MBA FPX 5910 Assessments 3 Capstone Project Annotated Outline

MBA FPX 5910 Assessments 3 Capstone Project Annotated Outline

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Capella university

MBA-FPX5910 MBA Capstone Experience

Prof. Name

Date

Executive Summary

Tesla Motors, an all-electric luxury vehicle manufacturer, launched its first cars in 2008. The Tesla Roadster, Model S, and Model X have revolutionized the automobile market. Headquartered in California, Tesla operates globally. In January 2019, Tesla began construction of Gigafactory Shanghai to locally manufacture affordable versions of Model 3 for the Chinese market (ir.tesla.com, 2019). Tesla’s vehicles are known for their rare, valuable, and inimitable qualities, providing the company a competitive edge. However, the company has faced quality and delivery issues that have negatively impacted its market share. Leadership has prioritized profit margins at the expense of performance and quality, leading to customer dissatisfaction. To regain its position, Tesla must foster better collaboration across its global teams and ensure that quality and performance are restored. Additionally, leadership should develop strategies to support individual product lines in the event they lose their dominance in the electric vehicle (EV) market.

Introduction

The Organization: Tesla, Inc.

Background and Current State

While Tesla operates in various sectors, including energy generation and storage, its automotive division accounted for 23% of the company’s gross profit margin in 2018 (Statista, 2019).

Competition in the Electric Vehicle (EV) Sector

Using Porter’s Five Forces framework, Tesla’s competitive environment can be analyzed. According to John Dudovskiy (2018), the competition in the EV sector is intense, and Tesla must navigate through it effectively.

Current Product Lines of Tesla, Inc.

Tesla’s core product lines focus on the automotive, energy storage, and energy generation markets (Kissinger, 2018).

Business Issue

Tesla has been losing market share due to various challenges, including quality, performance, and delivery issues. In Q1 2019, share prices declined due to delivery problems with the Model 3 in China, primarily caused by production shortfalls and governmental delays (Alverez, 2019).

The Electric Vehicle (EV) Sector and the Future of Tesla, Inc.

Threats to Tesla’s Future in the EV Market (PESTEL Analysis)

PESTEL analysis is critical for identifying areas of improvement and potential threats. According to Yuksel (2012), this tool helps organizations address external factors that may influence their operations. A major concern for Tesla is its focus on solar cell development, which could detract from its battery technology advancements. Other manufacturers are innovating rapidly, which may threaten Tesla’s leadership in this area (Barcom, 2019).

Five Forces Analysis of Tesla in the EV Market

A Five Forces analysis helps evaluate Tesla’s position in the EV sector by examining competition and industry challenges (Fern Fort, n.d.).

Pros and Cons of Independent Product Lines

Tesla’s diversification into independent product lines could have both positive and negative impacts on the company’s ability to compete and maintain market leadership.

Tesla’s Ethical Issues in the EV Market

Trust

Building trust is essential for innovation and organizational efficiency. Tesla faced ethical challenges when selling previously registered cars to a company in Germany, affecting its reputation and eligibility for local tax incentives (Hyatt, 2019).

Quality

Tesla’s focus on profit over quality has compromised product standards globally, leading to a loss of market share. Employees reported taking shortcuts to meet production goals, which further damaged the company’s reputation (Kolodny, 2019).

Leadership

Leadership Environment

Although Tesla’s leadership has maintained a strong presence, the focus on profit has deviated from core business values, leading to performance issues. Strong oversight is needed to ensure quality aligns with organizational goals (Kunnannatt, 2016).

Team Leadership

Team leadership at Tesla must be more collaborative, encouraging individual contributions toward organizational objectives. Leaders should inspire and empower their teams to achieve collective success (Kunnannatt, 2016).

Collaboration

Tesla’s functional/unitary structure limits flexibility and global collaboration. For instance, centralized decision-making restricts regional offices from addressing local issues, which hinders overall performance (Meyer, 2018).

