Ahmed Said Ahmed Mansour

Group C

Number: 10

Presented to: Dr. Khaled Bekhet.

About Tesla:

Tesla Inc. (formerly Tesla Motors Inc.) is an alternative fuel vehicles manufacturer
founded in 2003 by Martin Eberhard and Marc Tarpenning in Palo Alto, California,
USA. The company produces fully electric vehicles, energy generation and storage
systems and also installs and maintains such systems and sells solar electricity.

In 2008, Tesla launched the Roadster unveiled Tesla‘s cutting-edge battery technology
and electric powertrain. From there, Tesla designed the world‘s first ever premium all-
electric sedan from the ground up – Model S – which has become the best car in its
class in every category. Combining safety, performance, and efficiency, Model S has
reset the world‘s expectations for the car of the 21st century with the longest range of
any electric vehicle, over-the-air software updates that make it better over time, and a
record 0-60 mph acceleration time of 2.28 seconds as measured by Motor Trend. In
2015, Tesla expanded its product line with Model X, the safest, quickest and most
capable sport utility vehicle in history that holds 5-star safety ratings across every
category from the National Highway Traffic Safety Administration. Completing CEO
Elon Musk‘s ―Secret Master Plan,‖ in 2016, Tesla introduced Model 3, a low-priced,
high-volume electric vehicle that began production in 2017. Soon after, Tesla unveiled
the safest, most comfortable truck ever – Tesla Semi – which is designed to save
owners at least $200,000 over a million miles based on fuel costs alone.

Tesla’s mission:

Tesla‘s mission is to "accelerate the world‘s transition to sustainable energy"; they

want to prove that people didn‘t need to compromise to drive electric – that electric
vehicles can be better, quicker and more fun to drive than gasoline cars. Today, Tesla
builds not only all-electric vehicles but also infinitely scalable clean energy generation
and storage products. Tesla believes the faster the world stops relying on fossil fuels
and moves towards a zero-emission future, the better.
Tesla strategy:

Tesla business strategy integrates focus on electric cars and ownership of distribution
of products. Moreover, the company stresses the low cost of ownership of Tesla
electric vehicles as one of the solid bases of its competitive advantage. The alternative
fuel vehicles manufacturer has a divisional organizational structure and its divisions
include energy, engineering and production, HR and communications, legal and
finance, sales and software. Tesla organizational culture, on the other hand, is
associated with ambitious innovation, adherence of First Principles method of decision
making and lack of bureaucracy throughout the company.

Tesla possesses a set of competitive strengths. These include the first mover
advantage, increasing numbers of vehicles sales, expertise in innovation and a high
level of brand recognition at an international level. At the same time, there are certain
issues that cast a doubt over long-term growth prospects of the electric automaker.
These points of concern for Tesla include overly expensive price tags of Tesla
vehicles, burning though cash with no profit in view and the total debt of USD 10
billion, including about USD 3 billion non-recourse debts. Moreover, Tesla has a long
history of overpromising and under-delivering in terms of numbers of vehicles to be
produced.

International Strategies:

Tesla‘s international-level strategy is the transnational strategy. With this strategy,

Tesla seeks to simultaneously achieve low costs through economies of scale, location
economies, and learning effects; and differentiate its cars across geographic markets to
account for local differences. Most of Tesla‘s strategies in the foreign market are
similar to those it employs in the United States. These strategies are as follows:

Direct Selling: Tesla sells its cars directly to customers through its stores and galleries
or through the Tesla website. Elon Musk (2012) states that the main reason for this
direct selling, and not selling through dealers, is ―the fundamental conflict of interest
faced by dealers between selling gasoline cars, which constitute the vast majority of
their business, and selling the new technology of electric cars.‖ Benefits of this direct
selling include greater customer satisfaction since Tesla can better match its
production with consumer preferences and a reduced total cost.
Certified Pre-Owned (CPO) Program: Tesla uses a buyback program called
Certified Pre-Owned (CPO) in countries such as Germany, France, Sweden, Norway,
and Canada. Through this program, a Tesla Model S is sold with the right to return it
to the company after three years for a reimbursement of 43% to 50% of its original
price. Tesla then inspects, refurbishes, and certifies the used cars, after which it
extends the warranty and sells the cars for about 62% of a Tesla Model S new car‘s
price. With this strategy, Tesla not only collects 7 the resale profits (since it sells
directly to customers) but also expands more into the mainstream market as it can
attract the not-so-wealthy customers by selling at a more affordable price.

