Tesla Structural Analysis
Tesla Structural Analysis
Tesla corporate level strategy is to refocus their attention towards energy provision instead of seeking for means to improve and expand the all EV market. The EV market expansion will prove too big a challenge for Tesla to handle, especially with competitors joining the market. Even though Tesla enjoys a competitive advantage in the all EV market due to superior technology and advanced technology in the manufacture of the EVs, large multinational automobile companies have deeper pockets and the ability to match the technical nous and advantage that Tesla presently enjoys. Among the business level strategies that Tesla needs to adopt is to do a market survey of potential markets where its energy products may have a high demand. Unexploited markets such as Africa and the middle east that experience long intervals of the Sun present such market options. Investing in low-cost technology to lower the cost of the batteries is also top of the agenda among the most important business level strategies that Tesla needs to undertake.
Question one: Identify the form of technology- pooled, sequential, or reciprocal- necessary to produce the organization’s work
A pooled form of interdependence is a structure that portrays a high form of independence among the various units of an organization. Each unit performs its functions independently, but their products contribute towards the overall goal or product of the organization. This form of technology is considered blind due to its indirect interdependence among the departments. The sequential form of interdependence calls for actions that are similar to an assembly chain. This form of interdependence demands more coordination among the departments or units in an organization compared to the pooled form of technology. The third form of technology, the reciprocal interdependence is similar to the sequential interdependence but has a cyclical nature as well where each unit/department’s actions affect the other department as well.
Tesla needs a coordinated approach that is similar to the reciprocal approach, but without the cyclical effect. An advanced form of the sequential technology is ideal for Tesla. Each of the products in the various departments needs to work in unison to produce a product that augers well in all of its aspects. For instance, the design department should fit the technology available. The batteries produced for sale should reflect the level of research and expertise that people have come to expect from the Tesla brand. In this regard, the research department should also work in close relationship with the public relations department to ensure that the right information about Tesla’s products is released to the public. The information should be able to reveal the competitive advantage the product enjoys over its competitors.
Question two: Identify and describe the form or type of organization departmentalization that will provide the necessary level of integration among the workforce
There are various ways through which an organization can choose to organize its departments in order to facilitate efficient operations within the organization. Popular forms of departmentalization include, functional departmentalization; grouping of an organization’s activities is based on the functions of the departments, product departmentalization in which grouping is done based on the products produced by the department and geographic departmentalization that depends on the location of the departments (Haug, 2012).
In Tesla, the best form of departmentalization should be based on the function of the departments. The various departments should be organized under the various functions such as design, product development and research, sales, finance, e.t.c. Each of these functions requires a level of specialization that is slightly independent of each other. The difference in the nature and aspects of the various functions makes this kind of departmentalization ideal and grants some level of autonomy to the various departments. It also ensures that unrelated activities do not cause any interference between them.
Question three: Briefly describe what should be done with respect to each of the following to ensure that the Tesla structure supports its purposefully selected strategy:
Mechanistic or organic
A mechanistic approach calls for individual specialization as well as the centralization of decision-making. It also tends to be bureaucratic and slow. On the other hand, organic organizational structures call for joint specialization and a to a large extent, the decision-making is decentralized (Thompson, 2013). Employees in an organically structured organization are perceived to be brilliant, and their communication is mostly lateral.
An organic structure can suit Tesla better compared to a mechanistic form of organization. Tesla feels pride in having a pool of brilliant minds that are capable of innovation individually. Forcing such individuals to a bureaucratic structure will tie them down. Therefore, a mechanistic approach is not ideal for Tesla.
Tall or flat hierarchy
Tall organizational structures are ideal for large organizations and are generally represented by many management levels. As an organization grows, the hierarchy also grows taller. Each management level controls a small portion of the organization. Flat hierarchies, on the other hand, have fewer management levels and managers control larger sections of the organization. The flat hierarchy focuses on empowering employees and tapping into heir brilliant minds and innovative capabilities (Daft, 2012).
