Analysis Of Tesla Management Issues
Task: You are required to write an individual management report which critically evaluates the most significant component(s) of a chosen organisation’s behavior or operations. The issues arising from these behaviours or operations should be regarded as contentious. Make sensible recommendations about actions that could be implemented to address these issues in a positive manner, using examples of companies that have, to some extent, implemented these positive measures to gain competitive advantage. This submission should be anonymised: You must submit your work using your student number to identify yourself, not your name. You must not use your name in the text of the work at any point. When you submit your work in Turnitin you must submit your student number within the assignment document and in the Submission title field in Turnitin.
- Select an organisation of your choice to be the subject of the report.The organisation chosen should be one that has experienced issues in the past as a result of irresponsible management practices and /or is currently experiencing such issues.
- Identify the behaviours or operations attributable to this organisation, either currently or in the past, that could be regarded as contentious.
- Discuss how, if at all, these negative behaviours have impacted upon the firm in terms of reputation, customer response and profitability.
- Contrast these behaviours with examples of organisations who have behaved in a more responsible manner, particularly in relation to the competitive advantage gained.
- Make recommendations for your chosen organisation’s future behaviour to address the issues identified.
- All work must be fully referenced in line with the Harvard system using reputable academic sources. You should also use relevant theory to structure and support your arguments and ensure that your real world examples are drawn from credible resources.
The report below is based on the irresponsible Tesla management issues identified in the company. The company has been identified to face issues about its manufacturing process, management of the financial resources and the management of the safety and security of the customers as well as the employees. How the competitors of the company perform the business functions are explained in contrast with Tesla and recommendations have been provided to perform responsible management.
Responsible management in businesses refers to the process of balancing the interests of the key stakeholders of a company for prospering the benefits of recent and future generations. Responsible management is important for every business for planning, organizing, leading and controlling the responsible performance of a business. The present report is based on the controversial Tesla management issues faced by the UK based Automobile organisation. The impact of the negative and contentious behaviour on the organisation in terms of profitability, customer response and reputation is discussed in the study of Tesla management issues. The management approach of the company is compared with other organisations in this sector and recommendations have been provided for addressing the identified issues in Tesla.
Background of the organization
Tesla, Inc. is an automobile company headquartered in California, the U.S. that operates worldwide. Tesla was established in 2003 by Marc Tarpenning and Martin Eberhard. The organisation was established to prove to the world that people do not require to compromise the driving experience in electric cars and that the electric cars can be more fun, quicker and better to drive than the cars that use gasoline as fuel. It is the mission of the organisation to accelerate the transition of the world to the usage of sustainable energy (Tesla.com. 2019). Adhering to the mission statement, the organisation produces electric cars that can be afforded by the average consumers as well. The revenue of the organisation has grown to 21.5 million USD in 2018.
Figure.1: Revenue of Tesla Inc.
(Source: Statista. 2019)
Identification of the contentious behaviours or operations attributable to the organisation
The organisation Tesla Inc. was well known in the automobile industry regarding its approach of electric cars is transforming the world. However, it has been evidenced that the company has been facing some major Tesla management issues due to improper management practices and behaviour. The issues that have been identified are controversial in nature and have led to severe reputational, financial and social loss. The Tesla management issues that the organisation is facing in recent years are described below:
Management of production
As evidenced by the report of the organisation, the company has aimed to enhance the production of the new car that is Model 3. According to Parris et al. (2016), the manufacturing of the new products or services must be countered by the response of the target market toward the products or services. It demonstrates that it is important for an organisation to check the response of the consumers toward particular new products before proceeding to the heavy production cycle. In the case of Tesla management issues, it is identified that robust customer demand for the new car model was present for which the company had made the goal to produce 5000 vehicles per week. However, in the period of three months, the number of models produced by the company was 9800. So, the company fell short to respond to robust customer demand and affects Tesla management issues.
Figure.2: Tesla unit production volume
(Source: Bbc.com. 2019)
Management of financial resources
As opined by Dyllick (2015), financial resources are very important for a company to maintain the sustenance of the business. The allocation of financial resources can be done properly to balance the spending of business in different operations. In the case of Tesla, it has been identified that the organisation was investing a huge fund on the rapid production of the new car models. As per the report of Bloomberg, the spending of the company per minute was more than $6,500. This has raised a controversial debate on the survival of the organisation as it bears a large debt and continuously encountering massive losses. For managing the fund for the rapid production of the cars, the company has collected advance deposits from the customers and pressurised the investors as well which can be regarded as contentious negative behaviour of the company.
