BPME 6093 ENTREPRENEURSHIP DEVELOPMENT

EVOLUTION OF GREAT COMPANY

MODENAS (MOTORCYLE & ENGINE NATIONAL)

• Analyze Modenas business opportunity based on Barringer and Ireland’s for

essential qualities of an opportunity
• What are the primary factors that you believe most significantly contributed to
company becoming a great company? You must identify what you consider to be
the main factor.
• How this company attain its today’s achievement? Why have they endured?
• How would you compare the founder(s) of this company with the founders of
other companies, either international or local well known companies that you are
familiar with?
• What lesson do you draw from the evolution of this company that you apply to
your own business career?
REASON WHY WE CHOOSE MODENAS AS OUR ASSESSMENT FOR THE
TERM PAPER ASSIGNMENT.

Motosikal Dan Enjin Nasional Sdn. Bhd (MODENAS) has been chosen since
it is one the Malaysian great company. MODENAS was established in tandem
with Malaysia's efforts to achieve industrialized nation status, now
ubiquitously known as Vision 2020. MODENAS, one of the companies that
were created under the national automotive project undertook the
responsibility to acquire the technology to manufacture and produce
motorcycles, scooters and small application engines.

DRB-HICOM Berhad, the nation’s automotive conglomerate, was given the

task to head the project and with an investment of RM400 million, the
MODENAS project was one of the fastest completed projects in the DRB-
HICOM stable of companies. MODENAS' achievements, from the first day
the idea was mooted until the day the first model was introduced to the local
market and then to the international market, were achieved through the sheer
dedication and hard work of the management team and all the staff of
MODENAS. MODENAS motorcycles are distributed by its wholly-owned
subsidiary, EDARAN MODENAS SDN. BHD.(EMOS).

DRB-HICOM Berhad, the nation’s automotive conglomerate, was given the

task to head the project and with an investment of RM400 million, the
MODENAS project was one of the fastest completed projects in the DRB-
HICOM stable of companies. MODENAS' achievements, from the first day
the idea was mooted until the day the first model was introduced to the local
market and then to the international market, were achieved through the sheer
dedication and hard work of the management team and all the staff of
MODENAS. MODENAS motorcycles are distributed by its wholly-owned
subsidiary, EDARAN MODENAS SDN. BHD.(EMOS).
ANALYSE BUSINESS OPPORTUNITY BASED ON BARRINGER AND
IRELAND:

According to Barringer and Ireland’s, there are four essential qualities of an

opportunity. It is attractive, durable, timely and anchored in a product, service or
business that creates or adds value for its buyer or end user. Basically, the entrepreneurial
opportunity is a situation in which a person can exploit a new business idea that has
the potential to generate a profit. Baron & Shane identify that opportunities generally
arise from two major sources, the information people have that helps them to recognize
new business opportunity and changes in the external world that generate opportunity.

In analyzing MODENAS’s business opportunity referring to the Barringer and Ireland’s

four essential qualities of an opportunity, MODENAS is very ‘timely’ project where it
is in tandem with Malaysia's efforts to achieve industrialized nation by 2020.
It can also been recognize as the business opportunity that are related to
changes in external world. For MODENAS, at that particular moment, there
were changes in government’s plan in adding national automotive project.
MODENAS was mooted by YAB Tun DR Mahathir Mohamad as he can
barely see that MODENAS could success under national automotive project.
At that moment, Malaysia just launches our nation car producer, PROTON for
several years and it is the time to manufacture and produce motorcycles,
scooters and small application engines.

MODENAS is also a durable project where the company is under the national
automotive project. Government has taken an initiative to produce national
motorcycle project after a success of Malaysian national automotive
manufacturer, PROTON. It is also an advantage for MODENAS to be headed
by DRB-HICOM, a successful conglomerate in Malaysia. Part of that, 19% of
the MODENAS shares were owned by Kawasaki Heavy Industries, a
reputable world-class motorcycle manufacturer and are instrumental as the
technology partner for MODENAS.

