QUESTION
Elon Musk says that he might be interested in purchasing GM plants slated for closure next year. As a consultant to Elon Musk, you have been tasked to create a corporate structure based on the existing business model and the addition of plants being located in Canada.
Your assignment is to research Tesla. Provide bullet-point findings with resources listed as a footnote. The information will aid in the creation of a corporate structure. It is to include but not limited to the following:
- Company profile
- Business and main office locations
- Business industry/type
- Manufacturing Plants
- Business strategy
- Philosophy of founder
Based on your findings and the chapter 5 materials, provide a labeled drawing for the new corporate structure from a purchasing perspective. Describe and defend your solution in a document that is to identify the structure type along with the purchasing’s position within the organization structure. It is to include but not limited to the following:
- Driving influences for the adoption of the structure
- Which factors affecting the organizational hierarchy
- Who will have purchasing power?
- Will it be segregated geographically or by division or by type of purchase?
ANSWER
Tesla Inc is the next big thing in the market of automotive and electric charging and is expected to bring in the next wave of vehicles that will completely make the petrol and diesel vehicles as well as the pollution that has been so plaguing us something of distant history.
If we are to take a brief glimpse into the workings and the structure of Tesla, we will be able to understand just how they plan to achieve such impressive a feat
Profile
- Started in 2013 under the Martin Eberhard and Marc Tarpenning it soon roped in prolific innovators like Elon Musk.
- It now produces 4 types of models starting from Model S, Model 3 for the general public, Model X and Model Y.
- The company is also a huge manufacturer of battery and charging stations and was recently in the news for completing a huge charge storage station in Australia in record time
- The company has also started ventures into the solar energy by building and improving various types of solar power stations that are even planned to be fitted on the cars
- The company boasts of a huge vertical integration of about 80% which helps them a lot to reduce cost and report profits which they have recently done twice in 2 quarters
- The company is now looking to foray its automotive industry outside of US as it will help them to escape the various tariffs that are being implemented on it. This was recently shown by them opening up a Giga factory in China.
- The company plans to increase their production manifold so that one day their cars will be affordable to all the people
- It competes with various big shots of the automobile industry like BMW, Mercedes, Audi, etc
Business and main offices
The Tesla Inc mainly specializes in 3 business
- The company specializes in fully electric automobiles with zero emission which is their primary business line; it also creates electric charging as well as storage model thus helping them to integrate perfectly with their electric vehicle subsidiary. It also delves in the solar industry and creates solar cells to be integrated with their vehicles
- It was founded in California and opened up a first retail store in Los Angeles. It followed that up with factories in multiple cities in the US. It has recently opened a Giga factory in China as its first outstation venture
Business Industry
- It works primarily in the automobile, charging and the solar industry.
Manufacturing Plant
- It has multiple manufacturing and retail plants across the USA with Giga Factories in Nevada , Buffalo and recently in Shanghai China
- The company is trying its best to increase the number of cars it can produce per year to heavily utilize the economy of scale model
Business Strategy
- The business strategy of Tesla was initially to bring the car to the affluent part of society. Thus it brought out the Model S and X. It then targeted the more general public by Model 3. It is now foraying into various other domains like hatchbacks and SUV.
- The company sell through online only and gets the cars on display in their own showroom and does not believe in the dealer network
Philosophy of the founder
Though not originally the founder the words of Elon Mush has now become the face of the company, and it is his faith and belief that one day the cars of Tesla will be affordable by all
Corporate Structure for the acquisition
- Driving influences for the adoption of the structure
The main reason why this structure is being chosen is to give a certain amount of freedom to the President of the Canada operations. Since Tesla will start from scratch, there will be multiple situations which would require fresh and out of the box thinking which might not be possible within the existing thought process of the company. Given a new president and CMO-Canada, CFO-Canada, COO-Canada working under him/her, it will give them the freedom to take decisions outside the comfort zone as and when deemed fit to the Canadian situation.
- Which factors affecting the organizational hierarchy
The organizational hierarchy will be dependent on quite a few factors which are as follows –
a) Geography – A new place poses new challenges and hence a company must be flexible enough to change the organizational structure according to that. If not fully, minor tweaks are definitely required.
b) Company Policy – Alignment to the company’s existing DNA is very important while deciding about a new structure. Like, whether the company likes to have a flat hierarchy or a tall one or whether the company prefers to have individual departmental heads for a particular country/geography or not.
- Who will have purchasing power?
President of Canada operations along with his/her team should be responsible for the purchasing power. As discussed before, they should have the freedom to take decisions (definitely in synchronization with the top management in the USA) for a successful journey to begin.
- Will it be segregated geographically or by division or by type of purchase?
It will be segregated geographically. In the modern day world, every geography or country behaves differently from other and hence segregating geographically is a logical choice. What works in China might not work in Canada; hence the segregation will help in better understanding of the market and also better actions being taken.
Reference
Reuters (2017) ‘Tesla – Profile and other details’.
Retrieved on 31st January 2018
Retrieved from:
https://www.reuters.com/finance/stocks/company-profile/TSLA.O
Meyer, Pauline(2018) ‘Tesla Inc.’s Organizational Structure & Its Characteristics (Analysis)’
’.
Retrieved on 31st January 2018
Retrieved from:
http://panmore.com/tesla-motors-inc-organizational-structure-characteristics-analysis
Thompson,Cadie (2017) ‘Tesla has aggressive plans for the next 2 years’.
Retrieved on 31st January 2018
Matousek, Mark (2018) ‘Tesla’s problems are mounting’.
Retrieved on 31st January 2018
Retrieved from:
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