company background
Peugeot is a French based car company was found and establish in 1882 by Armand
Peugeot and use a lion as their company trademark. The company has established
itself as one of the world leading automotive manufactures when it comes to high-
end, extraordinary engines. Peugeot was also the first company that came out with
diesel engines 1938 and used these engines in the race course ever since.
The company also produced compact car models such as Peugeot 308 that not only
world smallest diesel engines but also have highly- efficient diesel engines and less in
Co2 release which safe for the environment. In Malaysia, Nasim Sdn. Bhd became the
official distributor for Peugeot in Malaysia and they had launched its first Peugeot
Blue Box in Glenmarie, Shah Alam on Feb 15, 2008. Since then, Nasim has launched
several Peugeot models to the Malaysian market which have picked up numerous
accolades including the New Straits Times and Maybank Car of the Year 2009 award
for the Peugeot 308 Turbo and they currently owns a total network to 34 outlets in
peninsular Malaysia, Sabah and Sarawak.
The company vision is to pursue useful technological innovation that meet all
economic, social and environmental responsibilities, maintain relations, based on
ethical values and trust based dialogue with all partners and its company mission is to
disseminate product and corporate information. As per today, Peugeot Company
ranked at number 14 among its rivals in the world cars industry.
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1.2 Current problem in Peugeot Company in Malaysia
According to Business News dated 15
th
January 2014, it was stated that Peugeot
Company currently facing problem when it comes to keeping up with the supply of its
cars. This is due to the factors that Peugeot Company has an issue regard to their
inventory that resulted in deficits in supply to meets it consumers demand of the car
model. Besides this problem, they still wants to increase its showroom throughout
Malaysia this will make the problem become even worse in the future. In 2014,
Peugeot Company based in Malaysia confident in hitting its 7,000 units cars to be sold
which amounted to RM581 million but eventually in only comes to 6,400 units and
they need to overcome this problem quick because they still do have commitments to
the dealers who had already invested millions of their money in the company.
Malaysia Peugeot also contributes to 85% of total ASEAN sales.











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COMPANY ANALYSIS
2.0 Peugeot Malaysia SWOT Analysis
2.1 Strength
i. Strong growth in customers demand
Peugeot brand in Malaysia since January 2008 and has been steadily growing the
brand to become the best-selling French marque in Malaysia. In addition, Nasim's
rapid nationwide network expansion exercise has resulted in 30 outlets by 2013. These
outlets answer the growing demand for after sales service and provide the best
ownership experience for Peugeot customers in Malaysia.

ii. Central distribution of Peugeot car in Asian country
Malaysia has become a central for distribution of Peugeot car in ASEAN country such
as Vietnam, Thailand and Indonesia. All the demand come from this country will be
cater by Nasims Sdn Bhd.

iii. Well-known car brand
Peugeot is a well-known brand that widely used by customers in the world. Therefore,
these cars already have their own customers. So due to the solid brand image of the
Peugeot Company make customers demand for their car was so high.



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2.2 Weakness
i. Shortage in meeting customers demand
Nasim Sdn Bhd, the sole importer and distributor of Peugeot cars in Malaysia, is
having difficulties meeting its annual sales targets in Malaysia due to overwhelming
demand from worldwide customers. They were having inventory issues, as the
principal couldnt cope with the Malaysian orders. Due to the demand for Peugeot
vehicles has been so strong that Nasim has been having problems keeping up its
supply. According to chief operating officer Datuk Samson Anand George, Peugeot in
Malaysia were targeting to sell 7,000 units in 2013, but eventually only did about
6,400 units.

ii. Heavily depend on the French country to supply car
Mostly high demand Peugeot car model was fully imported from France by Nasim
Sdn Bhd. Therefore, due to this factor, it leads to the shortage in production since they
need to wait in order to get the car form French. In addition, whenever theres an
accident that involved 508 models, the buyer needs to wait for a period of time for the
parts to reach the warehouse because it have to be imported straight from France.






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2.3 Opportunity
i. On-going nationwide network expansion
As part of its aggressive on-going nationwide network expansion exercise, Nasim Sdn
Bhd launched many latest outlets in the country as intends to grow their sales volume.
Therefore, in order to achieve, the focus on sales and after sales network expansion
and the introduction of several new and well positioned models.

ii. Customers demanding for low fuel consumption car
Recently, an increasing in the fuel price gives stress to the customers since fuel can be
considered as the basic expenses that will be spent by the customers. Therefore, as
regard from the increasing in fuel price will positively affect customers expenses. So,
in order to reduce the fuel consumption, customers nowadays tend to buy car that will
provide low fuel consumption. Therefore, with this awareness, Peugeot have come out
with Peugeot car model 3008 that provide low cost fuel consumption to the
customers. This model will provide average fuel consumption in rated at 7.7 liters per
100 km.

iii. Opportunities in India and China
China and India is world well-known country that has high population. Therefore,
Peugeot reinforced its commitment to both these countries by launching Peugeot
Citroen in India and China. High demand for compact vehicle from these countries
would provide an opportunity for the company to diversify its revenues.

