Operations Management Assignment: Operational Plan For Tesla
This operations management assignment will require students to develop a detailed Operations Plan for an operation relation to a product or service to be delivered across national borders. The main assignments tasks are the following:
- Identify a product or service company (or other organization) with which you are familiar. Provide a brief description of the company.
- Describe, in general, the key operations in this company and how these operations relate to the company’s strategy, its competitive priorities and the key performance indicators used by the company.
- Using the operations model, present in detail one of the operations, clearly identifying the transforming and transformed resources, the transformation process, and the outputs and outcomes of the operation.
- Provide a critical review of this key operation and its management that might underpin its future improvement and contribution to the company’s competitive priorities.
- Present this in an Operations Plan for this operation (based on your analysis and review) which highlights the resources and key management decisions that might need to be made to secure improvement in the operation.
Introduction: Company Background
In order to prepare operations management assignment, Tesla is selected which is an American company that deals with the production of electric vehicles and is associated with the generation of clean energy. It was founded in 2003, formerly known as the Tesla Motors Inc, with its name being a tribute to the great scientist and visionary Nikola Tesla whose dream was to provide free energy and wireless electricity all over the globe, hence quite a fitting name for a company whose main motto is to shift the world towards a more sustainable, cleaner and non-conventional methods of energy generation namely the Solar power, instead of relying on fossil fuels and other non-renewable sources (Van den Steen, 2015). Amongst its founding members Elon Musk has played the most important role in the development of the company and its funding since its founding days and he is now the CEO of the company since 2008. Their products range from electric driven cars, solar panels and tiles, energy storage products, and products and services related to these. In 2019, the company has been declared as the most successful in terms of the manufacturing of battery driven, plug in electric cars and in the year 2020 the company crossed the millionth mark of the number of electrically driven cars produced, with its Model 3 car as the best-selling electric car globally due to its cheap and affordable price (Tesla, 2021). The Tesla manufactured truck Tesla Semi is also one of their best products owing to its fuel saving capability (Tesla, 2021). They have installed photovoltaic systems in the United States and they are considered the largest manufacturers of energy storage systems and products globally, are it in the home scale or the grid scale via their subsidiary SolarCity Corporation. Some of the largest battery storage plants are installed by the firm all over the world and have led to the generation of 1.65GWh of energy in 2019 (Tesla, 2021).
Tesla Inc. is a dynamic company with a lot of key operations areas that are the fundamental parts of the company. The corporate structure of the firm has a function-based hierarchy, which is its most important characteristic of the firm. This hierarchy can be seen in the global organization of the firm. This hierarchy consists of offices and teams and other such agencies that fulfill the duty of overseeing the domestic and international business of the firm. The hierarchy gives rise to a number of key operational areas such as technology, finance, legal, engineering, and global sales and services, etc. The key operations of the firm are instrumental in assisting the firm in realizing the strategies that have been taken up by the organization (Ivanov et al., 2017). The primary strategy of the firm is to penetrate the high end automobile market and form a stable and large customer base within this high-end market by virtue of their electric auto motives. Consequently, the firm aimed at penetrating the low-end automobile market and driving down the prices of their automobiles and boosting production by utilizing the economy of scale (Hoffman, 2015). The global sales and services operations have been helpful to the firm in gaining new high-end markets in different countries and thus realizing the strategies of the firm.
The competitive priorities of the firm include popularizing the clean technology of electric vehicles. The automobile industry is dominated by the vehicles that run on fossil fuels, such as petrol and diesel. Tesla Inc. is committed towards providing alternative solutions to these automotives (Stringham et al., 2015). Hence, the firm introduced these electric automotives and the company aims to utilize this in order to gain competitive advantage over its competitors. The key operations of the firm are utilized to the optimum level in order to achieve the estimated success of the strategies of the firm that have been adopted. Several key performance indicators (KPIs) are used by the firm such as revenue growth, working capital, revenue concentration, cash flow, etc. These KPIs are used by the firm for various purposes such as organization performance measurement, quality measurement, risk measurement, financial performance measurement and aiding continuous improvements. These KPIs are also supported by the key operations of the firm; this can be exemplified by the centralized system of the firm that inspects the performance of the firm. Hence, the key operations of the firm have utility in varied aspects of the firm.