The third essential quality in Barringer and Ireland’s opportunity is

attractive. In this context, attractive could be understood as new business
ventures that have qualities that can be accepted by the market. In this
context, it is referring to MODENAS specialty in being the national one and
only motorcycles, scooters and small application engines manufacturer and
producer. It took lots of effort spend and wisdom gained in producing this
national brand.

The last quality in opportunity is an opportunity that seems to be an adds

value for its buyer or end user. In achieving this quality, MODENAS is trying
to be the motorcycle manufacturer who producing products and services that
consistently meets customer satisfaction. It seems to be achieved when
Modenas Kriss becoming the best-selling motorcycle model in Malaysia, and
nowadays, MODENAS is manufacturing and producing motorcycle not only
for Malaysia but are exporting to 14 countries around the world with Greece
being the largest importer.

PRIMARY FACTORS THAT MOST SIGNIFICANTLY CONTRIBUTE TO

MODENAS TO BE A GREAT MALAYSIA COMPANY.

There are three factors that contribute to MODENAS to be a great company:

• Research and Development strategy (R & D)
• Strong marketing team
• After sales
R & D Strategy.
Modenas has five divisions, R&D is one of them. The other four are Corporate Services,
Corporate Planning, Sales & Marketing and After Sales. R&D plays an important role in
assist company to produce products that correspond to market needs.
Modenas continues to do the R&D and come out with new model of motorcycle to cope
with the market demands and to stay competitive in the industry.
Its R&D strategy involves cooperation from government organizations and academic
entities.
The process of R&D consists of:
• Prototyping
• Reliability
• Engine Dynamometer
• Endurance
• Engine Performance
• Body and Chassis Design

Strong Marketing Team

Modenas started its productions in 1996 and amazingly sales began within a month.
Within a year, Modenas are top seller in the country. Today several models are exported
to more than 14 countries. Modenas motorcycle and scooters are distributed by a wholly
owned subsidiary, EMOS (Edaran Modenas Sdn.Bhd).

After Sales.
Modenas Authorized Services Dealers (MASD), with 200 dealer network is responsible
to facilitate and supports servicing and settlement of warranty claims.

The main factor:

The three primary factors are believe to be the most significant contribution to Modenas
to be a great company. R&D strategy is the main factors to all this contributions.
According to its Chief Executives Officer, Mr. Abdul Harith Abdul Rahman:
“During three year period of planning, Modenas carried out strong research and
development(R&D) to come up with more sophisticated models to replace the old
models.”
This plan will help Modenas increase its market share of motorcycles in the country to
18% with the introduction of several new models this year, 2010.

HOW DID THIS COMPANY ATTAIN IT’S TODAY ACHIEVEMENT? WHY

HAVE THEY ENDURED?

MODENAS one of the companies that was created under the national automotive project
undertook the responsibility to acquire the technology to manufacture and produce
motorcycles, scooter and small multi – application engines. How did this company attain
it’s today achievement because of a clear and achievable vision, mission, value and
quality policy. For example, the company’s vision is to be a competitive world class
motorcycle and engine manufacturer in Asian Region and MODENAS has already
achieved it as MODENAS is exporting the products to over 14 countries around the
world.

Other strength that keep MODENAS to still be in the market is MODENAS motorcycles
and scooter distributed by a wholly owned subsidiary, Edaran Modenas Sdn . Bhd.
(EMOS). EMOS has a strong marketing team is actively promoting its products in
building market awareness and sustaining campaign visibility in a competitive market
environment. MODENAS is strong with comparable specifications, competitive pricing,
excellent marketing, and excellent after sales service. MODENAS is geared towards
doing the leading motorcycle brand in Malaysia. MODENAS has a good position in
export market. MODENAS export program started early October 1997, just after its
domestics sales began. First consignment of Modenas ‘kriss’ was exported to Cambodia.
However today, it is available in 14 countries, including Greece, Iran, Turkey, South
Africa, Sri Lanka, Argentina, Mauritius, Malta, Vietnam, Singapore, Brunei, Indonesia
and Albania. Its export market presently contributes to 10% of its total production.
Modenas need to endured because this company have a own strength and YAB Tun
Mahathir Mohamad wants Modenas to be a competitive world – class motorcycle and
engine manufacturer in the ASEAN Region.

