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Strategic Change Management Of Tesla Inc. Corporation

Student Number: P2746984

Module Code: HRMG5027

DMU EMAIL: P2746984@my365.dmu.ac.uk

PROGRAM OF STUDY: MA, Human Resource Management

De Montfort University, Leicester UK

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Introduction

Senior et al. (2020) define organizational transformation as an organization's complete evolution

across time. It covers operations, innovations, and leadership transfers from the past, present, and

future. Change is one of the most important aspects of a business and is unavoidable in all

sectors. Organizations use it to revolutionize leadership styles, goods, and brands to delight

consumers and workers. Thus, every company strives for more sophisticated technical

advancements in its operations. Firms must integrate market trends into their organizational

reform plans to maintain market share and attract new consumers. According to Koskinen et al.

(2019), the main goal of organizational change is to ensure that the company operates in a way

that allows them to maintain its consistency and competitive position in the market and to climb

ladders and become one of the elite corporations in that industry. However, much organizational

change is considered inevitable and required in practically every firm; Nohria and Beer (2000)

state that roughly 70% of change attempts fail owing to a multitude of issues that impact the

whole change process, including time frame too short of showing results: inability to properly

identify the success elements, failure to critically examine the change efforts, other causes that

overwhelm the change, and the reality that change is continual and has no endpoint. Thus, this

essay critically examines Tesla Inc Corporation's strategic change management method. I chose

to write on change management at this company since I have a friend who works there, and we

sometimes discuss about the organization. I became interested in learning more about the

business because of the recent advancements in this organization that are oriented toward

reducing carbon emissions. On the other hand, Elon Musk's leadership of the organization has

been a source of inspiration due to his never-ending dreams of achieving more and better

technological advancements that would make the world of technology even better while
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contributing to environmental conservation. The context of Tesla, the drivers for change, the

approach followed during change, the change process, the impact of change on Tesla workers,

change management, the SWOT analysis, and the suggestions for change will all be considered

in the essay.

A short profile of Tesla Inc. Corporation

Tesla is an automobile company based in Palo Alto, California, US. The firm was founded in

2003 by two engineers, Martin Eberhard and Marc Tarpenning, according to Baer (2014). When

Martin Eberhard could not locate a climate-friendly sports automobile after getting divorced, Mr.

Eberhard was inspired to launch the firm. As stated by Hitt et al. (2010) also realized that battery

manufacturing technology had advanced to the point that a high-performance electric sports car

could be manufactured since the automotive industry's giants were outsourcing a large portion of

their production in pursuit of dynamic competencies. This experience persuaded Eberhard that

Tesla could join the automotive sector without developing entirely every automobile component.

According to Jones and George (2012), Eberhard persuaded Tarpenning that there was a market

for a strong and well-designed renewable energy motor. Thus, they were able to establish Tesla

with a strategy of differentiation from other industry participants. After investing $30 million in

Tesla, Elon Musk became Tesla's board chairman in 2004. "Tesla's mission is to accelerate the

world's transition to sustainable energy," according to the Tesla website. The company's original

goal was to build the first electric sports car, according to Parekh et al. (n.d). After much

research and development, Tesla released the Roadster in 2008. Tesla's Roadster was an

advanced electric sports automobile that could drive up to 245 miles on a single charge ("tesla,

Inc. n.d"). After Eberhard and Tarpenning left the firm in 2008, Elon Musk became CEO

("Tesla, Inc. n.d"). According to Stewart (2016), Tesla has expanded beyond automobile
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manufacturing to create a range of energy products under Elon Musk's leadership. According to

Parekh et al. (n.d.), Tesla offers solar roofing that charges the house battery for charging electric

cars, eliminating carbon emissions at home. With the cheap Model 3, Tesla is approaching the

midmarket to grow its market.

Change at Tesla Inc. Corporation

The change at Tesla Inc. Corporation is categorized as a strategic change. According to

Buchanan and Hucyzynski (2019), a strategic shift indicates the change's depth, extent, and

scope. According to Buchanan and Hucyzynski (2019), a strategic transformation comprises

developing new goals, objectives, and leadership, boosting efficiency, implementing a new way

of thinking, enhancing creativity, and altering how we conduct business. The strategic change

that took place at Tesla Inc. Corporation is considered to be a transformational strategic change.