The global sales and services of the firm is an important operation of the firm. The global sales and services of the firm is concerned with the sales of the automotives and providing the customers with post and pre-sales services (Zhang et al., 2019). The firm has several warehouses that are also used as the showrooms for the display of the automotives where the customers can come to get information regarding the vehicles and get help in case they face any issues. The global sales and services also involve other aspects such as supply chain management and logistics (Gianesello et al., 2018). These aspects of business are evidently helpful in operating the business and utilizing the resources to the maximum and cash in on the opportunities for growth. The resources engaged in the global sales and services are raw materials, capital resources, human resources, etc. These resources have seen a huge transformation in order to comply with the changes enforced in the global sales and services strategies of the firm. The concentration of the resources has been shifted from one domain to another in order to accommodate the changes that have in effect within the firm. The firm has been able to scale up its productions by economies of scale and this has been possible by changing the allocation of the resources and strengthening the sales and services (Hardman et al., 2015). The transformation process has been carried on by increasing the number of production facilities and warehouses all over the world. The transformation process has been fundamental in increasing the productivity and ultimately the profitability of the firm. The transformation of the resources has been heralded in by the decisions of the leadership and management of the firm and this is the major driver of the transformation that the company has been through. The leadership of the firm has played a leading role in determining the course of the transformation process. The transformation process has seen a number of outputs and outcomes that have been positive in nature. The firm has been able to increase its customer base and have greater profitability in its endeavors. The firm is aimed at introducing electric automotives at cheaper rates and thus to penetrate the wider markets instead of serving only high-end customers by manufacturing premium cars. Thus, the transformation process holds immense significance in the context of Tesla Inc. (Chen and Perez, 2018)
The global sales and services of the firm is one of the strong pillars of the firm and this operation must be further strengthened by the firm for gaining advantage over its competitors in the automobile industry. The managers have to focus on how the product of the organization has an influence over the cost, quality and resources of the firm and the way they can be utilized in an optimum manner for improving the design of the sales and services aspects of the firm. The firm has been focused on this aspect and hence the leaders of the firm have shown dedication and effort towards this and increased the number of production facilities in the different parts of the world. This has enabled the company to grow its customer base in the developed countries of the world in an organic way. However, the firm clearly shows much more room for further development.
The firm has been focused on innovation and this has been the central value of the firm since the inception of the firm. The firm can integrate this core value in the operational management aspects of the global sales and services and this can boost the productivity of the firm and the firm can see many positive results in this process (Nunes et al., 2016). The firm can integrate the social responsibility aspects and corporate citizenship ideals in the operation management and hence would be able to gain competitive advantage over its competing firms to differentiate itself from the rest of the firms. The firm can utilize the strengths of the operation management of the global sales and services into its advantage in the long run and this is a major opportunity for the firm especially in the volatile market (Perkins and Murmann, 2018).
The operational plan of a firm refers to the overly detailed plan for providing a clear and comprehensive picture of how the organization is going to work towards fulfilling the firm’s aims and objectives. The operational plan contains other details regarding the everyday tasks that would be taken up by the firm for running the business and the plan often involves providing insights into the strategies of the firm and the information regarding the application of the strategies in the context of the firm (Akakpo et al., 2019). An operational firm has been devised for Tesla Inc. that would give a clear idea about the overall running of the firm.