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2.4 Threat
i. Rising new material prices
Unstable steel price, hot rolled steel coil price, has become one of the biggest threats
not to Peugeot Company but most of the automotive company. Ongoing industry
consolidation in the steel industry could push prices to higher levels at any time when
the demand grows. This could obviously affect the companys profit margins.

ii. Increasing competition
There is an increasing number of competitors like Ford, BMW, Mercedes and etc in
Malaysia market that Peugeot need to handle with. In addition the growth of Japanese
company such as Toyota, Honda, and Nissan has also threatened Peugeots market
share in Malaysia where they need to keep aggressively doing promotion in order to
maintain and attract customers toward their product.











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PEUGEOTS EXTERNAL ANALYSIS
3.1 PESTEL Analysis
PESTEL analysis is a simple and effective tool used in situation analysis to identify
the key external (macro environment level) forces that might affects an organization,
(Strategic Mangament Inside Online, 2013). The outcome of this analysis is an
understanding of the overall picture surrounding the company.
3.1.1 PESTEL Variation
PEST analysis can be define as an analysis of the political, economic, social and
technological factors in the external environment of an organization, which can affect
its activities and performance, ( Thompson, 2010). PESTEL model involves the
collection and portrayal of information about external factors which have, or may
have, an impact on business, (Rothaermel, 2012)
3.1.2 Political
From the year 1960 to 1971, the countrys economy was dependent on farming and
primary commodities such as rubber and tin. Nowadays, Malaysia is a middle-income
country with a multi-sector economy. The GDP growth rate was 10.6% in 2011 and
12.5% in 2013. Malaysias economic is now depending on industry, agriculture, and
services sector, which contributes nearly 115% to the GDP at 2014. The automobile
parts industry in Malaysia is maintaining the high reputation among their valuable
customers locally and also in other country. The demand for Malaysias automobile
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parts are continually increasing, especially among major automobile companies like
Mercedes, Mazda, Ford, General Motors, Suzuki, Nissan and Mitsubishi. Besides that,
there are 343 automobile parts manufactures in Malaysia. (MSC, 2014).
For Peugeot, they need to follow the Law that had been develop in Malaysia as a
guideline. In order to be competitive, Peugeot need to respond to the new political
structure. For example, repond to government objectives where in 2012, Malaysian
governmnet wants to promote innovation and increase city-fuel economy through
encourage foreign direct investment by open up more investment in fuel efficient
engine, (MIDA, 2014).
3.1.3 Economic
Since 2001, the equity policy for the automobile sector has been relaxed to allow up
to 51% foreign equity on a case by case basis. Besides that, in Malaysia manufacturers
and assemblers are currently free to multi-source from the most competitive suppliers
globally, uninhibited from local content policy requirements (ELM, 2014). Peugeot
need to look into Malaysian tax insentive and also the way to reduce the cost of
operation in order to have an efficient and effective strategy. As refer to Paultan
Online (2013), the upcoming National Automotive Policy (NAP) revision might not
provide significant incentives for the CBU imports. The current full import and excise
duty exemption for hybrids and EVs, initially announced in Budget 2011, will run up
until December 31, 2013 and it is likely to continue beyond that date only for CKD
locally-assembled models. So, Peugeot had decided to increase the production of
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hybrid car in order to take advantge on this economic demand. R&D on engine using
palm oil as alternative to crude oil can be done in order to reduce cost.
3.1.4 Social
The key variables can be the buying habit, attitude towards savings, ethical concern,
average disposible income and so on. Small, large, for profit and nonprofit
organization in all industries are being staggered and challenged by opportunities and
threats arising from those changes. More than 60 percent of the population in Malaysia
is Malays and other is Indians (8 percent) and Chinese (32 percent). Approximately 44
percent from the total population is consider to be trained or skilled workers with basic
qualifications or higher. Malaysians employees work a minimum of 48-hours per
week and also have more holidays compared with China. Until now, the labors costs
are still relatively standard compare with other countries in Asia, including Vietnam
and China. In addition, Malaysians salary can be divided into two types: one is
monthly minimum wages and the other is average wage for an employee in the
manufacturing industry (Kiat, 2012). Peugeot had implement a good action to produce
more sport cars and family cars due to Malaysian sosial culture.
3.1.5 Technology
Technological forces represent major opportunity and threats that must be considered
in formulating strategies. Malaysias infrastructure is good and presents considerable
benefits to automobile supply chain operation. Malaysia has 80,328-km road network,
highways, and main roads. This mode of transport represents 90% of the goods and
passengers traffic in Malaysia. In addition, Malaysia has rail network of more than
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2,000 km, mainly located in Kuala Lumpur and along the coast of the Strait of
Malacca. The railway service in Malaysia is continuously improving by the
government such as KTM and LRT. Besides that, there are three main ports and two
airports in Malaysia currently growing in terms of exports such as KLIA and LCCT. (
Kiat, 2008 ).