Strategic Positioning of Stores and Galleries: Another strategy employed by Tesla

in the foreign market is deliberately positioning its stores and galleries in high foot
traffic, high visibility retail venues, like malls and shopping streets that people
regularly visit in a relatively open-minded buying mood (Musk 2012). This approach
is to, as Musk (2012) states, ―reach people before they make a decision on a new car.

Local Responsiveness: As one of its strategies to attract customers in the foreign

market, Tesla customizes its cars to meet local needs and to satisfy the tastes and
preferences of its customers. For example, in response to customer feedback, Tesla
made some modifications to its Tesla Model S in China, including an ‗executive rear
seat‘ option, which costs $2000 over the standard model and aims to make the rear seat
experience more comfortable.

Related Diversification: A strategy employed by Tesla to expand globally is related

diversification through strategic alliances with well-established international auto and
battery producers. Tesla actively collaborates with foreign firms in the research,
development, and production of electric powertrain components (lithium-ion battery
cells). This was the case with the Japanese automotive manufacturer Toyota, for which
Tesla built the lithium-metaloxide battery and other powertrain components for the
Toyota RAV4 EV Second generation; 8 the German automaker Daimler AG, for
which Tesla manufactured electric powertrain components for the Mercedes-Benz A-
class E-cell and the Mercedes-Benz B-class ED; and the Japanese battery cell maker
Panasonic, together with which Tesla develops nickel-based lithium-ion battery cells.
With these partnerships, Tesla was able to realize greater cost economies by benefiting
from the experience of these well-established firms and, thus, establish a dominant
global position not only in the electric car sector but the entire automotive industry.
Tesla Main customers and competitors:

Tesla targeting all types of customers and it has not so many competitors in the
market.

Major competitors for Tesla include traditional auto companies such as:

 Ford Motor Company, the multinational automobile manufacturer founded in

1903.
 General Motors (GM), the U.S-based automobile manufacturer founded in
1908.
 Honda Motor Company (HMC), multinational automobile manufacturer
founded in 1948.
 Nasdaq-listed Kandi Technologies.
 Navistar (NAV), commercial vehicle holding company.
 Oshkosh (OSK), truck and military vehicle manufacturer, founded in 1917.
 PACCAR Inc., truck manufacturer; Spartan Motors, specialty chassis and
vehicle manufacturer.
 Tata Motors, the largest automotive manufacturer in India.
 Toyota Motor Corp. (TM), multinational automotive manufacturer.
 Wabco (WBC), manufacturer of systems for heavy-duty commercial vehicles.

Federal Signal, an industrial conglomerate, can also be seen as a competitor in the

development services space.

Tesla organizational structure:

Tesla as a multinational company is following the third phase as the organization

design involves:

 Departmentalization:

Refers to how the organizational structure groups the company's functions, offices
and teams.

In Tesla business can also be divided into groups based on function, geographic
locations or even customer needs.

 Chain of command:

In Tesla there is a clear organizational structure with a clear chain of command.

This helps eliminate inefficiencies by having each employee report to a single
manager. Managers assign tasks, communicate expectations and deadlines to
employees, and provide motivation on a one-to-many basis. When employees
encounter obstacles or problems, they report back to the appropriate manager.
 Span of Control:

An organizational structure‘s span of control defines how many employees each

manager is responsible for within the company. Tesla has suffered from too many
middle managers which means narrow span of control for each manager, but after
a careful study of what made for effective managers, the company decided that
middle managers added value after all meaning that the span of control is
appropriate for each manager