Figure.3: Tesla growth since 2010
(Source: Bbc.com. 2019)
Management of the safety of the customers
According to Meixell and Luoma (2015), or any automobile business it is necessary to ensure the safety of the travellers. The major Tesla management issues and security issues for the customers have raised concerns regarding the autopilot mode of electric cars. It has been reported that the poor functioning of the Autopilot semi-autonomous driving features has led to the death of many Tesla drivers leading to the scrutiny of the electric car Model 3. The major reason behind the poor functioning of the autopilot mode of cars is related to the poor manufacturing of cars.
Management of Safety at the workplace
The number of workplace injuries has also increased drastically and ultimately affects Tesla management issues. As explained by Jamali et al. (2015), the management of health and wellbeing of the employees is one of the major functions of organisations and it is important to maintain the workplace security to avoid workplace injuries. The safety violations in the factories of Tesla Inc. are rising and it has led to the injury of the factory workers.
Discussion of the impact of the negative behaviours upon the firm in terms of reputation, customer response and profitability
The negative behaviour of the organisation Tesla about the management of different operations in the business has led to the development of serious Tesla management issues.
How Tesla management issues affect Company’s reputation?
As stated by Parris et al. (2016), the improper management of the production activities in any company can affect the reputation of the business seriously. The way the manufacturing process of the company was triggered to meet the goal and respond to the customer demands has raised questions regarding the working hours of the employees. It is reported from the analysis on Tesla management issues that the employees of the company had been working for 120 hours a week for the accomplishment of the goal. In addition to it, a huge number of customers were also fired due to inadequate performance and without any apparent cause. The behaviour of the CEO on social media and to the journalists regarding the fire of the employees has also resulted in a huge debate and harmed the reputation of Tesla. The organisation has also faced a great reputational loss after the serious injury of the plant workers. A great question was raised regarding the workplace culture and working environment of the organisation and the stress that the employees have to encounter while working in Tesla. The safety scrutiny performed in the organisation’s factories has revealed that there were 18 security and safety violations in the same year.
Impact on customer response
As explained by Schnackenberg and Tomlinson (2016), the response of the customers can be impacted negatively by the poor management of the safety of the passengers in the cars. It is identified that the autopilot mode is very popular among the customers and issues in the autopilot functioning has reduced the response of the customers toward it. The negative reviews of the customers towards the efficiency of the car models with autopilot mode have resulted in a reduction of sales of the car models. The safety issues about the employees also resulted in a reduced response in terms of the purchase of electric cars from the company.
Impact on profitability
The profitability of the company has declined in recent years with the inability of the company to respond to the highly growing consumer demand toward the new model. It was identified that the company has spent a huge amount of money in the manufacturing process but still being unable to deliver the product to the customers has resulted in a drop in its profitability. The other Tesla management issues such as poor management of the safety and security of the customers have also reduced the sales of the car models. According to Guerrini et al. (2018), organisations have to make a proper allocation of the financial resources to ensure its survival in the industry. As the company has spent the major portion of its funds in manufacturing the products, the marketing approaches of the company were impacted negatively. For which, the company could not attract the attention of the customers toward the new model. This has also reduced the sales of the new model and resulted in a reduction in the profitability of the company.
The contrast of the negative behaviours with other organisations (reputation, customer response and profitability)
Based on the overall analysis on the study of Tesla management issues, it has been identified that Tesla has faced the problem of management of production and they could not meet the requirements of customers according to their estimation. Hence, the analysis of the performance of Tesla clearly says that the company could not enhance their competitive advantages by maintaining equilibrium between demand and supply. On the other hand, Ford Motor has achieved success in case of supplying materials according to the demand. Hence, in terms of competitive advantages, the Ford Motor Company is in a good position compared to Tesla. The less amount of production has hampered the customer base of the Tesla and it has deteriorated profit base. On the other hand, based on the on-time supply of products to the customers, Ford has enhanced its position in the market.
In terms of financial resource analysis, it has been identified that Ford motor company does not have any competitive advantages compared to Tesla. This is because; Ford motor company has faced the problem of financial difficulty in terms of working capital management (Tesla.com, 2019). On the other hand, one of the Tesla management issues faced by the company is that it has faced large debt issue and it has deteriorated the revenue base of the company. Hence, the entire analysis depicts that in terms of financial performance(profitability) both the companies are in the same situation (Xu et al., 2017). In terms of working capital management, Tesla has competitive advantages over the performance of Ford Motor. Hence, both companies need to focus on the financial resource allocation and resource management process. The responsible behaviour of Ford therefore elevated its profitability the profit base of Ford Motors is comparatively better than Tesla and the profitability was recorded to be US$160.33 billion in the year 2018 whereas the profitability of Tesla was US$21.461 billion. This difference in figures could be related to the sustainability measures taken up by Ford, for managing their supply chain in an increasingly effective manner.