Another reason why MODENAS is still in the market is they are doing continuous
research and development (R&D), so they could produce a high quality product, as stated
in their mission. For many year MODENAS has devoted a substantial proportion at its
resources to research and development (R & D) and developing products that correspond
to market needs. This in addition to satisfying customers demand has also propelled its
market share in the industry.

HOW WOULD YOU COMPARE THE FOUNDER(S) OF THIS COMPANY

WITH THE FOUNDERS OF OTHER COMPANIES, EITHER
INTERNATIONAL OR LOCAL WELL KNOWN COMPANIES THAT YOU ARE
FAMILIAR WITH?

Founder of MODENAS
The idea of creating MODENAS was came from our former Prime Minister, YAB Tun
Mahathir bin Mohamad. It is due to the vision of the nation to become industrialized by
the year 2020. Therefore, the nation’s automotive conglomerate, DRB-HICOM Berhad
was given the task to head this project.
MODENAS values the experience of its development because each accomplishment
represents the effort spent and wisdom gained which brings with it gratification and
honor. Only by learning will MODENAS continue to growth.
Tun Mahathir bin Mohamad born 10 July 1925 is a retired Malaysian political figure. He
was the fourth Prime Minister of Malaysia. He held the post for 22 years from 1981 to
2003, making him Malaysia's longest-serving Prime Minister, and one of the longest-
serving leaders in Asia. During his term in office, he was credited for engineering
Malaysia's rapid modernization. Compared to Honda’s founders, Tun is a well known
person during introducing this brand. Meanwhile, Honda is started as a mechanic at a
Japanese tuning shot named Art Shokai.
During his term in office, Tun Mahathir turned Malaysia into a regional high-tech
manufacturing, financial, and telecommunications hub through his economic policies
based on corporate nationalism, known as the various "Malaysia Plans" which set out the
government middle-term objectives. These policies with strong Keynesian tendency
remained in effect almost to the end of his tenure in office. His pet projects have included
Perwaja Steel, an attempt to emulate South Korea and Japan, the Proton car company,
and Astro, a satellite television service. Tun Mahathir is credited with spearheading the
phenomenal growth of the Malaysian economy, now one of the largest in Southeast Asia.
Growth between 1988 and 1997 averaged over ten percent and living standards rose
twentyfold, with poverty relatively almost eradicated and social indicators such as
literacy levels and infant mortality rates becoming almost on par with developed
countries. During this period, Tun Mahathir embarked on various large scale national
projects, such as the North-South Expressway, Multimedia Super Corridor, the planned
capital city of Putrajaya, Johor's Port of Tanjung Pelepas, Kuala Lumpur International
Airport, the Bakun Dam in Sarawak, and the Petronas Towers.

