Background of the company
Tesla Motors was established in the year 2003 which carved a niche in the automobile industry with the manufacture of electric cars (Tesla, 2019). It was founded by like-minded engineers and deployed their first cars in the early 2008 from its headquarters Palo Alto in California. Tesla's vision is to become a household name by building their presence globally and expanding their business in the international market. It is one of those compelling companies in the automobile industry that aims to set new standards with their sustainable vehicles.
Tesla majorly focuses on manufacturing sustainable high-quality electric vehicles. It also has regular hybrid cars, full electric, fuel cell vehicles, plug in and zero emission sports car. The main motive of Tesla is to promote zero emission cars with the use of enhanced technology in order to capitalise the market opportunity (Tesla, 2018). Tesla is also enhancing its capability to produce luxury vehicles in the Sedan market.
Reasons for choosing Tesla
The rationale behind choosing Tesla is the idea behind the company that not only wants to create a global presence through their innovative concept using alternative energy vehicles and foster sustainability through their green technology. It is one of those few companies which is built on the value of manufacturing products that drives transition of the world through electric cars. The idea of creating electric cars in comparison to the gasoline powered can move the world towards a sustainable vehicle.
Purpose and Outline of report
The purpose of the report is to critically discuss the management of Tesla and analyse its business operations, strategies used, challenges faced, management of cross border operations, functions of Human Resource Management, marketing activities, IT management and supply chain management. The report will critically analyse and evaluate the current position of Tesla in the market and make recommendations basing on the above-mentioned areas.
Advisory report for Tesla
Analysis for global business management: Organizational Structure and Design
The organisational structure of Tesla, Inc. supports business growth. As opined by Zetlin (2018), Tesla follows the traditional form of organisational structure keeping in mind the managerial focus and control along with limited expansion and control in the global market. The effectiveness of the business structure supports the operations management of Tesla. Tesla has a functional organisational structure where the hierarchy is based on the business function. The strict managerial control of the operations follows the hierarchy in the order stated.
According to Korosec (2018), Tesla's corporate structure follows a centralised control on the entire organisation where the decisions are taken by a central group. One centralised group forms the hierarchy which directly controls all operations. The autonomy of regional or overseas offices is minimally supported by Tesla as the flow of decision has to be from top to bottom.
According to Lee, Tu & Sharif (2016), the Divisional organisational structure supports less bureaucracy and effective managerial control of multinational corporations. This also allows efficiency in the decision-making process of the company and supports the implementation of new strategies for International growth and sustain competitiveness in the automotive industry. The central control allows Tesla to develop competitive advantages and provide the foundation for better future strategies. Tesla is unique in its own way that can be analysed from its organisational structure. Currently, organisational structure of Tesla constantly undergoes changes to improve communication, emphasize on transparent operations and trim activities that are not essential for its success.
The only disadvantage of a centralised control is that it does not support flexibility in times of rapid adjustments required in the organisation. However, in case of Tesla Inc., it has maintained an effective control that supports organisational efficiency.
According to Marr (2018), Tesla has been deeply interested in artificial intelligence which van be seen from their concept of building autonomous cars. Elon Musk, the CEO of Tesla has been outspoken about his views on artificial intelligence and working on Tesla’s own AI hardware. The concept of autopilot cars is not new, but Tesla wants to take that to a new level by making their cars with enhanced driverless technology. Their pushy tactics might work but the concept of self-driving technology has its implications too. As analysts are concerned that the launch of autonomous cars might pose a threat to the employment of workforce whereas they faced criticism on the possible accidents caused due to self-driving cars. However, the strong information technology team of Tesla believes that the world is still not aware of this kind of technology and might not understand its benefits at this nascent stage.
