1.

0 INTRODUCTION

Business management practices usually refers to the working methods and

innovations that managers use to improve the effectiveness of work systems. Common
management practices include empowering staff, training staff, introducing schemes for
improving quality, and introducing various forms of new technology. Business management
practices emphasise on managing the coordination and organisation of business activities. this
typically includes the production of materials, money, and machines, and involves both
innovation and marketing. Management is in charge of planning, organizing, directing, and
controlling the business's resources so they can meet the objectives of the policy.

Managers and directors have the responsibility and power to look over an enterprise
and make decisions. the management size can be anything from a single person in an
organisation to thousands of managers in companies that are in different nations. In bigger
organisations, the policy is defined by the board of directors and then carried out by the CEO,
or chief executive officer. the goal of management is to get people together to achieve the
same desired objectives and goals by using the resources that are available in an effective and
efficient way. Management functions include the following:

 Organizing
 Directing or leading
 Planning
 Staffing
 Controlling an organisation

they also encompass the manipulation and deployment of financial resources, natural
resources, human resources, and technological resources. Management is necessary to
facilitate a united effort towards achieving the company's goals.

For this paper, Tesla MOtORS INC has been chosen to analyse business practices that
has ben practiced there. Tesla Motors Inc. is an American automaker under the leadership of
Elon Musk. the company marked its entry into the automotive market with the Roadster
sportscar, a completely battery powered vehicle. the company developed its own power
storage technology in the form of lithium-ion batteries for the Roadster, and it became the
first-ever car that can go up to 320 km on the strength of a single charge. Tesla launched the
Model S luxury sedan in 2012, which earned a five-star safety rating and went on to become

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world’s bestselling plugin vehicle by 2015 (Baer, 2014). As of November 2016, 150,000
units of the Tesla Model S have been sold worldwide, and the mass-market Model 3 is
introduced in 2018 (Hanley, 2015). Tesla also has a chain of Supercharger stations across the
United States, parts of Europe, and Australia, where the cars can be charged by their owners
at no cost; chargers in the network have the ability to give a 60% battery boost in just 20
minutes (Tesla, 2018).

As of today, Tesla manufactures the majority of its cars in Fremont, California, with
another assembly location in the Netherlands to serve the European market. In 2014, Tesla
announced its massive plans to build its own Gigafactory in Nevada to produce car batteries
and other power solutions. the Gigafactory is under construction with a $5 billion investment
jointly made by Tesla and Panasonic. Once fully operational, the facility will be able to
produce 36 GWh of clean electricity to charge the batteries that will eventually be used in
cars, Powerpacks and Powerwalls (Tesla, 2020).

Tesla Motors has shown a ten times revenue increase from 2012 to 2015, mostly
owing to the commercial success of its Model S. However, due to increasing investments in
manufacturing and retail stores, the company has yet to show positive results in terms of net
profits and has raked in losses the past 4 years with net losses amounting to $88 million in
2015 (Tesla, 2017). Despite these short-term financial losses, shareholders have shown
increasing interest in Tesla, with share price and company valuation increasing tremendously
since the company went public in 2010 (Squatriglia, 2010). As of today, Tesla has a market
capitalization of about $31 billion, more than half of Ford Motors (Tesla, 2010). Tesla
Motors also got a significant push from US authorities in recognition of its effort to make
large-scale production of non-polluting electric vehicles a reality; this was majorly in forms
of tax credits to the company, with an estimated $2.4 billion of future incentives awaiting
Tesla for its Gigafactory project (Tesla, 2018).

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2.0 BUSINESS MANAGEMENT PRACTICES

2.1 LEADERSHIP

Tesla CEO Elon Musk has a clear vision of accelerating the world towards sustainable
sources of energy. this vision is clearly reflected in all the work he does, whether at Tesla
Motors or the other companies he leads, like SolarCity which recently merged with Tesla
(Stewart, 2016) and SpaceX. to evolve and contribute towards the mainstream usage of
sustainable energy, Musk has been the central force developing cutting-edge technologies by
employing the best minds in the field. He has heavily invested human capital and money into
developing these in-house technologies, whether it is high-efficiency cars or establishment of
the Tesla Gigafactory. Musk leads by example: he has created several companies that
showcase success in such a short time that he is definitely among the top leaders in the world.
Musk’s creativity and transformational leadership has played a pivotal role in the success and
progress of Tesla, which is now seen as the world’s most prominent brand in the automotive
industry.