Founders of HONDA
Honda Motor Company, Ltd. is a Japanese multinational corporation primarily known as a
manufacturer of automobiles and motorcycles. From a young age, Honda's founder, Soichiro
Honda had a great interest in automobiles. A self-taught engineer, he later worked on a piston
design which he hoped to sell to Toyota. The first drafts of his design were rejected, and Soichiro
worked painstakingly to perfect the design, even going back to school and pawning his wife's
jewelry for collateral. Eventually, he won a contract with Toyota and built a factory to construct
pistons for them, which was destroyed in an earthquake. Due to a gas shortage during World War
II, Honda was unable to use his car, and his novel idea of attaching a small engine to his bicycle
attracted much curiosity. He then established the Honda Technical Research Institute in
Hamamatsu, Japan, to develop and produce small 2-cycle motorbike engines. Calling upon
18,000 bicycle shop owners across Japan to take part in revitalizing a nation torn apart by war,
Soichiro received enough capital to engineer his first motorcycle, the Honda Cub. This marked
the beginning of Honda Motor Company, who would grow a short time later to be the world's
largest manufacturer of motorcycles by 1964.
Honda's official slogan is "The Power of Dreams". They have never used this slogan to sell their
products. Mr. Honda's belief is that well built products will sell themselves. During the 1960s,
when it was a small manufacturer, Honda broke out of the Japanese motorcycle market and began
exporting to the US. Honda subsequently had huge success in the US and around the world due to
selling a very high scale of production in order to benefit from economies of scale and learning
curve effects. Besides, Honda’s success was due to the adaptability and hard work of its staff,
rather than any long term strategy.
In Malaysia, the founder of HONDA is Tan Sri Dato' Loh Boon Siew (1915-1995) also
known as “Mr Honda”, was a Penangite tycoon and the first sole distributor of Honda
motorcycles in Malaysia. Boon Siew was born in Hui-An, Fujian province of China. He
spent his childhood collecting pig dung (then used as fuel) to make a living. At age 12, he
arrived in Penang in a small boat from China and had virtually no formal education. He
worked as an apprentice car mechanic, which earning three dollars monthly upon his
arrival. It is said that Boon Siew's sifu used to hit him in the head whenever he did
something wrong.
This highly accomplished self-made man already had a wide range of successful
enterprises under his belt then, but his true passions were in motoring. At age 18, Boon
Siew purchased 11 buses using his $2,000 in savings. He reconditioned the buses and
sold them for $12,000. Next, he used the money he earned to buy another 39 buses. In
1942, during WWII, all his hard-earned money was confiscated by the invading Japanese
army. But Boon Siew did not give up. After WWII ended in 1945 and the Japanese were
defeated, he started selling bicycles, tyres and motorcycle accessories, and soon he
expanded his business to used cars, transports and buses.
In 1958, Boon Siew noticed the widespread popularity of the Honda Super Cub
motorbike which was just introduced in Japan. He believed that this low-cost, high-
efficiency machine would find a similarly receptive market in the rapidly urbanizing
areas of Malaysia. Boon Siew arranged to meet with Mr. Soichiro Honda, the bike's
creator, and quickly convinced him to set up a Honda subsidiary in Malaysia.
As a sign of their deepening bond of trust and respect, the Japanese Honda Motor Co Ltd
soon appointed Boon Siew the sole distributor for Honda motorbikes in the country just
as the historic first 50 units of Honda 4-stroke cub were being imported into Malaysia. A
factory was built in Penang to assemble the Honda Cub and the Honda motorcycle
assembled in Malaysia was renamed the Boon Siew Honda.
Boon Siew was recognized as the first person to bring the Honda Cub motorcycles into
Southeast Asia. The popular Cantonese word Cub 仔, which means "small (Honda) Cub"
and is now a generic for small underbone motorcycles in Malaysia, originates from the
Honda Cub. Boon Siew also played a role in the brief merger between Kwong Wah Yit
Poh and The Star (Malaysia) in 1974, and among his many charitable causes or deeds
was the establishment of the Lam Wah Ee Hospital and the Penang Old Folks Home.

GOODS THINGS TO LEARN AND APPLY FOR THE BUSINESS

Our group point of view is that, all those founders are very determinant persons. They
have a forward thinking about the opportunities in this business industry. These
companies have become a national manufacturer in motorcycles. Besides, even though
we did not have enough education to run the business, it is not important. The key point
is we are interested and very keen to create something new or innovate of product. We
must come out with the ideas that other people cannot see them. Furthermore, we must
work hard in getting the ideas become reality. It is not too easy. We must not give up and
always make a continuous improvement in order to achieve the company’s goal and also
be a market leader.
We should learn from the founders where there is no easy way to succeed. Even to Tun
Mahathir himself, he had been critiqued by people when he came out with a new
innovation or idea. But, he never gives up and eventually, it shows that he is no wrong at
all. It is same goes to Soichiro Honda where the first drafts of his design of piston were
rejected. However, due to a high determination he worked painstakingly to perfect the
design, even going back to school and pawning his wife’s jewelers for collateral.
The two factors that business company can apply to be successful like MODENAS

1. Company should has own R&D department. This R&D has to consistently follow
up with market trend and focus to produce products that are good in quality and
fulfill consumer needs and wants

2. In order to get through any circumstances such as economy slow down, company
need to have plans so that it will sustained in the industry and gain its market
share.
References

Online documents:
http//www.kereta.info/modenas-new-model-of motorcycle
http//www.bernama.com
http//www.modenas.com.my