Tesla Inc.’s Organizational Structure Type & Features

Tesla has a functional or U-form organizational structure. The unitary-form (U-

form) structure uses organizational function as the main defining factor. For
example, the company has a structural group of employees for engineering, and
another for sales and service. Some structural characteristics of other types of
corporate structure are also present in Tesla, although at a less significant extent. In
this company analysis case, grouping based on business function stands as the
most significant feature. The following characteristics are significant in Tesla‘s
organizational structure:

1. Function-based hierarchy
2. Centralization
3. Divisions
Function-Based Hierarchy: The most significant characteristic of Tesla‘s
corporate structure is the function-based hierarchy in its global organization. This
hierarchy involves functional teams or offices that oversee domestic and
international operations. This feature is typically observed in traditional corporate
structures, where companies aim to maintain strict managerial control of their
operations. In this business analysis case of Tesla‘s organizational structure, the
following functional offices direct and represent the global hierarchy:

1. Chairman & Chief Executive Officer

2. Finance
3. Technology
4. Global Sales and Service
5. Engineering
6. Legal

Centralization: Tesla, Inc. uses centralization in its corporate structure. The

emphasis of centralization is managerial control on the entire organization through
decisions that a central group or team generates. In this case, the heads of the
offices of the global hierarchy form the corporation‘s central headquarters, which
directly control all operations. In this organizational structure, Tesla minimally
supports the autonomy of its regional or overseas offices. The company‘s
headquarters make most of the decisions for overseas operations.

Divisions: This characteristic of the corporate structure focuses on the extent of

geographical or other types of divisions in Tesla Inc.‘s automotive business. These
divisions are used to implement different strategies and marketing campaigns, and
to organize financial records and reports. The company‘s main divisions in its
corporate structure are:

1. Automotive
2. Energy Generation
3. Storage

These divisions are less significant compared to the function-based hierarchy of the
organization. Also, Tesla‘s organizational structure has the following geographical
divisions mainly used for financial reporting:

1. United States
2. China
3. Norway
4. Other.
Organizational chart:

Tesla, unlike most companies, it has a unique management structure. Tesla

organizational structure can be characterized as divisional.

As it is illustrated in figure above, Tesla organizational structure comprises a

number of divisions such as energy, engineering and production, HR and
communications, legal and finance, sales and software. Each division is led by
several vice presidents, except software division, which is led by 1 vice president
and Director of Artificial Intelligence. Tesla benefits from divisional
organizational structure through less bureaucracy compared to many other
companies of similar sizes. Divisional organizational structure also helps the
electric automaker to increase the speed of communication among different layers
of management with positive implications on decision making and flexibility of the
business.

Tesla’s Corporate Structure: Advantages & Disadvantages:

Tesla, Inc. benefits from its corporate structure in terms of effective managerial
control of multinational operations. Another advantage is the ease of implementing
new strategies throughout the organization. Also, the regional divisions support
financial reporting and analysis, and provide the foundation for future
regionalization of strategies and tactics in the international automotive market.
These advantages empower Tesla to use its organizational structure for further
international growth and to build competitiveness against Toyota Motor
Corporation, Honda Motor Company, Nissan Motor Company, General Motors
Company, Volkswagen, Bavarian Motor Works (BMW), and other car
manufacturers. The organizational structure enables the company to centrally
control the development of competitive advantages.

A disadvantage of Tesla‘s corporate structure is the rigidity that limits rapid

adjustment in the organization. For example, global centralization is a structural
characteristic that limits the autonomous ability of overseas offices to readily
respond to issues they experience in their respective regional markets. To address
this disadvantage, it is recommended that Tesla Inc. reform its organizational
structure to increase the level of autonomy of overseas offices.

Decision-making process:

Tesla, Inc.‘s (formerly Tesla Motors, Inc.) operations management (OM)

practices address the objectives in the 10 strategic decisions for optimal
productivity in all areas of the automotive and energy solutions business. These 10
strategic decision areas require operations managers to maintain best practices to
ensure streamlining, operational effectiveness and high productivity in the
organization. In this business analysis case, Tesla‘s global expansion plans depend
on the success of these practices in optimizing productivity and overall
performance. Also, the company‘s technological innovation goals support and
depend on OM performance. For example, the productivity of Tesla‘s automobile
manufacturing performance depends on operations management effectiveness,
such as in the area of inventory management and supply chain management. In
relation, OM procedures depend on‖ Tesla‘s vision and mission statements‖, which
define much of the company‘s strategies and tactics. Operations management
prowess contributes to high productivity and the growth of the business despite
negative external forces.