According to Nadler and Tushman (1995), transformational change involves changes in basic

organizational elements such as leadership, goals, efficiency, objectives, and change tolerance.

Tesla's improvements were intended to revamp its leadership, production, customer relations,

technological innovation, and business processes.

Elon Musk became Tesla's CEO in 2008 when the founders departed, and he remains in

that role today. Musk's appointment as CEO has caused several changes in the corporation. The

company's vision has changed from building the first electric sports car to accelerating the

world's transition to sustainable energy. The company's latest innovative automobile production

technology investments are another strategic move. Team Newsable (2022) states that the

corporation has switched from producing gasoline-powered cars to electric ones to reduce carbon

monoxide emissions. Tesla is also creating electric automobiles with autonomous capabilities,
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according to Team Newsable (2022). Tesla CEO Elon Musk also said that by 2023, they would

produce fully robot-driven automobiles.

According to Paik & Chang (2014) and Lakhani et al. (2013), Tesla's production of

automobile parts is another strategic move. Tesla has improved its ideas by collaborating with

other companies and using their resources. According to Paik & Chang (2014) and Lakhani et al.

(2013), Tesla has always used an open innovation strategy and collaborated with well-

established and strategically relevant businesses to advance its technology and goals. Tesla

worked with Panasonic to create a new generation of EV cells faster. In 2015, Tesla and Solar

Edge worked together to offer distributed PV storage solutions worldwide. Lakhani et al. (2013)

found that these collaborations with top firms allow organizations to expand quicker and become

industry leaders in technical innovation. As Tesla works with Toyota and Daimler, this

collaboration model also played a fundamental role in its innovation journey. McCain (2019);

Hoelzlhammer, (2018) concludes that Tesla targets new markets like China to acquire new

consumers and minimize the additional expense customers incur when buying and shipping

automobiles from the US.

Tesla's transformation process and efforts reflect Senior et al.'s (2020) work. In

comparison to Senior et al. (2020) work, Tesla's change efforts are examples of strategic

adjustments a company may make. Senior's work covers innovation, policy change, mission

change, leadership change, marketing, organizational culture, efficiency, and operational

changes.

Impact of Change on Tesla Employees-Sustaining Change

According to Buchanan and Huczynski (2017), the extent to which an organization and

its employees can cope with organizational change depends on several factors, but understanding
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the many change drivers is crucial. Buchanan and Huczynski (2017) suggest that change drivers

may be internal or external and impact all companies at various levels. Initiative decay and

fatigue are two primary outcomes of organizational transformation, according to Buchanan and

Huczynski (2017). These two viewpoints show what occurs with the new developments shortly

after the change and how the side effects of change affect the workers who implemented the

modifications.

Tesla Inc. Corporation's organizational reorganization reflects the perceptions of

Buchanan and Huczynski (2017). According to Carlier (2022), Tesla began manufacturing

electric automobiles in 2008 with the Roadster, followed by the Model X and Model S premium

sedans in 2015. In 2017, Model 3 transformed the company's ideas. Carlier (2022) claims that

Model Y was released in the US in early 2020 after this invention. According to Han (2021), the

business continues to create entirely robot-driven automobiles. This shows the level of initiative

decay in Tesla's technical advances as the corporation strives to innovate immediately after each

breakthrough.

According to Buchanan and Huczynski (2017), Tesla Inc. workers have change

weariness. For change efforts to function well, senior organizational managers and corporate

leaders must play atypical roles in formulating change initiatives and communicating them to the

workforce. According to Sieklucki (2018), change management demands leaders to go beyond

their usual activities and work planning to prepare for worker opposition. According to Sieklucki

(2018), Tesla's CEO stated in a meeting that the company wants to improve the road safety of its

vehicles, which requires its top engineers to work harder and longer. Buchanan and Huczynski

(2017) found that change causes stress, weariness, and burnout.

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Finally, Tesla's technological advancements aided workers' career growth and

technological improvement. Employees have gained new talents, career development skills, and

experience thanks to the company's technology innovations. Space X, Tesla Energy, Tesla Solar,

and Robotic cars are all inventions that have helped employees improve their work skills and

advance in their careers.