Allocation of Human Resources
Tesla Inc. has a strong human resources aspect that the firm has been able to utilize in the developing and strengthening its business all over the world. The company has been able to establish its strong hold in the high-end automobile markets in the first world countries, however, the firm has not been able to introduce cheaper versions of these electric automobiles that would be suitable for the wider markets. Hence, the firm must concentrate its human resources in the engineering and marketing aspects. The personnel of the firm in the engineering operational division can produce the prototypes of the cars that can be made and manufactured for the customers at a cheaper price (Hoffman, 2015). The involvement of the engineering division is pertinent in the energy storage part of the firm as well. The human resources of the firm must also be allocated to the marketing operational division of the firm, which may help the firm in penetrating new markets. The personnel may be given training on the new marketing aspects of the firm. The responsibility of the engineering division would be on the Head of the Engineering and the responsibility of the marketing would be on the Marketing Head of the firm.
Allocation of Financial Resources
Tesla Inc. had a somewhat strong financial performance in the past couple of years. However, the company has incurred losses in the past year and this has been a severe issue within the firm. Hence, the allocation of the financial resources is a major decision for the improvement of the operations of the firm. The allocation of the capital must be done in an efficient way according to the needs of the department. As stated earlier, the engineering and marketing operational division must be given importance for transforming and uplifting the firm. A major chunk of the capital can be allocated to the engineering department. A major portion of this would be allocated to R&D of the engineering department (Hoffman, 2015). The marketing department would need another massive portion of the budget for strategizing in order to gain new markets such as India and other South Asian countries. The cash flow from the sales of the already manufactured cars in the US and China can be utilized for the R&D aspects and for marketing in the new markets of the firm. Thus, channelizing the cash flow can be of advantage to the firm.
The operational plan must give a straight answer to the question of the timeline of the adoption of the operational plan (Nakamura et al., 2015). The operational plan provides the suggestion of strengthening the engineering and marketing divisions of the firm. Hence, it is imperative to provide a steady timeline for the necessary activities that need to be taken up by the personnel. The engineering department is tasked mainly with the R&D aspects of the firm and since this requires a heavy amount of time for completion, the major portion of the timeline would be dedicated to this activity. Another major chunk of the time would be allocated to the marketing personnel for the necessary activities. The first one month would be allocated for taking the necessary decisions regarding the transformation process. This is mainly the task of the leaders and managers of the firm. The consequent ten months would be dedicated to the engineering department activities for R&D and other such activities. The next seven months would be dedicated to the marketing departments for the devising the marketing strategies for the promotion of the automobiles in the new markets of the firm (Moritz et al., 2015). Thus, the timeline can be evidently helpful to the firm in establishing strong hold in the new markets.
Setting Performance Indicators
KPIs are extremely helpful in giving a quantitative idea about the success of the firm in different aspects such as the financial performance of the firm, the employee satisfaction and other such factors. The KPIs act as metrics to measure these different parameters so that the managers of the firm are able to know the extent to which the firm has been successful in its endeavors. The KPIs are also used in case of introduction of some new strategies in the organizational context; therefore, the setting of some appropriate performance indicators is mandatory in inspecting the success of the new policies of Tesla Inc. regarding the introduction of the cheaper models of the electric automobiles in the new markets of Asian countries (Tsay et al., 2018). The KPIs such as net profit margin, current ratio, cash flow, etc. can be used appropriately for getting a clear idea about the ways the plan has been able to improve the standing of the company and the ways the firm can further improve in terms of the new strategies that have been implemented in the firm.
Tesla Inc. is a major electric automobile manufacturer based in the USA; however, the firm has been able to develop a large customer base in the major developed countries of the world. The firm has been catering to the premium customers of the high-end automobile industry. Hence, the customer base of the firm is still limited to a particular segment of the market. This is a limitation to the firm as the firm would face difficulty in achieving economies of scale and hence the firm must focus on conquering new markets and establishing footholds in those markets by introducing new models of the electric auto motives at a much cheaper rate. This would enable the firm in increasing the number of its customers manifold and thus the profitability of the firm would be boosted since the production of the firm would be increased. An operation plan has been devised in this study that gives a detailed overview of the method by which the new strategy can be applied within the organization.
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