Strategies

Mitigation of Loss in the EV Market

Tesla can mitigate losses by addressing existing quality issues and developing a comprehensive risk management plan. For instance, Tesla offered to repair defects in over 5,000 Model 3 vehicles following Consumer Reports pulling their recommendation (Olsen, 2019).

Diversification of Product Lines

Tesla should also focus on diversifying its product lines to reduce dependency on a single market segment.

Recommendations

Mitigation of Loss in the EV Market

Tesla should allocate more research and development (R&D) resources to the EV market rather than focusing primarily on solar technology (Barcom, 2019).

Solidifying Individual Product Lines

Tesla has developed innovative battery and drivetrain technologies, giving it a competitive edge over rivals like Ford and Toyota. Despite being a younger company, Tesla’s market capitalization surpasses that of Ford (Hoium, 2018).

Conclusion

Tesla, Inc. is a global company with a diverse portfolio across multiple sustainable energy sectors, but the EV segment remains its largest revenue source, accounting for 85% of total revenue (Tesla, 2017). Tesla has made efforts to address quality and performance issues, but further R&D in battery technology and strong leadership are essential for maintaining market share. By focusing on long-term innovation and customer satisfaction, Tesla can secure its place in the EV market and continue to develop a strong base of individual product lines.

References

Alvarez, S. (2019). Tesla (TSLA) to hold Q1 2019 financial results and earnings call on April 24. Retrieved from https://www.teslarati.com/tesla-tsla-q1-2019-earnings-call-date/

Barcom, G. (2019). Capstone Project summary, PM-FPX5910 Asst 1Capstone Project Summary. Capella University.
Dudovskiy, J. (2018). Tesla Porter’s Five Forces Analysis. Retrieved from https://research-methodology.net/tesla-porters-five-forces-analysis-2/

Fern Fort. (n.d.). Tesla, Inc. Porter Five Forces Analysis. Retrieved from http://fernfortuniversity.com/term-papers/porter5/analysis/862-tesla–inc-.php

Hoium, T. (2018). Better buy: Ford Motor Co. vs. Tesla. Retrieved from https://www.fool.com/investing/2018/07/21/better-buy-ford-motor-co-vs-tesla.aspx

Hyatt, K. (2019). Quality issues lead NextMove to bail on its massive Tesla Model 3 order. Retrieved from https://www.cnet.com/roadshow/news/tesla-model-3-nextmove-german-cancels-order/

Kolodny, L. (2019). Tesla employees say they took shortcuts, worked through harsh conditions to meet Model 3 production goals. Retrieved from https://www.cnbc.com/2019/07/15/tesla-workers-in-ga4-tent-describe-pressure-to-make-model-3-goals.html

Kissinger, D. (2018). Tesla, Inc.’s marketing mix (4Ps) analysis. Retrieved from http://panmore.com/tesla-motors-inc-marketing-mix-4ps-analysis

MBA FPX 5910 Assessments 3 Capstone Project Annotated Outline

Kunnannatt, J. T. (2016). 3D leadership-strategy-linked leadership framework for managing teams. Economics, Management and Financial Markets, 11(3), 30.

Meyer, P. (2018). Tesla Inc.’s organizational structure & its characteristics (analysis). Retrieved from http://panmore.com/tesla-motors-inc-organizational-structure-characteristics-analysis

Olsen, P. (2019). Tesla Model 3 loses CR recommendation over reliability issues. Consumer Reports. Retrieved from https://www.consumerreports.org/car-reliability-owner-satisfaction/tesla-model-3-loses-cr-recommendation-over-reliability-issues/

Statista (2019). Tesla’s gross margin from FY 2014 to FY 2018, by segment. Retrieved from https://www.statista.com/statistics/783477/gross-margin-by-segment-of-tesla/

Tesla, Inc. (2017). Tesla annual report 2017. Retrieved from http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_TSLA_2017.pdf

Yuksel, I. (2012). Developing a multi-criteria decision-making model for PESTEL analysis. International Journal of Business and Management.