3.1.6 Environment
Environment friendly is the major challenges to automotive industry. Another
variables could be the attitude towards supporting the renewable energy, attitude
towards green or ecological products and air and water pollution. Other than that,
increasing awareness of global warning, greenhouse effect and burnout among patrons
(organization, 2008) would Shift in consumers tastes and preferences towards use of
more eco-friendly cars, hybrid cars, fuel cell cars and others. Towards this concern,
Peugeot need to consider on the environmental impacts since lower oxygen emission
had become buzzwords for car manufacturer. Peugeot had come out with Citroen C-
ZERO and Hybrid-4 to meet the environmental friendly. In addition to the
development of electric and hybrid vehicles, the Group is also pursuing every strategy
that allows CO2 emissions to be significantly reduced. Examples include more
compact and less polluting engines, diesel engines fitted with the new Blue HDi
pollution control line that cuts emissions of particles and nitrogen oxides, more
efficient gearboxes and others. All these initiatives enable PSA Peugeot Citron to
offer a complete range of mobility solutions suited to its customers needs and budgets
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3.1.7 Legal
Malaysia restricted towards pollution and the laws and rules are used to prevent
environment from unbalancing and damaging. The responsibility and the safety of the
vehicle is the prior concern. Peugeot need to cope with the law that had been ruled out.
Legal forces variables such as discrimination law, anti-trust law, intellectual property
law, safety law and others. The regulatory bodies that responsible towards
implementing the legal forces relates to automotive industry are JPJ (Malaysian Road
Transport Department), MiTi (Ministry of international Trade and Industry) and
Puspakom. Peugeot need to make sure that the car or any vehicles that being produce
was approved before it can be sell to the market.









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STRATEGY
4.0 Current Strategies
Peugeot have been implementing several strategies which are integration strategy and
intensive strategy. These two strategies were normally used by company to reduce cost
and to stay competitive in the automobile industry.

4.1 Vertical Integration Strategy
Due to the fact there is high rivalry between others car brand, vertical integration
strategy was used to seize ownership and taking control of supplier and distributor.
Forward integration and backward integration were spotted to be the integration
strategy used by Peugeot. In the case study, Peugeot seem to be successfully operating
this strategy as many sales outlets were available around the region in order to support
the distribution activity. In Malaysia, there are 22 sales outlets and 18 after-sales
outlets. Other than relying on the distrbuter

4.2 Intensive Strategy






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CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
This chapter concludes the present study regards Peugeot Company. It presents conclusion
and recommendation for future researchers benefit.
5.1 Conclusion
Based on the vertical integration strategy implemented by Peugeot Company, we can see
that 408 model needs a large amount of money in its investment as a result of assembly
cost that the company needs to burden of and they claims the parts locally, mainly from
Gurun Kedah. In addition, 408 models that were assembled in Malaysia provide the
buyers with 5 years or 10,000KM free service as whichever comes first.
On the other hand, if we compared to 508 models which relatively marketed at slightly
higher price than 408 models, it was the model that fully imported from France. Due to
this factor, buyer needs to pay for car tax, immigration as well as shipping cost to bring
the car here in Malaysia. Whenever theres an accident that involved 508 models, the
buyer needs to wait for a period of time for the parts to reach the warehouse because it
have to be imported straight from France.
This is to ensure the originality, genuine as well as only high- quality product only used
for the models in order to guarantee its exclusivity. This vertical strategy that was
implemented by the company was not really successful because it cant fulfill the
company demands.
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5.2 Recommendations
Based on the data that the researchers had gathered in the study, the researchers already
came out with several recommendations for Peugeot Company action in the future. As
sole distributors in Malaysia as well as Asean countries, Peugeot Company should have its
own plant for assembly of the models that do have high demand whether locally or
internationally. This is vital in order for the company to keep on supporting its branches
throughout Malaysia and also sustain its existence in the future.
As a sole distributer for Peugeot in Malaysia, Nasim Sdn. Bhd. must keep supporting its
branches entire Malaysia as well its dealers. They can achieve this by conduct meeting
periodically with all head branch and dealer for strategic planning and evaluation.











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References

Thompson, J(2010). Strategic Management: Awareness & Change. 6th ed. Cengage Learning
EMEA, p. 86-88, 816
Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases. McGraw-Hill/Irwin, p.
56-61
Official Website of Peugeot Malaysia Company. Retrieved at: http://www.peugeot.com.my/