Elon musk’s leadership traits are a mix of opinionated and adaptable leaders, putting
him in the quadrant of the most successful and continuously innovating leaders like Steve
Jobs. While he has a strong persona reflecting his opinions, he is adaptable in nature and
ready to accept the many failures in the process of innovation which is the most significant
trait of transformational leadership.

Musk’s communication style has been described as authentic, down-to-earth, and

exceptionally clear, with four times more use of the present tense than average (Goldberger,
2016). these traits help him rally people behind a very bold vision and motivate them to
pursue it. His aggressive focus, though, can make him conflict prone, blind to his employees’
hard work, and defensive against complaints instead of learning from them (Vance, 2015).
One apparent consequence of Musk’s style is perpetual senior leadership turnover
(Morrisson, 2008). Such turnover is costly (Lucas, 2013) for reasons including training costs,
lost knowledge, and potential negative morale. As another consequence, employee reviews
are frank about the long hours and poor work-life balance—though they overwhelmingly

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state that the company’s mission makes the personal sacrifice worthwhile (Glassdoor.com,
2016).

tensions have also come to the surface in Tesla’s supply chain. As a newcomer to the
intricacies of automotive manufacturing, Tesla depends on suppliers to build its cars. In fact,
Tesla and would never have come into existence at as a company without Eberhard,
tarpenning, and Musk’s diplomatic in-person efforts to persuade potential suppliers (Baer,
2014). Recently, some suppliers have struggled to meet Musk’s purposefully optimistic
production targets, and the company Mobileye ended its relationship with Tesla by publicly
citing its concerns that Tesla’s deadlines posed a safety risk (Rosevear, 2016).

2.2 ORGANISATIONAL STRUCTURE

Tesla has a functional form of organisational structure that enables it to exercise

strong control of the business (Meyer, 2016). the various functional departments are Human
Resources, Business Development, Engineering, Processes and Autopilot, Manufacturing,
Design through, Global Sales and Services. through this structure, Tesla is able to maximize
its ability to implement new strategies and manage its operational activities. Tesla also
maintains minimal regional divisions, specifically four: the USA, Norway, China, and a
catch-all division for operations in other locations. these divisions allow Tesla to tailor their
strategies, marketing campaigns, and financial reporting to different geographies with
different customer populations and legal requirements.

Despite maintaining regional divisions, Tesla’s emphasis of global centralization

means that their entire organisation is controlled through decisions that a central group or
team generates. Tesla’s central headquarters includes the head of each office of its global
hierarchy; the company does not support autonomy of its regional or overseas offices.
Instead, Tesla’s headquarter makes the majority of operational decisions for overseas
operations. Tesla’s organisation structure is one of the key factors that influences its culture.
the six core features of Tesla’s culture (Meyer, 2016) contribute to making Tesla a learning
organisation that is able to surmount a turbulent business environment (Jones and George,
2016).

 Think like owners

 We are ALL IN

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  Do the impossible
 Reason from ‘first principles’
 Constantly innovate
 Move fast

As a learning organisation, Tesla believes in personal mastery “think like owners”;

employees are encouraged to think out of the box and bring innovative ideas “Constantly
innovate”. the company tries to reward innovative employee contributions. Because of strong
executive leadership, Tesla employees share a common vision “Do the impossible” that
unifies them and reduces conflicts. the global scope of this vision is an example of bold
systems thinking, and, in addition, Tesla managers encourage their employees to use complex
mental models “Reason from ‘first principles” to find the root cause of issues and respond to
problems very quickly and effectively “Move fast”. Tesla has training programs to orient its
human resources to this feature of its organisational culture. Finally, from its roots in Silicon
Valley’s software development culture and practices (High, 2014), Tesla places a high value
on team learning and effective teamwork “We are ALL IN”.

2.3 INNOVATION

Integrative innovation is part of the fabric of Tesla’s culture. In 2016, Forbes

Magazine rated Tesla as the World’s Most Innovative Company. the following aspects of
Tesla’s culture, structure and daily work are what makes it different (Nielson, 2016): Tesla
has idealistic goals of a greener planet. the company approaches this vision by integrating
decades of sustainable energy research in many fields into a viable form. Tesla makes unique
products like connected cars that have self-driving abilities, can be upgraded over the air or
monitored via phone, and charge for free on the nationwide Tesla Supercharger network.
Tesla is known for placing risky bets on technology and itself. After all, it is a start-up in the
over 100 years old automotive industry. Employees are encouraged to set stretch goals in
keeping with the informal Musk Doctrine: “Never set a deadline you are likely to keep”.

