Business Analysis of Tesla

2364 words (9 pages) Business Assignment

2nd Jun 2020 Business Assignment Reference this

Tags: Business AssignmentsInternal AnalysisExternal AnalysisBusinessCSRBusiness EthicsTeslaLeadershipBusiness StrategyBusiness Analysis

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Mission Statement:

Tesla, founded in 2003, is a United States company. Mostly known for its electric powered cars. But, the company also specializes in solar panels and battery energy storage. Their mission statement is to accelerate the world’s transition to sustainable energy. To achieve this Tesla is pushing to produce more affordable, and accessible products in hopes to advance the idea of clean transport and clean energy production on a global scale.

Strategic Plan/Goals:

To reach this high goal of solely using sustainable, clean energy in the future Elon Musk, Co-founder and CEO at Tesla Motor, has a master plan. When first starting his goal was to create a low volume car, which would be expensive. Then using that money to develop a medium volume car at a lower price. Then to ultimately use that money to create an affordable, high volume car and solar powered. Musk stated that “we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse.” The whole goal of this organization is for the greater good of the world. “So that we can imagine far into the future and life is still good. That’s what “sustainable” means. It’s not some silly, hippy thing — it matters for everyone.” To be able to achieve these goals they will first create a solar roof with battery product. Ultimately allowing the customer to be able to control their own utility, then scaling that around the world by collaborating with Solarcity, a solar energy company, to attain the same goal of sustainable energy. Tesla’s next goal is to expand the electric vehicle product line to address all consumer needs, such as trucks and SUV’s. Then ultimately leading to the development of a self-driving car that is 10 times safer than manual. (Musk, E.)

Management perspective:

Tesla leans more towards the administrative principles approach. Which is an approach that focuses on the total organization rather than the individual worker. The management functions followed are planning, organizing, commanding, coordinating, and controlling. Though this company is currently tackling trying to get away from bureaucracy. Musk has stated that he believes in leading by example. “If you’re co-founder or CEO you have to do all kinds of tasks you might not want to do … If you don’t do your chores, the company won’t succeed … No task is too menial.” – Elon Musk. Leading with a purpose is something that is easy to see within this company, Musk has a purpose and a plan and will continue to work hard until it is obtained. Elon realizes that putting people in the right role, that are natural for their talents, is critical for success. “If you’re trying to create a company, it’s like baking a cake. You have to have all the ingredients in the right proportion.”- Elon Musk.

Organizational Structure:

Tesla does not provide an organizational chart or much about its executive team on their website. The only information about management anywhere is listed on the Tesla website, where there it lists three executives. Musk as chairman, product architect, and Zachary J. Kirkhorn, Tesla’s Chief Financial Officer. From what I have found, Tesla operates under a functional, U-form, structure. This is when functions are grouped together from top to bottom of the organization. Tesla groups together positions into departments. Such as, first chairman and chief executive officer, followed by finance, to technology. Then, global sales and service, to engineering, and lastly, legal. (Meyer, P) Tesla’s hierarchy oversees all operations, to maintain rigid control on the productivity of their operations. People in the grouped departments communicate mainly within the same department, to achieve goals passed down throughout the hierarchy. This can be a disadvantage when people are separated across departments, coordination and communications are oftentimes poor. Sure enough this was affecting the company, last year Musk stated, “To ensure that Tesla is well prepared for the future, we have been undertaking a thorough reorganization of our company. As part of the reorg, we are flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission.” (Higgins, T.) When it comes to decision authority Tesla uses centralization, leaving the decision making to near the top of organizational levels. Tesla obviously seems to be dealing with organizational structure issues, simply because of the lack of of great upper management, because there isn’t a set line of who reports to who. Because Tesla continues to grow rapidly, it’s easy to let the business out-scale leadership.

Internal Environment:

When hiring Tesla is looking for individuals who are mission-driven. Tesla’s culture is driven by the passion and long term goal of changing the world and advancing humanity. Each employee is heavily determined to contribute. Strong loyalty and determination of employees creates a feeling of individual responsibility, resulting in strengthening of the brand. “Each member of the team is expected to challenge and to be challenged, to create, and to innovate. We’re tackling the world’s most difficult and important problems—and we wouldn’t succeed without our shared passion for making the world a better place.” (Indeed)

External Environment:

Tesla has many opportunities to take to advance as a company. But for Tesla to finally begin gaining profits, they will need to bring down costs, which they are currently working on. One opportunity is expanding to operations other than their primary factory in California. The company is in the process of building a Gigafactory. The factory should help to increase capacity, for the large given demand for the new Model 3. If the company succeeds to lower costs, and gain greater efficiencies in production and distribution this would help lower the price of units bring down. (SWOT Analysis of Tesla) A potential threat that the company faces is debt. Because of all the research, development and expansion of the company, their profit seems to disappear. “Tesla went from a $200 million revenue to more than $6.8 billion. That sounds impressive, however their profit was only $312 million.”  Tesla continues to spend money that they don’t have in hopes to expand, but could ultimately leave them bankrupt.

Leadership Style:

One of the most important elements of Tesla’s management is the leadership of Elon Musk. Musk is very passionate and dedicated to Tesla. Musk goes above and beyond showing a charismatic leadership style. With a charismatic leadership style he has shown the ability to inspire and motivate people, despite obstacles and personal sacrifice. Last year Tesla underwent manufacturing issues, which resulted in removing or fixing conveyors and robots that did not properly work, and finding a way to replace the issue with more manual labor. Musk follows the idea that he must lead by example. In 2018 Musk’s promise to build 5,000 vehicles in a week by the end of Q2, had fallen short. Which resulted in Musk stepping it up at work, which resulted in quite a few problems.  “He displayed episodes of mania, working 120-hour weeks, while sleeping at the factory for days on end. He regularly missed management meetings, raged at colleagues, impetuously fired employees with little apparent cause, yet all the while relentlessly pushing his team to work harder and faster.” (Sherman, L.) In every crisis situation, he steps in to solve the problem.  “I move myself to wherever the biggest problem is in Tesla,” Musk said. “I really believe that one should lead from the front lines, and that’s why I’m here.”  

Ethics/Corporate Social Responsibility:

Despite all risks, including fossil fuel industries continuing to rise, Tesla is committed to this long term battle for what is an environment resolution. Creating a company that’s purpose is to make electric cars is a risky business. Not only because the market could fail, but because no other car company has made the full switch to solely making electric cars. Tesla has stuck to its plan and seems to be very confident in it. Tesla has invested millions in the nationwide development of the free-to-use Supercharger stations for cars. Musk even opened soured his patents, so that the electric vehicle market could grow, for the greater good of society. With more people becoming aware and interested in climate change and global warming it is likely that Tesla’s market share will pick up.

Company’s advantage:

Tesla has many advantages that other companies do not have. Tesla has been involved in making electric cars since it was founded in 2003 and have more experience doing so. Also, not only have they invented a battery more energy efficient, but for a lower cost. “The company is aiming for battery cell costs of under $100/kWh per year, which is likely to be well below the broader industry, giving the company an edge in terms of input costs.” (Team, T.) As mentioned before, the company has been working vigorously on self-driving cars and charging stations, and are already ahead of the game nationwide. Tesla has shown repeatedly that it cares more about providing the customer with good service, for a good cause, and little to no money off of them. Lastly, the future is Tesla. No other company is making strides and risks like this company is, if other manufacturers don’t get on board they will always be several steps behind Tesla.


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