Managers are required to follow the eight steps of decision making as showing in
the following graph:
Elon Musk the CEO use 6 questions to come up with an idea, solve a problem, or
decide to start a business. He values this kind of evidence-based decision making,
and criticized individuals who can't separate fact from:

1. Ask a question.
2. Gather as much evidence as possible about it.
3. Develop axioms based on the evidence, and try to assign a
probability of truth to each one.
4. Draw a conclusion based on cogency in order to determine: Are
these axioms correct; are they relevant, do they necessarily lead
to this conclusion, and with what probability?
5. Attempt to disprove the conclusion. Seek refutation from others
to further help break your conclusion.
6. If nobody can invalidate your conclusion, then you're probably
right, but you're not certainly right.

Managing Organizational Change:-

Tesla works through a very dynamic environment where they have to undergo
changes almost constantly if they are to remain competitive. Organizational change
occurs when a company makes a transition from its current state to some desired
future state.

Strategic change, can take place on a large scale for example, when a company
shifts its resources to enter a new line of business or on a small scale for example,
when a company makes productivity improvements in order to reduce costs. There
are three basic stages for a company making a strategic change:

1. Realizing that the current strategy is no longer suitable for the company's
situation
2. Establishing a vision for the company's future direction
3. Implementing the change and setting up new systems to support it.
Technological changes; are often introduced as components of larger strategic
changes, although they sometimes take place on their own. An important aspect of
changing technology is determining who in the organization will be threatened by
the change. To be successful, a technology change must be incorporated into the
company's overall systems, and a management structure must be created to support
it. Structural changes can also occur due to strategic changes as in the case where a
company decides to acquire another business and must integrate it as well as due to
operational changes or changes in managerial style. For example, a company that
wished to implement more participative decision making might need to change its
hierarchical structure.

People changes; can become necessary due to other changes, or sometimes

companies simply seek to change workers' attitudes and behaviors in order to
increase their effectiveness or to stimulate individual or team creative-ness. Almost
always people changes are the most difficult and important part of the overall
change process.

Leadership style:

Leader – someone who can influence others and who has managerial authority.
Speaking about that, a transformational leader like Elon Musk is the legendry
hero of the company who leads by example and who, through his own drive toward
excellence.
Elon Musk as a transformational leader, he is the one who stimulate and inspire
(transform) leaders who stimulate and inspire (transform) followers to achieve
extraordinary outcomes.

Organizational heroes:-

Elon Musk Doesn’t Work Alone. These Are Tesla’s Other Key Leaders:
In an effort to shed light on Tesla executives who aren‘t named Elon Musk,
Bloomberg searched public references and interviewed several current and former
employees to compile a list of 30 key executives. Tesla is now 15 years old, but
most leaders on this list have been at the company fewer than five years. These are
the men and women that shareholders and customers are counting on to ramp up
production, develop exciting new products, halt the company‘s epic cash burn and
lead the world‘s transformation from a mine-and-burn economy to a sustainable
future.

Motivation and communication in Tesla;

Elon musk pushes his senior executives to find ways to motivate and inspire their
employees through selflessness. Musk suggests that leaders do this by "reducing
the noise in their work."

"Leaders are also expected to work harder than those who report to them and
always make sure that their needs are taken care of before yours, thus leading by
example."

Communication in Tesla is very important, but it seems to be insufficient. So, if

diverging from the traditional chain of command doesn't work on clearing up
communication, perhaps we should wait for Musk's next project — he raised $27
million with the aim of linking human brains with computers to enhance
communications.

Types of control in Tesla:

Controlling –the process of monitoring, comparing, and correcting work

performance to ensure that activities are completed in ways that lead to the
accomplishment of organizational goals.