Drivers of change

According to Senior et al. (2020) and Dawson (2003), change drivers are internal or external

elements that motivate organizational change. An organization's operational strategy, policy,

leadership, product design, services, and technical advancements may evolve. Senior et al.

(2020) identified the following change drivers as impacting most organizational change

initiatives: Global competition, changing consumer demand, technological breakthroughs, new

laws, climate change, and human behavior.

Tesla Inc. Corporation's transformation mirrored some of Senior et al.'s (2020) and Dawson's

(2003) change drivers. Thus, Tesla Ince's change drivers were as follows:

Global competition. Tesla Inc. Corporation has changed due to global competitiveness.

According to Reeves & Deimler (2011), Tesla competes with well-known motor manufacturing

businesses. Ford, Toyota, Nissan, Mercedes-Daimler, Audi, Volkswagen, and Honda are well-

established participants in this industry. As Reeves & Deimler (2011) stated, Tesla needs to step

up its game by modernizing its manufacturing to make current automobiles appealing and more

efficient to gain market share.

Change in customer demand: Tesla Inc. Corporation's move was also driven by client demand.

Electric automobiles are becoming more popular among consumers who wish to save money due

to rising fossil fuel costs. Most automobile owners prefer electric cars over petrol ones. Since
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demand is rising, Tesla decided to spend more on this initiative to provide cheaper electric

vehicles for its consumers.

Technological advances: Global technical developments also inspired Tesla's manufacturing

breakthroughs. As Carlier (2022) shows, the firm has promoted its brand by continuously

improving its automobiles, starting with a roadster, then model X and S, and finally model Y.

These developments aim to provide the most elegant, efficient, safe, and cheap automobile

brands that meet consumers' demands and tastes. Tesla, Inc. (n.d.) claims its advancements put

the business ahead of its competition, even though it was the first to develop a rechargeable

lithium battery that lasts longer and can travel 245 miles on a single charge.

New legislation: However, new government laws have spurred organizational innovation-based

adjustments. In 1990, California passed legislation encouraging zero-emission car production,

according to van Kampen (n.d.). As revealed by van Kampen (n.d.), the requirement required

automobile manufacturers to offer a certain proportion of zero-emission motors in California.

General Motors and other automakers began making hybrid and electric automobiles. Tesla Inc.

changed due to legal enforcement.

Change in the environment: According to Musk's (2006) master plan, Tesla moved to produce

zero-emission electric automobiles. As stated in Tesla's organizational statement Tesla, (2018),

the organization's goal was to pioneer the innovation of sustainable transport through the creation

of electric cars that would enhance environmental sustainability by lowering carbon dioxide

toxicity levels since the organization is dedicated to the global effort to reduce industrial

contribution to global warming that causes climate change.

Models of change

Lewin's Model of Change

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Based on the functionality of this model, there are three stages in play where the changes can be

implemented using the company's existing systems:

Stage 1: Unfreeze- According to Carlson (2015), in this stage, the organization dismantles all of

its operational rules, regulations, and processes and allows the system to accept new

developments.

Stage 2: Change- The company creates a new operational system during this stage. The changes

occur naturally, assisting the organization in installing new systems suited to the newly identified

demands among stakeholders and customers.

Stage 3: Refreeze- Schulze et al. (2015) argue that at this stage, the company can achieve a

position in which the new systems have been successfully established, are properly fitted within

the organization, and have been fully welcomed and adopted by the firm's personnel.

At this time, the corporation has reached a point where the systems have naturally found their

home in the company and have been adopted by its employees (Schulze et al., 2015).

The adoption of Lewin's three-stage model in Tesla Corporation's change process is evident in

the sense that Tesla Corporation began with a change of leadership when the two founders left

the organization. Tesla found new leadership in Elon Musk, who came up with an innovative

operation idea that eliminated the employees' previous ways of thinking in 2008 when Tesla

began its journey towards electric car production by launching its first electric vehicle.

