Research Paper on Managerial Dimensions: Structure and Strategy Interrelation in Tesla Motors Inc

Abstract

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The operations of a business are subjected to internal and external factors that determine the extent to which a firm will attain the designated performance targets. The approach to the factors that determine the revenue, quality, market competitiveness, and sustainability of the undertakings varies across different enterprises and industries. However, the effective analysis of the resources and targets of the business can assist in enhancing the performance. This paper presents a critical assessment of Tesla Motors in line with corporate management factors such as capacity planning, outsourcing, innovation, learning curve effect, the theory of constraints, breakeven model, balanced scorecard, sustainability, and business process reengineering.

Introduction

Information technology is central to the success of the organization in this post-modernism era. The ability of a firm to capitalize on the advantages of technology in management, planning, and implementation of programs. However, it is essential to understand the effect of different dimensions associated with the use of technology as well as strategic management approaches for long-term and excellent performance results (Banbury & Mitchell, 1995). In most cases, the structure and strategy interrelation is critical for firms irrespective of the sector of operation. Nevertheless, the understanding of the implication of the methodologies used to balance available resources, objectives of the organization, the accessible and acquired competencies, the shifts and trends in the sector of operation, and the changing external environment factors defines the extent to which organizations are affected by choices and decisions (Wagner and Svensson, 2014). The externalities of technology implementation in a firm can be viewed from the managerial dimensions such as capacity planning, outsourcing, innovation, learning curve effect, the theory of constraints, break-even performance, sustainability, and reengineering processes. This paper examines these dimension based on the structure and strategy interrelation in Tesla Motors Inc.

Overview of the Organization

Tesla Motors was established in 2003 as a company in the energy sector where the primary objective of the organization was to produce electric-based devices such as spare parts and batteries. The main location of the firm is in the United States; however, the organization has diversified its scale of operation and market coverage to multiple countries such as the United Kingdom, Australia, and Germany (Tesla Motors, 2017). With the opportunities in the market, the organization increased its capacity and started investing in electric train spares. Through advanced technology, the firm managed to strike a significant market in the entire American market. The shift in the scope of operation opened new avenues for investment in the company where the firm started to produce electric cars. The vehicles were referred to as hybrid alternative, which generated a changing dimension in the motor industry (Tesla Motors, 2017). The new brands in the market offered the company a new competitive position for further growth and development. Although the firm has limited capital increasing sales and access to external equity enabled the management to plan strategically for sustainability.

Worth noting is the approach of the company to market dimensions. Tesla Motors has considered a direct market entry method to enhance customer experience. Although the organization has faced several challenges with the policy in different states, the approach has assisted the firm to control competition. A keen analysis of the success journey associated with the business indicates how the management has created a unique culture with customer acquisition and retention. On the other hand, business reengineering and the use of technology to enhance the quality of products is part of the techniques employed by the company to enhance competitive advantage (Thompson, 2017). With the new approach to expansion such as acquisition, the organization is expecting to internationalize their operation to unexploited market, which is anticipated to increase the revenue margin. However, the firm has faced financial challenges based on the market and economic shifts, which reduced the profit margin. The restructuring of the strategies and implementations changed the trend, and currently, the company has maintained high profitability (Trefis, 2016b). The corporate dimensions in line with business technology as applied in Tesla Motors are worth evaluating for business and industry recommendations and planning as depicted in this paper.

Capacity Planning

An organization dealing with the production of goods and services depend on the available demand to schedule their supply strategy. Capacity planning involves the process of evaluating the number of brands or service required in the market in line with the demand and supply correlation. Since it is a complex process owing to the changing market trends and customer desires, design capacity plays a critical role in establishing the amount of work, resources, and time needed to meet the required demand (Song et al., 2015). For large organizations, having a comprehensive capacity planning strategy has contributed to escalated performance and market positioning. However, the approach to the process is central to the achievement of the designated objectives. Nevertheless, the use of different corporate models increases the efficiency of the organization when planning and implementing the market needs.