For Tesla, a flat hierarchy would be ideal to help provide a perfect environment for its brilliant minds to be creative and to steer the company forward with smart technological advancements.
Centralization Vs. decentralization
A centralized organizational structure has one central decision-making body. The organizational structure is common for small organizations that have one individual, the CEO, who makes all the decisions. On the other hand, decentralized structures have several individuals making the decisions. A decentralized structure has an advantage over the centralized structure due to its speed of decision-making caused by the bureaucracy in the centralized structure (Daft, 2012).
For Tesla, a decentralized structure would be ideal to some extent, but some features of centralization in place. Tesla is still small and, therefore, can afford to have a centralized structure to enjoy the efficiency in decision-making that comes with it. However, its managers can be accorded some autonomy and power to make important decisions in their departments for the common good of the entire organization.
Wide or narrow spans of control
A wide span of control, basically, is depicted by managers controlling more people or subordinates. On the other hand, a narrow span of control means that there are fewer subordinates under each manager in an organization. A wide span of control is ideal for subordinates that perform simple routines repeatedly that do not demand close supervision. However, for highly skilled tasks, a narrow span of control is ideal to ensure that the sensitivity of the tasks is accorded the attention it deserves (Daft, 2012).
In the Tesla Corporation, a narrow span of control should be ideal for the managers. Tesla is at the forefront of the EV market, and its products are at the apex of car technology inventions. Its brand has been built on its ability and its position at the forefront of technological inventions. It is, therefore, crucial that each product and function be closely scrutinized that the end product meets both company targets as well as customer expectations.
An organizational structure may be dependent on the resource allocations among various sections and departments within an organization. More focus is given to departments that receive the lion’s share of an organization’s resources. However, the importance of a particular function determines the level of resource allocation accorded to a given department. In Tesla, more resources are allocated to the research and product development departments due to the critical role that they are poised to play in determining the future of the organization.
Question Four: Finally, using insight from the text reading, what are three of the main considerations that top management should be mindful of with respect to the marketing, finance, and accounting, R&D, and internal information systems functional areas
Each of these departments is crucial to an organization and, therefore, top management is keen on balancing resource allocation among the departments as well as ensuring that the departments work in a cohesive manner.
First, resource allocation among the various departments is crucial in determining the success of an organization, depending on the company’s strategy, the departments should have the resources appropriated accordingly to reflect the role the department is poised to play in attaining the organization’s overall goals.
Secondly, Communication among the various departments. Horizontal communication among the various departments is crucial to the proper functioning of an organization. Even though some level of autonomy is required within various departments, communication is crucial among the departments to ensure that their contributions are in line with the overall organization’s goals and objectives.
Thirdly, each department should have its goals. However, the goals should reflect the overall goals of the organization, and the organization should ensure that each department is headed by a manager who will ensure that the organization does not deviate from the overall objectives.
Question one: Whether going forward, Tesla would be pursuing related or unrelated diversification if they were to continue forward as both a car maker and a battery maker
If Tesla were to continue forward as both a car manufacturer and a battery maker as a form of diversification, the company would be pursuing a related form of diversification. However, presently, the company makes Powertrain batteries and components that it supplies to its direct competitors, Toyota and Daimler automobile companies. This action has the effect of helping the competitor in joining the lucrative and rapidly expanding electric car market.
Question two: using the five points noted in the text related to the diversification of profitability, what the argument FOR pursuing both would be
Up until this point, pursuing both battery manufacturing as well as EV manufacturing has proved profitable. Both of these markets have a huge potential. However, rapid changes and entry of competitors into the EV market have necessitated growth and expansion plans. The expansion plans are not only for the organization’s benefit, but to remain competitive among the automobile industry.
Having a diversified portfolio is beneficial to any organization that operates in a risky environment changing customer needs, available resources, and political environments make business diversification a necessity for the long-term survival of a business.
Diversification of an organization’s portfolio is also beneficial as it helps in reducing the risk facing an organization. It also helps in self-protection, if one of the options is doing well, it can shield an organization from losses that may be incurred by the other investment option (Naqshbandi & Kaur, 2013).