Currently, as suggested by Korosec (2019), Tesla cars are equipped with Level 2 autonomous driving capability. Tesla has rolled out their cars from 2014 with the vision of making them autonomous in the future. As of 2018, Tesla launches its first mass-market car, the Model 3 which uses the custom liquid-cooled dual computing platform with both its Autopilot and infotainment computers built onto two different boards in the same module. The Model S is a luxury sedan which uses Full Self-Driving (FSD) suite. The innovation of the information technology can be seen from the efficient use of cloud which shows that if one system of the car faces a glitch, the information can be sent to the cloud that can be repaired with software patch. The crowdsourcing facility created by Tesla allows them to receive vehicle data starting from driver hand placement to the technical issues in the car with the help of external sensors (Ross, 2016). In the future, the third level cars will be able to connect with nearby Tesla car networks. In order to implement these decisions, Tesla needs to test their waters so that it will be able to achieve its goal of creating autonomous and sustainable cars for the future.
Knowledge and innovation management
Tesla empowers innovation at all levels of the organization. Tesla has numerous patents under its name with regards to their battery and charging technologies. 20 patents are related to electric motor and drive control whereas 10 patents belong to vehicle frames and chassis (Tesla, 2014). The culture of integrative innovations in Tesla has propelled its unprecedented growth and position in the automobile industry thereby empowering to keep supporting its innovative ventures for the future. Tesla boasts its innovative concepts through its ideas of creating fully automotive cars and electric vehicles that will not only reduce human efforts and make the world more sustainable but also transform the future of automobile industry. Initially, the strategy of Tesla, Inc. was to apply innovation in product designing and development by combining their efforts on knowing the technological advancements in different companies in the automobile industry. In addition to this, Tesla supports Open Innovation with Research & Development collaborations with other companies supporting innovation (Juell-Skielse & Hjalmarsson-Jordenius, 2017). The integration of information technology can be seen from its Electronic Vehicle business that has aimed to bring innovation in the automotive industry. This helped Tesla to grow more as a major IT equipped organization in the market.
The out-of-box thinking has been beneficial has enabled Tesla to manage its workforce and recruit people who have a knack for innovative thinking. The CEO of Tesla, Elon Musk is an innovator and a creator whose long-term planning and vision has allowed Tesla to become unique. The concept of driverless technology and electric vehicles are often discussed by several companies to incorporate in their vehicle design, but Tesla has actually made that possible showing to the world that how technology can be beneficial and transformational. The only issue identified is the feasibility of the technology used by Tesla cars and its effectiveness in the present scenario.
According to Bloomberg NEF (2019), the global Electronic Vehicle market is predicted to be flourishing with an annual rate of 21.4% between 2018 & 2026. Tesla is one of the most innovative in the history of automobile industry which has bagged 3 best-selling electronic vehicles in the year 2018. Tesla is surrounded by multiple competitors that are equally competent and have produced hybrid concept cars. However, the brand appeal of Tesla is much higher than its competitors like Chevrolet and Toyota. The promotional strategy of Tesla has been different and majorly utilizes social media for the promotion of its products. The CEO, Elon Musk is a highly enthusiastic personality and face of the brand. Unlike Toyota, Ford and Volkswagen, Tesla does not promote its brand through paid promotion. It mainly focuses on the strategies of word-of-mouth and free media coverage to highlight the features of its products. Tesla believes in less promotion and advertising as it has already created a global presence through its innovative products. Tesla is also one of the most talked about automobile companies in the social media platforms like Twitter even after not posting much feed on its pages. Since Tesla has been a combination of design, innovation, style, convenience and safety, the marketing strategy of Tesla does not focus on promoting their products rather than building their capacity to deliver better results.
Human resource management
The key drivers of Tesla’s success right after its innovative thinking is its industry leadership. Tesla believes in active engagement of each individual in the organization. The employee engagement and level of decision-making is comparatively very high in Tesla when compared to any other company in the automobile industry. Starting from the leaders of Tesla, the top management is highly enthusiastic about working in this company where people are encourages to provide their ideas and thoughts to innovate better products. The communication strategy of Tesla generally involves sending direct emails to the corporate employees whereas conducting meetings for manufacturing plant employees and engineers. Tesla uses the 360-degree approach to let their employees analyse their performance and skill gaps which can be later enhanced by ways of training or mentoring. This is specifically done for all international employees to enhance their capabilities. The Human Resource Management of Tesla has been transparent, and employees are well-informed about the decisions taken by the company (Dalton, 2017).