The new leadership succeeded in instilling new ideas, vision and mission, and innovative ways

of doing things by installing new systems that facilitated the manufacturing of new electric cars,

which the company continued to develop and make a culture of the organization. According to

Musk (2006), the company aims to produce affordable electric vehicles. This is the

organization's present mission.

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Tesla has succeeded in reaching a point where new inventive ideas for change are recognized

and embraced by both staff and customers. The third step of Lewin's change model is depicted

here. Tesla's ideas and reforms have evolved into company culture, with the corporation planning

even more advancements, such as the space X (Musk, 2006).

Change management

Resistance to change

Armstrong (1999) defined change resistance as the hesitation to accept, embrace, or ponder

changes that people consider harmful or detrimental to their welfare. According to Armstrong

(1999), people regard change as completely harmful and detrimental to their personal or group

interests. Armstrong (1999) outlined numerous reasons why people may resist change.

Armstrong (1999) identified these reasons: Shock of the new Economic worries, Inconvenience,

Uncertainty, Symbolic fears, Interpersonal relationship threats, Status or skill threats, and

Competence fears. As with Tesla, there have been no significant cases. However, several factors

may have caused consumers, workers, and stakeholders to oppose change. According to Vance

(2015) and Newcomb (2016), Elon Musk's intense concentration on innovation in the automobile

business may make him conflict-prone, oblivious to staff efforts, and unresponsive to employee

complaints. In this respect, Morrisson (2008); Volecker (2009); Shall (2016); Lambert (2016);

Korosec (2016) claim that Musk's leadership results in constant top leadership churn. According

to Lucas (2003), such turnovers result in enormous losses for the firm regarding training costs,

skilled personnel loss, and perhaps worse staff morale. Ross Garber says another Tesla and Elon

Musk concern is that he makes big promises he seldom keeps. Another problem that might

generate opposition is the corporation promising too much change, sharing too much about its
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creative intentions, and failing to deliver. Han (2021) announced that the firm will build 500000

automobiles by 2020.

Kotter and Schlesinger (2008) listed six ways to handle opposition. Education and

communication of the intended changes and the company's needs are key to overcoming

resistance. In Tesla's change process, the CEO openly and directly communicates with his staff,

stakeholders, and consumers to explain his aims and reasons for changing his business. This

method helps stakeholders understand the expected advantages of the proposed changes, making

them more likely to accept and embrace change agents.

Communication of change

Kotler (2000) recognized five major milestones in the evolution of communication. In his study,

he recognized the following important steps of change communication: identifying the target

audience, defining the communication goals, designing the message, selecting the

communication channels, and measuring the communication process's outcomes. Tesla CEO

Elon Musk first identified his target audiences, which were the customers, devised the objective

of his communication and the intended changes and made them clear, designed the content of the

message he wanted to pass on to the audience and ensured it was everything they would love to

hear, he then selected the best channel for communication and he in most cases used social

media and Twitter where he attracted

Kotler (2000) named the management chain of command, meetings with senior and intermediate

managers, company websites, blogs, podcasts, noticeboards, team briefings, emailing, and social

media as some of the primary avenues for communication during transformation. Elon Musk

often used several media, like Twitter, blogs, podcast meetings, and team briefings, to

communicate his ideas to consumers. According to Goldberger (n.d.), Crabtree (2016), and
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Schwartz (2016), Tesla generates an urgency for change by evaluating the areas and industries

that demand urgent innovation and communicating with consumers. For example, Elon Musk's

plan to produce a driverless automobile by 2023 was led by increasing urgency, resulting in a

stronger coalition between workers and Musk following the communication flow that Musk

adopted.

Gibb (1961); Buchanan and Huczynski (2017) demonstrated key communication climates, one of

which Tesla's leadership embraced throughout the change process. The key communication

climate exhibited in Tesla's communication process was an open, supportive environment,

especially an open and honest communication climate, in which the CEO spoke directly to his

staff and stakeholders without withholding any information. Goldberger (n.d.), Crabtree (2016),

and Schwartz (2016) demonstrate that Musk's communication style is considered authentic,

down-to-earth, direct, and clear as he speaks to employees far below him in the hierarchy, having

been spotted using a present tense than average to address his audience. This technique has

allowed him to garner huge support for his vision and every project he pursues.