Tesla treats its competitors, the traditional auto companies as potential allies, and
formed strategic alliances early for its battery recycling program. Tesla also models the way
with open patents, as Elon Musk believes that such knowledge should be shared widely for
the common good. Tesla’s business strategies are a unique case study in themselves. No other

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auto company takes capital from customers upfront before building the car. Tesla also
focuses on engineering and design over marketing. Finally, their decision to retail directly
customers has upended the traditional dealership-based automotive supply chain. With such
innovation, for the first time in automotive history a vehicle has been created whose price can
appreciate over time.

3.0 ANALYSIS OF BUSINESS MANAGEMENT PRACTICES

Tesla leadership is frequently a topic of heated debates. Tesla CEO and co-founder
Elon Musk is a controversial figure. At the same time, he is admired worldwide for his
entrepreneurial and leadership skills. Elon Musk is a successful serial entrepreneur with a
reputation as a creative genius who founded PayPal, Space X and the Boring Company. Each
of these companies has become highly successful in its respective field in the global scale.
Musk also has been a driving force behind the rapid development of Tesla, assuming the roles
of CEO and Product Architect with the company. He was considered as an effective
visionary leader credited with the successful launch of Tesla Roadster in 2018, the first
electric car to use lithium-ion battery cells. Later, Musk oversaw the launch Model S, Model
X and Model 3 electric vehicles and acquisition of Solar City Corp. for USD 2,6 billion in
stock. the company’s board of directors comprises 10 people, including experienced and
accomplished business leaders such as Oracle founder Larry Ellison and former 21st Century
Fox CEO James Murdoch.

Tesla uses operations management (OM) best practices to maximize productivity

while minimizing costs, based on the 10 strategic decision areas. this optimal operational
condition contributes to Tesla’s ability to sell its products at reasonable prices, given current
market forces and cost of materials.

Design of Goods and Services

In this strategic decision area, operations managers focus on how the organisation’s
products influence costs, quality objectives and resources. In this company analysis case,
Tesla addresses this concern through concurrent innovation, which involves simultaneous
innovation in various parts of the automotive, battery, and solar panel business. For example,
to ensure productivity in manufacturing advanced electric vehicles, the company

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continuously innovates its products and supply chain systems. this decision area of
operational management (OM) links to Tesla’s generic strategy and intensive strategies,
which emphasize product differentiation and product development as approaches to grow the
global business. It is notable that the company focuses on electric vehicles. As a result,
Tesla’s operations management is also focused on the innovation and manufacture of electric
automobiles, such as through optimization of organisational capacity for innovating electric
cars and car parts.

Management Quality

Satisfying customers’ quality expectations is the main objective in this strategic

decision area of operations management. Tesla. addresses this strategic objective through
regular quality checks, quality improvement initiatives, and research on the
automotive/transportation and energy solutions market. In addition, the company continues to
enhance its products and processes to satisfy high standards for quality and productivity. For
example, Tesla’s operations managers regularly conduct quality reviews of, and implement
enhancements to manufacturing processes. Moreover, in response to quality issues with
suppliers of automobile parts, Elon Musk shifted the company toward manufacturing more of
its own vehicle parts instead of sourcing from parts manufacturers. this shift increases
managerial workload but improves quality control and overall product quality.

Process and Capacity Design

This operations management decision area focuses on business processes, along with
related investments, resources, and standards. Tesla, Inc. integrates automation for this
concern. For example, the company automates manufacturing processes combined with
human intervention. this condition helps Tesla achieve high productivity through operational
efficiency in the automotive and energy solutions business. Also, Tesla Inc.’s organisational
structure influence and is influenced by this area of operations management. For instance,
some parts of the corporate structure depend on relevant process and capacity requirements in
the business.

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Strategic Location

Logistics and nearness to markets, resources and suppliers are considered in this
strategic decision area of operations management. In terms of resources, Tesla’s operations
managers utilize its global reach. For example, suppliers in the United States, Europe, and
Asia provide some of the basic components for the company’s electric automobiles and other
products. Tesla’s marketing mix involves company-owned stores and galleries in malls and
other key locations to maximize sales personnel productivity and access to the target market.
this OM approach involves high-density areas for displays and sales transactions, considering
the company’s relatively high prices and specialization in electric vehicles and energy
products.