The talent management of Tesla is unique as it adjusts its hiring process according to the country with careful consideration. Tesla’s strategy of hiring its people is based on their talent and workforce planning. For instance, Tesla will be not be analysing the engineers same as the manufacturers. As a part of Tesla’s strategic workforce planning and analytics, it has multiple measures to measure the productivity of its employees and improve their performance in order to achieve the organizational goals. It also manages its international recruits through a culture-fit screen to enable diversity within the company. However, the issue lies in talent optimization which will require Tesla to conduct a formal analysis to understand the actual needs from the people to be hired. The philosophy of Talent first can enable a better productive environment for Tesla.
Operations and supply chain management
Tesla is forcing the players in the automobile industry to rapidly change and bring innovation. Although this has gained Tesla growing criticism, but it has driven change and innovation within the industry. Tesla was the first company that pioneered the concept of electric cars and the major automotive manufacturers with strong supply chain management feel the pressure to roll out better electric cars in the market. However, some parts of the supply chain strategy of Tesla has been commendable whereas some parts highlight its issues. The good part is the vision of Elon Musk for Tesla and full utilization of its vertically integrated supply chain. On the other hand, the issue lies in Tesla’s inability to meet their expectations resulting in production delays. Tesla had a vision of manufacturing their parts on site and making the plants fully operational in California. They also have their manufacturing units in Mexico and China along with battery factory in Nevada. The design of the battery factory was sort of a bottleneck for the company which was causing the issues of delays in manufacturing. The value chain of Tesla includes installing charging stations for their electric cars which subsequently became slow in installation. Although the supply chain of Tesla is considered to be revolutionary, it has been slow in delivering the electric cars. The production of the Model 3 was slow and only 55,840 electric cars could be produced in the year 2018 whereas approximately 4 lakh drivers were promised to receive their vehicles (Randall & Halford, 2019). The issue of mass production is a reality in Tesla as each car have more than 10,000 parts that needs to be assembled on time. Tesla’s vertical supply chain integration provides it with the benefit of cost savings on transportation of supplies and parts, and control of the downstream distribution channels. Contrarily, this strategy creates an impact on the product design as well as issues of balancing the upstream and downstream supply and demands.
Tesla has been one of the most innovative and competitive organisations in the global automotive and renewable energy markets. However, even with such a brand image, Tesla faces strong force of competition from automakers like Toyota Motor Corporation, General Motors Company, Volkswagen, Ford Motors Company and BMW. Tesla is well known for its high rate of innovation that has given the world its first fully electric sports car. The business goals of Tesla brand has been a strong control on production processes, centralised control and out of the box thinking. However, even after a controlled maintenance of its operations, Tesla must focus on addressing its issues that can hinder its performance to a significant level. It is recommended that Tesla can expand its operations in foreign markets and exploit the renewable energy industry globally. The investment on the product innovation can be made accordingly. The supply chain also has functioning issues which needs the strategy of diversification. The centralised organisational structure and design supports transparent operations thereby trimming unnecessary activities that can demotivate the company. The centralised control can support flexibility at times to adjust to the rapid changes in the organisation. The technological advancements can be strategized according to the understanding of the customers as many of them are still not aware of the concept of driverless technology. The talent management of Tesla can be improved by conducting formal analysis to understand the issues faced by the employees of the organisation. This will not only make them productive but also improve the overall productivity of the organisation. The innovation management is transformational, but Tesla still needs to test their cars in the actual roads. The marketing issue of Tesla can be improved by combining their efforts on social media promotion. The supply chain issues can be addressed making its supply chains stable with the support of investors and sufficient cash flow to improve their manufacturing process on time.
The secret of Tesla is not because of selling innovative conceptual cars but the idea behind selling such cars. The rigorous brand strategy of Tesla and ability to produce conceptual cars has made it one of the most innovative automobile companies in the world. The future of Tesla is about great efficiencies introductions, rolling out the concept of self-driving cars and a sustainable future. The electric car market is booming, and Tesla has left no stones unturned to achieve its goals of delivering autonomous and electric cars to the customers. But, as there are no guarantees in life and business, Tesla needs to constantly evolve and resolve their issues in order to remain competitive as an established industry player.
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