SWOT Analysis

Strength

An organization's strength is determined by analyzing its competencies and accessible assets,

primarily used to achieve a competitive edge. According to Binkiewicz and Czubakowski

(2008), the following are Tesla's strengths:

Superior proprietary innovations in car design, such as Model S, X, Y, and 3, and engine and

battery technology that outlasts competitors.

Superior vehicle performance (i.e., vehicle range capabilities) and distinctive/attractive vehicle

designs
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Musk secured the production of inexpensive electric cars by developing the Luxury Sedan

automobile in 2012, followed by the Model S and X in 20215, and eventually, the Model 3,

which costs $35000, according to Carlier (2022).

Weakness

Tesla's vulnerabilities in the BEV market are as follows:

Due to a lack of major economies of scale, the cost structure is rather expensive.

If demand rises dramatically, component supply issues may arise (Binkiewicz & Czubakowski,

2008).

Potential output issues if customer demand in the intended luxury car market skyrockets (current

manufacturer, Lotus, has limited manufacturing capacity).

Consumers are concerned about the infrastructure of the electric car industry ('range anxiety,' a

limited number of charging stations, limited additional charging choices, and so on).

Musk's effort to diversify into other companies, including solar-powered appliances, elicited a

mixed response from stakeholders since the efficiency of his motor industry was seen to have

decreased by 43%, according to Kolodny and Pettitt (2021).

Opportunity

According to Ferrell et al. (1998), some of Tesla's significant prospects include:

Significant advancements in automobile battery technology (headed by Tesla).

Significant entry obstacles in the BEV industry help to restrict the number of viable new entrants

(as seen by the recent failures of TH! NK, Aptera, Venture One, and Venture Vehicles)

(Binkiewicz & Czubakowski, 2008).

Consumers are becoming more conscious of owning a BEV's financial and environmental

advantages.
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Concerns about pollution and global warming are growing.

Rising worldwide worries about energy security and reliance on fossil fuels

Collaboration with Toyota and Daimler has provided Tesla with a new opportunity to obtain

more technical improvements in the automotive business.

According to Kissinger (2016), the company's expansion into new areas, such as China, helped it

to recruit new clients and make its goods easily accessible to customers outside the United

States.

Continued technical advancements and improvements in new technology that previous firms

lacked, such as autopilot (The Washington Post, 2022) and lithium batteries (The Tesla Space,

2002).

Threat

Tesla must address the following main threats:

There has been significant growth in the number of direct BEV competitors.

A growing range of BEV alternatives (such as plug-in hybrids, gasoline-powered hybrids, natural

gas vehicles, ethanol-fueled cars, and more fuel-efficient non-electric vehicles) are available.

Large vehicle makers with better economies of scale capabilities, such as Toyota, Nissan,

Volkswagen, Honda, Audi, and others, are entering the BEV industry.

Potential key breakthroughs in car battery technologies by a competitor(s) that might reduce

Tesla's existing BEV technical advantages

A situation in which one of Tesla's vehicle drivers was engaged in a car collision while in

autopilot mode continues to jeopardize the company's market position and Tesla's automobile

safety on the road.

Recommendations
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The SWOT analysis results revealed that competition is the most important element influencing

Tesla's growth and company operations. Tesla should devote most of its strategy formation and

resources to establishing better marketing techniques and generating more efficient and

appealing goods that surpass its market competitors. This will allow the corporation to increase

its competitiveness against its business competitors. It is advised that the organization spend

more on improving its innovation and market presence by strengthening its research and

development to gain a significant competitive edge.

In addition, the organization should strengthen its market presence. It is advised that Tesla

explore a broader market presence by researching other global emerging markets. According to

the SWOT analysis, Tesla is only present in the United States, China, and a few European

nations. To capture new markets and compete successfully, the corporation should undertake

more brand marketing, particularly in countries where electric cars are not widely recognized.

Finally, Tesla should educate its consumers about how to use their products as illustrate by

Mangram, (2012). This will aid in lowering the number of accidents involving their automobiles.

This program will assist in educating consumers about the situations in which they should not

drive in autopilot mode, particularly when it is raining.

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