Diversification also helps an organization to have several avenues for expansion. This is ideal for the long term reasons because all organizations are poised to grow in the future. Having more than one option for growth reasons gives a business an added advantage and presents some form of certainty over its growth prospects in the future.
Question three: Using the text information on the limits/ disadvantages of diversification as well as the information on strategic choices to be made to diversify, why would you argue AGAINST the pursuit of a dual (related or unrelated) strategic focus and in favor of your selection (using both insight on strategy and the structural form you have built to support that strategy)
Diversification introduces extra challenges to an organization (Evans, 2012). For one, diversification eliminates or reduces the competitive advantage an organization can enjoy when it specializes in a particular product. Both of the diversified sections are poised to grow in the future, the level of growth may not be the same. While one department may face astronomical growth, the other may experience stunted growth. Such a situation presents a challenge for an organization in terms of modifying its strategies and focusing on one of its products.
For Tesla, pursuing both options is not ideal. Tesla is already faced with serious challenges in the all EV market. Its plan to expand in the near future will present even more challenges. The battery manufacture business also introduces its challenges. Seeking to expand globally in two markets will double the challenges that the company is poised to face making it more difficult to predict its growth. Therefore, the strategic decision to specialize in the battery manufacture business will work for the corporation both in the short term as well as in the long term.
Review two separate classmates’ arguments for a strategic approach opposite your selection and share your thoughts on their selection and support
First argument: (Nicole): “I believe by becoming only an EV manufacturer is the first step in the right direction. Prior to this, they were focused not only on manufacturing vehicles, but also the technology portion and were unable to dedicate their full resources to one or the other. By making a choice, and sticking to it, I believe they can avoid being stuck in the middle, and failing.”
Choosing one direction and sticking to the choice is the way to go. The EV business presents as much potential for growth as the battery manufacture business. However, the EV business is poised to offer bigger challenges to Tesla going forward. The challenges will come with the negative economies of scale and entry into new markets. However, the immediate threat that Tesla is certain to face is the entry of competitors into the market. Companies such as Toyota, Nissan, Ford and Daimler have already entered the market with all EV or hybrid cars. So far, Tesla has a competitive advantage over their products due to the milage of the Tesla’s products as well as the technological advancements. However, some of these automobile companies have established markets globally and can invest heavily to reduce the competitive advantage Tesla enjoys and probably run Tesla out of business.
Second argument: (Linda): ”Tesla should try to avoid being stuck in the middle by maintaining the differentiation among their competitors. With their services and products, should go more towards the efficiency of the car for their consumers. By the focus on their main mission and vision, I believe that they will not be stuck in the middle; they will always being the ones who stand out in the ‘blue ocean’ ”
Differentiation of their products has worked out well for Tesla and given it an edge over its competitors up until now. It may also continue to work in the short run for Tesla. However, Tesla faces a challenge in which the notion that its cars are meant for the affluent in the society gives it a bad image among a majority of people. Differentiation due to technology will force it to maintain the high standards of technology and, therefore, the price as well. In the long run, the market may shift towards its competitors with the ability to introduce price-friendly options in the market. Therefore, differentiation may work against Tesla, in the long run, especially with the entry of competitors in the market that may force Tesla to compete on price as well.
Daft, R. (2012). Organization theory and design. Cengage learning.
Evans, P. (2012). Counter‐Hegemonic Globalization. John Wiley & Sons, Ltd.
Haug, P. (2012). VALUE STREAM MANAGEMENT: EMPIRICAL EVIDENCE ON LEAN ORGANIZATIONAL STRUCTURES. Opgeroepen op, 4.
Naqshbandi, D. M. M., & Kaur, S. (2013). A study of organizational citizenship behaviours, organizational structures and open innovation. Organizational Structures and Open Innovation (November 28, 2013).
Thompson, S. (2013). How Do Organic Organizational Structures Affect External Hierarchical Organizational Structures?. Small Business—Chron. com.