Tesla Inc. Business Report
Tesla Inc. is the leading manufacturer of electrically-propelled cars in the world. The United States-based firm integrates modern technology to drive its manufacturing approach. Driven by the demand for high-end, greener cars, automotive manufacturers have managed to avail various models of their products. Each subsequent production phase is more customer-centric by integrating consumer demands into its output (Motors, 2015). The company has segmented its production phases into various which combine towards producing electric cars. These segments include; design, development, manufacturing, marketing and sales, quality assurance, and regulatory or oversight bodies (Physics Today, 2015). These segments combine to establish efficiency and effectiveness in business operations.
The automotive manufacturer has a mission statement guiding its operations and focuses on addressing the shift from the traditional manufacturing approach to the current strategies that have concerns about the future in its core values. The mission reads, “accelerate the world’s transition to sustainable energy.” In the quench to establish future sustainability, the company has focused on producing electric vehicles that are fewer pollutants compared to fossil-fueled cars. The mission statement focuses on guiding the production of vehicles in the industry and ensuring the production approach is aligned with the United Nations (UN) Sustainable Development Goals (SDGs), which focus on mitigating incidences of ecological degradation. By integrating this approach, the company has witnessed a massive contribution towards transitioning the production and establishment of sustainability through advocacy for greener energy consumption.
Elon Musk, the company CEO, has outlined his future objectives for the company, with the core focus being to increase the market share hence increasing revenue generation in the business. The company is focused on growing its annual vehicle production output to a yearly production of roughly 20 million production units. The increase in production will demand an equal expansion in the market for the products. In this aspect, the company will undertake rigorous marketing to inform the consumers about their products and the ability to meet their demands. The first phase of increasing the company’s annual production has been achieved by developing a mega-production plant in China (Cooke, 2020). The establishment of overseas production plants serves two general purposes, to reduce the cost of production by establishing manufacturing plants in locations where factors of production are easily accessible and cheaper. This increases the market for the product. The production of these cars will be guided by technology integration to facilitate the availability of outstanding secure vehicles to the consumers.
The company appreciates the massive roles played by the stakeholders in the management and operations of the organizations. These shareholders are classified as either internal or external based on their roles in the organization. Internal stakeholders are those directly involved in the daily operations of the organization. They include employees (investors, directors, employees, shareholders), suppliers, business partners, the country’s administration, and the community where the company has established its plants or is operating. The company maintains regular and firms operations and performance. The constant communication is because the players have various interests in the organization, direct or indirect, in the organization’s performance. To maintain consistent and close contact with its consumers, Tesla has applied strategies like the utilization of social media, the company website, and other channels of communicating with its critical stakeholders.
Tesla incorporation applies a divisional structure in its management approach. There is no definite organizational structure in the management of the organization. Elon Musk has a direct impact or contribution to all aspects of control of the organization. However, critical analysis of the management structure at the organization demonstrates that the company leadership structure is divisional, which is dictated by high levels of flexibility. The divisional leadership approach or structure is denoted through the segmentation of various groups of operations. Each division or manager reports directly to the CEO; hence he has critical insights into the organization’s functions.
Figure 1: Leadership structure at Tesla Inc.
The policies at the organization are dictated by the culture stipulating the approach towards the operations in the organization. The organization has a policy seeking to recruit and retain innovative and competent human resources to guide the organizational operations (Meyer, 2019). In this aspect, Tesla has developed and integrated a corporate culture representing values appreciated in the industry. The employees are at liberty to innovate and generate new business operations and performance approaches. Consequently, the business has been able to outstand and effectively compete in the industry. Employees are motivated to innovate and support Tesla’s quench towards continuous performance improvements.
Tesla Inc. faces several challenges arising from various areas of its operations. One of the significant challenges that the company is experiencing is the limited market for its products. Currently, the demand for electric vehicles is limited to cities worldwide or in developed countries like the USA, China, the United Kingdom, some European nations, and some countries in Asia. The limitation in the market for the market has a direct impact on the production and consumption of the products. The company will experience the challenge of realizing the objective of increasing the output to 20 million vehicle units. The challenge is reflected in the company’s failure to meet its sales and production levels goals.
The company is also experiencing challenges related to its reputation. The firm’s reputation challenge arises from several incidences of reported fraud cases involving the company’s CEO. Fraud cases threaten and risk the organization’s reputation, represented in its market performance. The company is experiencing a failure to have a comprehensive approach to producing its cars. For instance, the company has failed to elucidate the production process of their vehicles, primarily the plant where the models will be delivered. The company is also under pressure from failure to meet its budget allocations. In this case, the challenge experienced is failing to manage the debts. As of now, the company is in deep crisis with a debt of over $1billion. The challenge is complicated due to the persistence of the failure to establish a formidable approach to reduce the deficits. The emergence of various electric brands of electric vehicles complicates the problems at Tesla Inc. The company is confronted with losing its market share to stiff competition (Latch, 2019).