Tesla Motors has been keen to balance the market demand and its production capacity for sustainable revenue. Since the firm has specialized in the manufacture of electric vehicles, the organization has launched different models in line with the customer needs and expectations. Before distributing large productions of the new designs, the management usually uses the preorder approach where customers book the models they need then the firm embark to production (Trefis, 2016). Using this method enables the company to be guaranteed entire purchase once the production is complete. Between 2013 and 2016, the firm achieved high sales because of the capacity planning strategy, which allows the firm to minimize the cost of production through effective resource allocation. Therefore, in most occasions, the organization has set the manufacturing process to balance the market demands for maximum profit.

Nevertheless, Tesla Motors needs to improve their capacity planning methodology because of the challenges the firm has faced previously. The market demand for electric vehicles especially the Model 3 version escalated from 50,000 units in 2015 to 350,000 preorders that the company had to deal with in 2016 and the beginning of 2017 (Trefis, 2016). Such sudden and huge market demand and expectation presents strain on the resources of the company. Planning to cater for the market need within the short period could lead to poor quality. Therefore, the firm should consider a market research-based predictions and manufacturer the models based on the projected demands from the market trend analysis rather than from the previous pre-orders made. Moreover, altering the approach will not affect the returns of existing shareholders as witnessed with the current approach.

Outsourcing

One of the key factors that an organization seeking to establish a secure financial and human resources for profitability is the ability to outsource. In many occasions, companies have resorted to Business Process Outsourcing to enhance their productivity capacity. In this case, the organization assigns a section or the whole process of production to another firm. Most service-oriented organizations have joined the manufacturing market by outsourcing production. The trend in now shifting to automobile sector where the organization is collaborating with the Tier 1 and Tier 2 producers with the parent firm being the main assembler. Strategic outsourcing can generate high levels of profitability in the organization; however, the need for competitive advantage in the market could present critical challenges for firms that are inclined to excess business outsourcing (Bertrand & Mol, 2012).

Worth noting is that Tesla Motors has remained reserved when it comes to the production of their brands. The initial production focused on the electric brands such as spares and batteries. Eventually, the organization introduced the hybrid cars and electric train components. With time, the firm became a major automobile and energy firm in the United States and across the globe. The company has been clear on production process by employing line and mass production approach, which eliminated the need for outsourcing (Handfield, 2016). In fact, the firm also chose a direct customer accessibility approach for the segmented market with the view of maintaining low costs for the products. The firm has established a competitive innovation and design team such that all the processes in the organization are available internally without the need for external collaboration.

Worth noting is that the current brand in the market that is the key revenue source for Tesla Motors is the electric vehicles. The advancing level of competition in the market requires a unique quality characteristic that will position the brands above the competitors. In such a case, the approach the firm is using to enhance production and engage customers is necessary. The organization should not include outsourcing as one of their strategies since there is a need for market uniqueness and high competitive advantage. The move to segregate the line productions into different companies is essential in diversifying the needs of the enterprise. Nevertheless, the firm needs to improve the capacity, competence, and skills of the innovation and design departments through talent acquisition and retention based on the long-term requirements of the business (Wang, 2013).

Innovation

Innovation is another essential part of organizational development. The process of production of goods and services require constant improvement and high-quality levels. Through innovation, a firm can incorporate the tastes and preferences of consumers when designing the brands. Such a move guarantees high competitiveness and customer satisfaction. The process of innovation in the capital-intensive organization includes the use of technology to reduce the cost of production and enhance the position of the brands in the market (Banbury & Mitchell, 1995). The level of innovation in an organization defines the extent to which the firm will remain relevant in the industry. Worth noting is that adapting the business strategy and structure to the trends in the internal and external environment is a fundamental component of innovation.

In Tesla Motors, innovation forms the center of...