Company Layout and Design Strategy

In this strategic decision area, operations management is concerned with achieving

optimal flow of resources and information. In Tesla’s case, layouts are designed to maximize
capacity utilization of facilities, especially buildings used for manufacturing electric vehicles.
Also, the company employs advanced computing and networking technologies for internal
communications. these approaches increase productivity in Tesla’s operations. the company
also minimizes distances among intermediary processes in its manufacturing operations. An
example of such minimization is the Nevada Gigafactory, which helps reduce production
costs along with vertical integration.

Human Resources

Adequacy of effective human resources is the objective in this strategic decision area
of operations management. Tesla satisfies this objective through a competitive compensation
strategy to attract effective and competent workers. this approach is especially important in

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the market, where many companies compete for high quality human resources. Tesla’s
corporate culture’s focus on innovation and problem solving contributes to the definition of
this OM decision area. Also, the company’s operations management ensures effectiveness
and high productivity of personnel through regular training, as well as leadership
development programs. For example, leadership development is used to fulfil Tesla’s
leadership needs to grow its automotive business.

Supply Chain Management

In this strategic decision area, operations managers focus on adequate supply and an
effective and efficient supply chain. Tesla has a global supply chain aimed at supporting its
manufacturing processes. For example, high productivity of the company’s manufacturing
plants in the U.S. benefits from timely shipment of materials from overseas. Tesla’s social
responsibility and corporate citizenship ideals are applied in this OM area, in considering the
effects of the business on suppliers and associated communities. As an automaker that
focuses on manufacturing in the United States, Tesla’s operations management automates
major areas of the supply chain, while constantly looking for strategic partners in the
industry.

Inventory Management

Inventory decisions, costs and support for production are considered in this strategic
decision area. At Tesla, inventory decisions are based on operations management principles
that emphasize quality. For example, managers require that inventory holding does not affect
the quality of materials used for the company’s electric vehicles. On the other hand, for high
productivity and minimized inventory costs, Tesla’s operations management approach
involves just-in-time inventory for some materials. For instance, some materials for
automobile production are used as soon as they arrive at the company’s manufacturing
facilities.

Schedule Management

This strategic decision area focuses on short-term and intermediate schedules for
resource utilization. Operations managers at Tesla address these concerns through market-

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based scheduling, combined with automated processes for maximum efficiency. In market-
based scheduling, the company monitors actual market demand and uses the resulting data as
basis for scheduling automobile production. On the other hand, Tesla’s operations
management supports scheduling activities with automation to minimize errors and delays,
thereby enhancing productivity.

Maintenance

Adequacy of resources and production capacity are the objectives in this strategic
decision area of operations management. Tesla ensures resource adequacy through regular
inventory monitoring that readily responds to shifts in market demand. the company
addresses the objective of adequate production capacity through a small but significant
degree of redundant processes and production resources. For example, Tesla maintains excess
production capacity in some of its facilities. Such redundancy allows the company to rapidly
increase its production in response to spikes in market demand for electric vehicles. these
operations management approaches create resilience and responsiveness in Tesla’s
productivity.

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4.0 IMPROVEMENT

4.1 Leadership

In today’s fast-moving business world, one with an increasing number of flat

hierarchies, every employee needs good leadership skills. Even if they don’t supervise a team
or are a junior employee, a company needs to work on developing the leadership skills of
every employee for their productivity, and to enable them to be a fully contributing member
of the organisation. As a result, employees will be in a better position to advance their career
and get ahead in life. An organisation can only achieve as much as its leaders allow. Strong
leadership includes being able to communicate, motivate and plan effectively. the results of
effective leadership include a stronger team and increased productivity.

 Motivation
As an employee at the top of a hierarchy, a leader’s role is to make sure all other
employees do their jobs the right way. thus, one of the key leadership skills important
to any company is the ability to motivate others. Part of the ability to motivate people
is to be a good role model and set high standards of performance, accountability, and
behaviour. As a by-product of having strong leadership skills, a leader will create a
team that strives to achieve those same high standards.

 Vision

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 Seeing the bigger picture is a key leadership attribute, and part of this is having the
knack to see areas of opportunity and act on them. Looking to the future is an attribute
which separates leaders from non-leaders. With a well-executed plan, leaders can
generate growth and prosperity for their companies. However, that vision must be
paired with the ability communicate ideas in a clear and authoritative way.