The challenges evidenced at Tesla Inc. demand a fundamental change to enhance the development and realization of the organization’s objectives. The need for change in the organization is highlighted by inducing effectiveness and efficiency and generating competitiveness. The challenges highlighted in this paper arise from the lack of a straightforward operation approach elucidating the path in production and logistics of their output. For instance, with less time remaining for the inauguration of the much-awaited Model-Y, the company was unsure of the plant responsible for the show and the logistics to apply in availing the product. Also, the change will enhance the company’s desire to establish competitiveness through helping products at the right time, which is critical in building a positive consumer impression.
|The company is a top employer in the automotive industry, denoted by the positive environment in the business. It, therefore, attracts a colossal pool of competitive employees. The company has massive resources and has been ranked as the most valuable automotive manufacturer globally. Tesla is the leading manufacturer of electric cars in the world. High levels of innovativeness also back the strength.||The high levels of innovativeness complicate the production processes, which delays the production process. The complication of the production process reduces the ability of the company to supply cars, making it unable to meet the market demands. Inability to balance effectively managing the resources makes the company fall into a debt crisis. Shortage of batteries to reciprocate the demands for cars.||The company faces the possibility of expanded market share arising from increased demand for greener means of movement. The company will therefore report expanded market share. Innovation attributes at the company are critical in enabling the company to manufacture less expensive cars, allowing it to report increased demands for its products. The company intends to manufacture its batteries to curtail the challenge of failing to meet the demands of its electric cars.||The entrance of high-end automotive manufacturing companies threatens the company’s market share. Companies like Audi’s involvement in manufacturing electric cars induce stiff competition in the green cars markets. Tesla is experiencing limited market share and geographical limitations in the acceptance and utilization of the product. The unavailability of electricity in some parts to recharge the cars means that the product’s market is restricted to some regions or areas. The company’s reputation is at stake with the continuous presence of Elon Musk at the helm of management. His erratic behavior threatens the market acceptance of Tesla products and performs of its cars.|
The company can utilize its strengths to overcome the fundamental problems discussed earlier. In this aspect, the company can develop strategies to overcome real problems. The concern about utilization of the cars beyond cities and some countries that have created structures to facilitate the utilization of Electric Vehicles (EVs) is a problem that is beyond the company’s capacity. However, the company can optimize the market command in areas where its products are highly consumed. The company boasts the strength of being the higher revenue earning globally. The company can focus on allocating these resources toward maximizing the market share. As the globe shifts towards the utilization of greener means of transport, the significance of EVs will equally increase. The company will need to gather data about consumer demands or considerations when purchasing cars. It will then incorporate these stipulations in its production to increase the market share and optimize sales. This strategy focuses on developing or producing customer-centric EVs to acquire and retain market share. This move will be essential in curtailing the levels of competition induced by the new entrants.
Tesla Inc will also need to motivate and train employees towards increasing their competence levels. The debt crisis in the company could be driven by the operations in the company that incurs higher costs equivalent to revenues generated. Innovativeness will facilitate the development of new approaches that could enable the company to maximize its profitability. Application and appreciation of transformational leadership will be critical in motivating employees towards being innovative (Zhang et al., 2018).
These strategies will be critical in improving the profitability of the company. The company will increase the market shares increasing the revenues generated by the company. The company will also maintain reasonable costs saving it from falling into bad debts and possible exit from the market. The stakeholders will benefit from various perspectives depending on their relationship with the organization. Shareholders will receive increased dividends, and employees will enjoy performance benefits.
|Steps of Implementation||Resources demanded||Timeline|
|The optimization will demand thorough market research, integration of the findings, and strategic marketing.||Human resources, financial resources. The employees will denote human resources, and management demanded to execute the steps outlined. These steps will make the company incur economic costs, thus requiring this vital resource.||Six moths|
|Creating an environment for change. This is through mobilizing employees to embrace the change by explaining what the change will entail and anticipated outcomes.||The management, owners, employees, and other stakeholders||One month|
|Implementation of change||Management, employees, shareholders, owners, and other critical stakeholders||The change will be implemented in phases and will take six months.|
The significance of the suggested strategy will be measured through several performance metrics to ascertain its effectiveness. The performance of the strategic plans will be evaluated by analyzing the achievement of the business objectives. Attainment of the business objectives will be based on metrics like levels of profitability, revenues generated, and the rate of cash flow. An increase in any of the stated metrics will denote positive performance and indicate the strategy’s success.
Market performance, denoted by the volume of sales, market share retention, and acquisition, will also matter in assessing the suitability of the proposed strategy. The measuring criteria in this approach will analyze the market share boosted by Tesla Inc. products, retention, and acquisitions rate. An increase in any of these metrics expresses the positivity of the strategy.
The project’s implementation phase will identify the challenge of employees’ resistance to change. Employees and stakeholders are always reluctant to embrace change and will demonstrate negativity to the new models. In this aspect, the time demanded for implementation will be higher than the initially anticipated timeline.
The organization is also likely to demonstrate a reluctance to allocate sufficient resources toward the new strategy. The uncertainty about the business model’s future risks the acceptance of the plan by the shareholders. Consequently, insufficient funding may spell the failure of the program.
The state of the economy is a critical determinant in business operations. The uncertainties about the economy’s future may hinder the successful implementation of the suggested strategies. In this case, the business may fail to appreciate the integration of the proposed approach.
Cooke, P. (2020). Gigafactory logistics in space and time: Tesla’s fourth gigafactory and its rivals. Sustainability, 12(5), 2044. https://doi.org/10.3390/su12052044
Latch, R. (2019, October 2). 4 biggest problems Tesla still has to solve. MotorBiscuit. https://www.motorbiscuit.com/4-biggest-problems-tesla-still-has-to-solve/
Meyer, P. (2019, February 22). Tesla Inc.’s organizational culture & its characteristics (Analysis). Panmore Institute. http://panmore.com/tesla-motors-inc-organizational-culture-characteristics-analysis
Motors, T. (2015). About Tesla.
Physics Today. (2015). Tesla Motors expands its battery technology to solar power storage. Physics Today. https://doi.org/10.1063/pt.5.028843
Zhang, Y., Zheng, J., & Darko, A. (2018). How does transformational leadership promote innovation in construction? The mediating role of innovation climate and the multilevel moderation role of project requirements. Sustainability, 10(5), 1506. https://doi.org/10.3390/su10051506
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