Managers in Tesla do the three types of control; feed-forward controls,

Concurrent controls and Concurrent controls:

1- Feed-forward controls: control that takes place before a work activity

is done.
In Tesla, managers asses the previous work to find mistakes and
develop new ideas before they start a new product. They also compares
the competitors situation comparing to them (for example the sales of
related cars – figure below)
2- Concurrent control: control that takes place while a work activity is in
progress.
In Tesla, they usually asses where they stand according to the
percentage of compilation of the target. For example, Tesla has just
celebrated the sale of Tesla Model 3 has achieved a production rate of
5,000 vehicles per week in just the first quarter which means they are
on the right path according to their plans.

3- Feedback control: control that takes place after a work activity is

done.
Tesla has a very restricted process of after assessment involves
reviewing information to determine whether performance meets
established standards to insure whether they should modify their target
or not.
Financial control in Tesla:

Tesla Laboratories combines private sector best practices with their understanding
of the Intelligence Community (IC), Department of Defense (DoD) and the
Internal Revenue Service needs to deliver financial management solution that
achieve the mission.
Their integrated approach facilitates multidimensional support and flexibility at all
levels of the organization. Their past performance is based on providing objective,
fact-based insights, and our broad portfolio of services is aimed at driving relevant,
tangible results.
Telsa has many financial systems and tools:

 Financial Management Support:

 Accounting Record Maintenance

 Budgetary Performance Analysis
 Cost Modeling and Estimation
 Cost Reimbursable (CPAF, CPIF, CPFF) Contract Management
 External Audit and Internal Assessment Management
 Financial Policy, Procedures, and Documentation
 Financial Reporting

 Budget and Planning Support:

 A-123/Internal Controls and Compliance Support

 Budget Planning, Programming, Management, and Execution
 Enterprise Risk Management
 Funding Plan and RAD Development
 OMB Exhibit 300 and OMB Exhibit 53
 Requirements Definition and Decomposition

operational controls in Tesla:

1- Analyze the supply chain from both product and services standpoint
2- Logistics and facility location considerations

3- Analyze the most important value points in terms of; process, products,

and services

4- Asses the organization‘s competitive position and possibilities

Informational system in Tesla:

Management information system is designed to handle collection, processing, and

retrieval of information or data that have significance to the organization (Quang,
2014). It is a system used by most organization for the purpose of support in
decision making, provision of information to support operations, distribution of
information or knowledge to key players of the organization and the systemic
usage of technology for information sharing.

Management Information System (MIS) helps Tesla Motors to gain competitive

advantage and to build a plan that will strengthen its knowledge transfer for
efficient and effective organizational performance.

The emergence of information systems (IS) having created opportunities for Tesla
organization and solutions for issues faced by the organization. With IS, Tesla are
able to improve the processes of their operations, thus creating value to their
products and customers with the establishment of new business models such as:

 Design and Manufacturing Improvement

 Improvement of the Supply Chain
 Inventory Management

innovative managerial practices in Tesla:

Tesla was recently named to the top of The World's Most Innovative Companies
list, produced by Forbes magazine.

Hal Gregersen, Executive Director of the MIT Leadership Center, and co-author
Jeff Dyer, recently examined some of the unusual strategies and tactics used within
Tesla.

According to Gregersen, Tesla takes a completely different approach. "Tesla never

pursued the classic route of going after low-end, price-sensitive customers first
with cheaper, inferior technology. It doesn't pursue non-consumption, or customers
who don‘t currently drive cars," writes Gregersen. "Tesla has instead proved to be
a different kind of disruptor, a high-end version that can be just as troublesome for
the incumbents."

Think differently about hiring

Regardless of size or longevity, most companies hire based on candidates' previous

experience. This is not necessarily how Tesla has built--and continues to build--its
team. According to Gregersen, CEO Elon Musk is known for selecting talent based
upon their ability to solve complex problems--not upon experience.
Turning innovation on its head

So what can innovators learn from Tesla? That perhaps our ideas of how
innovation needs to occur should not be cast in stone. Some startups succeed
brilliantly by taking the MVP approach. Other companies, like Tesla, Apple, and
Starbucks, take a different route. Second, Telsa, under the leadership of Musk,
thinks differently about how business must operate—from hiring to questioning
what is, and is not, impossible.