 Crisis Management
The ability to manage conflicts, sudden emergencies, or any other negative events is
essential even in the most well-planned environment. The ability to deal with
inevitable crises effectively and quickly is a crucial skill for a leader. Stronger
leadership skills during emergencies minimize their negative impact, while poor
leadership skills in dealing with such events can make potential problems much
worse.

 Collaboration
One of the most important leadership skills is the ability to provide guidance to staff
on how to do their jobs with minimal management, allowing them to become mostly
self-sufficient. Leaders who opt for a bullying or authoritarian attitude will see little
growth in their teams. Instead, leaders must listen to employees, ask questions, and
develop an environment where employees have the means and confidence to grow on
their own when needed. Leaders foster a spirit of collaboration among their staff
members. this contributes to high morale and greater productivity and signifies the
importance of good leadership skills to the company.

 Adapting New Leadership Development Process

To compete in today’s business sphere, companies must shift toward a lean and
simplified approach in developing their leadership skills development process.
Shifting to a clear and concise leadership skills development process can help

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 companies acclimate to a rapidly changing environment and focus on outcomes,
rather than sticking too rigidly to definitions that already exist. Below is the reason
why traditional method of leadership skills must be changed in accordance with time.
a) Traditional leadership skills models are notorious for providing too much
information, with dozens of categories, competencies, levels of competencies,
and proficiencies described in a single model.
b) Older leadership skills models don’t place the focus on the end user to foster
greater capability-model understanding, impact, and resilience.
c) The old models lack inclusion of concise, clear, and relevant tools that
organisational leaders and their employees can understand and apply to their
roles, which is crucial to effective leadership skills modelling.
 Including Employees into Leadership Role
Companies must embrace the idea that all employees can be leaders in their own
context. Companies must never start with an abstract definition of leadership and then
try to fit people to the mould. Instead, companies must recognize that the things the
employees do well and define how they lead. those are the strengths they have and the
areas where their talents really shine. So, leadership skills development should be
about how the company can leverage those strengths in a more meaningful way, to be
more effective.
 Situational Awareness
A good leadership skills development process considers the bigger picture and helps
employees to anticipate problems before they occur. this is one of the most valuable
leadership skills to have when handling complex projects with tight deadlines. The
leadership skills development process must develop an employee’s ability to foresee
outcomes and provide suggestions for avoiding potential problems. this ability also
helps to recognize opportunities that others overlook, which will certainly earn
recognition.

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4.2 Organisational Culture

the key to a successful organisation is to have a culture based on a strongly held and
widely shared set of beliefs that are supported by strategy and structure. When an
organisation has a strong culture, three things happen: Employees know how top
management wants them to respond to any situation, employees believe that the expected
response is the proper one, and employees know that they will be rewarded for demonstrating
the organisation's values.

 Encourage Face-to-Face Interaction

With technology readily available, it’s easy to believe that a few quick keystrokes will
save us time and make us more productive. However, some conversations are best
held face-to-face, where there is less room for miscommunication or
misunderstanding. For remote workers, it is not just about jump on a video call and
turn those cameras on for conversation. there is a lot to be learned from actually
seeing co-workers’ facial expressions and reactions in real-time.

 Maintaining Physical Meeting or Events

It is important to keep up a healthy cadence of meetings and events within the
organisation to draw people together. this is especially important when many teams
are distributed or working hybrid schedules. A good leader or manager need to

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 proactively schedule dedicated time for employees to connect around shared interests.
All kinds of meetings can support culture, from teambuilding activities to networking
and ideation sessions. As most teams will include remote workers, virtual options
must be taken into consideration before planning an event, so all employees are
included. By consistently creating the space for employees to connect, the
organisation demonstrates the importance of inclusion and collaboration in your
organisational culture.

 Bring the Change that the Employees Prefer

A management must establish patterns of consistent behaviour that build a culture of
positivity, inclusiveness, and belonging to improve company culture. Leaders in every
level of the organization must communicate and model the desired behaviours that
want to be seen within the organization. If the leaders don’t embody the desired
culture, employees will become frustrated at the hypocrisy. Managers may recognize
the importance of investing in culture, but coming up with activities that improve
engagement, culture, and inclusion is no easy task. Simple actions, however, can
make a big difference, from offering recognition to sharing goals to showing interest
in employees’ hobbies and interests outside of work.

5.0 CONCLUSION

Employees most commonly leave their jobs due to poor management practices, a
situation that increases costs and lowers the talent present in a business. Business owners
should understand good management practices through personal research or formal education
in order to create a business model that can improve employee productivity, eliminate
redundancy in processes and increase retention rates.

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