As opined by Fathali, (2016), if the comparison of the operating performance of Tesla has been made with Toyota, it can be shown that Toyota has competitive advantages over the performance of Tesla in producing Autonomous car. The company has emphasized the safety of human beings and enhancing the efficiency level of cars which has enhanced the competency level of the company in the comprehensive business environment. As the efficiency level of the cars produced by Toyota is greater in comparison with Tesla, it can be said that the company gains better consumer response from the market with its responsible management and positive behaviour. The company has developed its performance by focusing on less energy consumption process. The chance of accident has been reduced by developing this car in the market and in this respect, it can be said that Tesla does not implement a fully autonomous car still now. Hence, based on the production and innovation performance comparison between Tesla and Toyota, it can be said that Toyota is far better in the enhancement of their production. As compared to the management behaviour of Tesla, the organisation Toyota has been found to have greater brand reputation for its transparent practices that it use for providing information to the customers.
Based on the overall analysis of the above it has been identified that three companies have three different anatomies of issues. The entire discussion says that to enhance the competitive advantages and reduce Tesla management issues, it is essential to the company to focus on the development of management of production. Furthermore, the company has to adopt strategic policies to develop their investment performance. On the other hand, to enhance the production of a fully autonomous car, the management of Tesla has to emphasize on the research and development wing. The successful development of technology would help the company to compete with Toyota in the comprehensive business environment.
Recommendations regarding future behaviour to address the identified Tesla management issues:
From the analysis of the impact of the improper management of the different business functions of Tesla, it can be said that the company needs to improve its management style and approaches to bring the company on the correct track. According to Prawitz and Cohart (2016), the organisation can pay greater attention toward the management of the safety and security of the employees at the workplace focusing mainly on the plant and the factories. A stronger risk management procedure can be helpful for the business to reduce Tesla management issues and accidents in the factories. For this purpose, the organisation is also required to focus on the recruitment of talented staff with adequate knowledge of risk management in the factories.
To improve the company’s reputation and earn the lost reputation from the market the management of the company needs to be more transparent on the matters that are important in the business. According to Kompalla and Kopia (2015), the organisation can communicate to the media and the community regarding its approaches to enhance the safety and security of the employees and the customers while driving the cars. The organisation has already confirmed that it is not possible for the autopilot function to detect every small vehicle on the road and therefore it is required that the drivers pay major attention to the road while driving in autopilot mode. Based on the systems theory of management, it can be said that to cope up with the Tesla management issues a company can perform either as an open system or a closed system. In an open system, the organisation can be affected by the incidents occurring in the external environment and there is a flow of information between the organisation and its external environment (Dubey et al., 2015). So, the company can operate as an open system and be transparent to the customers while selling cars or allowing the customers in test drive regarding the necessary steps that the customers are required to follow to prevent accidents. For example, Toyota provides its customers regarding the steps they must follow while driving in an autopilot mode with the provision of a brochure containing instructions of driving in autopilot mode.
To cope up with the growing demand of the new car models the company has focused on higher production of car models which has led to the enhancement of the working hours for the employees. Several employees have also terminated due to their inability to cope up with the changed demand of the company. According to the Human relations management theory individuals possess the desire to be a part of a team that is supportive and facilitates growth and development (Gond et al., 2016). Based on the theory, the company can focus on the training and development of the employees so that they can support the company in meeting the goals rather than terminating the employees. To increase the financial performance of the company and reduce debts, the company is required to focus on better resource allocation. On the other hand, the organisation is also required to focus on its manufacturing process and correctly set its goal considering its capability in meeting the goal in order to overcome Tesla management issues (Sirrs, 2016). For the reduction of the rate of accidents in cars, the organisation is further recommended to improve its manufacturing process by paying attention to the quality check of the vehicles.
From the above discussion on Tesla management issues, it has been evidenced that the organisation is facing major management challenges that have led to the serious implications on the company's reputation, profitability, and customer response. The problems that have been identified are contentious in nature. It is identified that other automobile businesses deal with the management issues differently and can maintain the reputation and the response of the customers in an efficient manner. Several recommendations have been provided so that the company can responsibly manage its future behaviour and address the identified problems efficiently.
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