Entrepreneurship encouragement:

Tesla adopts a movement call The Lean-Startup methodology which recommends

companies focus on developing a minimum viable product (MVP) before creating
a full-blown product. The idea is that the MVP is the core of a build-measure-learn
feedback loop that helps guide a company to building a product that solves a real
problem, and one that companies will buy. The measure-learn aspect of the loop
addresses the "buy" aspect of developing a product.

Ethical dilemmas faced by Tesla:

Tesla is selling people a prototype-quality level 1 or 2 self-driving car. But it is also

collecting money upfront for the promise that its cars will become level three
capable via a future software update. And that the level three capabilities will be at
least twice as safe a human driver.

But that‘s a lot of assumptions as Tesla is making representations to the public and
customers that are bordering on deceptive.

Three Problems Tesla Has to Face

1. Tesla Needs To Fill Orders: Tesla consistently overpromises and under-

delivers.
2. Tesla Needs To Make Good With Its Workforce: Several Tesla workers
claimed to have been taunted for being homosexual, threatened with
violence, and heard racist slurs flung their way. And the company, they say,
has repeatedly failed to address their complaints.
3. Tesla Needs To Make Money: After ten years of losses, Tesla finally
announced its first-ever quarterly profit in 2013. But it didn‘t exactly keep
that up — in February 2018, the company announced that it ended 2017
with its largest quarterly loss ever: $675 million.
Employee empowerment:

Tesla found that Tableau empowered its employees to explore their own data—and
contribute their discoveries to conversations about production improvement.
So, Tesla Motors charged up collaboration with help from Tableau. The results are
improved production efficiency, among several other benefits.

Role(s) of technology:

Tesla has become a household name as a leader and pioneer in the electric vehicle
market, but it also manufactures and sells advanced battery and solar panel
technology.

Conclusion:

Tesla is a dream for many people to work in including me, and the reason
for that is, people who work for Tesla are immersed with, not the car or the "I work
a wow company" status, but with the meaning it carries. Tesla's mission statement,
"accelerate the transition of sustainable transportation" isn't taken lightly when it
comes to the dedicated employees Tesla hires.

Also, working with a leader like Elon Musk is a gain itself as he has many
expertise as his companies work on everything from space suits to self-driving cars to
miles of tunnels under Los Angeles they also work on communication.

To work in Tesla It‘s not simple to snag a spot on Tesla‘s staff. But the only thing I
got after reading about them is that they attract people who believe in what they are
doing and that is exactly what I do.

Tesla Recruiter also shared six strategies To Land a job at the company that I
should consider if I decided to work there:

1. JUST APPLY
2. NO FORMULA
3. BE COMFORTABLE ON THE SPOT
4. DEMONSTRATE POTENTIAL
5. SHOW OFF THE SOFT SKILLS
6. DO MY HOMEWORK

Eventually I have to say that although working at Tesla is a dream for me but I
love my current work I don‘t plan to quit it sooner.
Reference:

1. www.tesla.com

2. https://research-methodology.net

3. www.investopedia.com

4. panmore.com

5. https://www.bloomberg.com/graphics/2018-tesla-org-chart/

6. https://www.businessinsider.com/tesla-elon-musk-how-to-communicate-2017-8

7. https://screwedopinion.blogspot.com/2017/01/management-information-systems.html

8. Hal Gregersen, Executive Director of the MIT Leadership Center, and co-author Jeff

Dyer, recently examined some of the unusual strategies and tactics used within Tesla

in

9. https://futurism.com/three-problems-tesla-company-future

10. https://research-methodology.net/tesla-organizational-structure-divisional-and-

flexible/

11. http://panmore.com/tesla-motors-inc-organizational-structure-characteristics-analysis

12. https://www.thestreet.com/investing/stocks/how-elon-musk-controls-tesla-with-only-

a-minority-stake-14564491