Introduction (P1)
Business is a diverse sphere of human activity that requires solid analytical skills in order to understand its inner mechanics. Its diversity is created by a vast variety of forms, sizes, and types of enterprises. Those that have similar interests either compete or cooperate for a share of the market. No matter what organization is under analysis it is rather obvious that its goal is the acquisition of profit. The profit could be material such as money, or immaterial as broadcasting an idea. Occasionally, these types of profit coexist within one organization.
Depending on the scale, there could be large, small, or medium companies that vary by the size and volume of their operations and the number of personnel. A legal form could also be used as a classifier. They differ based on the county’s laws, but there are several omnipresent variants such as limited, unlimited partnerships, sole proprietorship, holding, subsidiary, or a non-profit company. Private companies are usually small entities that do not list their shares on the market. Public ones, on the other hand, want to maximize their profit by attracting more capital through enlarging their pool of shareholders.
Globalization as a force that opens new niches and provides opportunities for further growth creates an international business with a complicated structure.
Each company type is unique and needs to be analyzed in order to build a well-round outlook on business in general and better understand the functions and goals of one’s own organization. To provide Google with a closer outlook on the business sphere, an analysis of three major company types could be beneficial. The chosen organizations are as follows: a large multi-national technology company presented by Tesla, a local non-profit organization presented by Save a Rescue, and a restaurant company presented by Eleven Madison Park.
Tesla
Overview
Tesla Inc. is a large multinational technology company that produces environmentally friendly devices for family use. It was originally created in 2003 as Tesla Motors by Elon Musk, Ian Wright, Martin Eberhard, and Marc Tarpenning. Tesla designed a car that had a sport-like appearance and capabilities while being fully electric and affordable. The company quickly rose from a niche-market car-seller to a large multinational corporation with offices and outlets in many cities around the world. In 2017, Tesla reported revenue of 11,6 billion US dollars. It employs more than 37 thousand people worldwide and shows outstanding financial performance and patent activity.
Products and Services
Tesla’s main product is electric cars. Initially, the company specialized in producing premium electric sedans. Model S and Model X are classic examples of such vehicles. Tesla Model 3 was more competitive in the family market segment than BMW costing $2000 less than similar electric vehicles produced by BMW. There is also a Tesla roadster that is a premium sports car intended for wealthy customers who care for the environment, style, and comfort. In all its cars, Tesla promotes safety as one of the main features. The frame is made from a composition of aluminum and steel with additional elements protecting the driver and passengers from crash damage. In addition, it provides one of the longest battery lives on the market. All cars have an autopilot function that, however, is an extended drive assist rather than a full autopilot.
The company also produces electric batteries for energy storage and solar roofs. Tesla also produces and sells solar farms that are, essentially, a composition of multiple solar panels and energy storage devices intended for large-scale energy consumption ventures such as data centers and other IT businesses.
Size and Scope (P2)
As was already mentioned above, Tesla is a large organization that provides jobs to 37 thousand people globally. The corporation has production facilities located in the U.S. It has a large car factory located in Fremont, California that occupies 150 hectares of land. This facility employs around 6000 workers (Tesla factory n.d.). Batteries are produced on a large facility called Gigafactory that occupies a 400-hectare territory in Nevada (Tesla gigafactory n.d.). Tesla also has a network of stores, service centers, and charging stations located around the world, but mostly in the U.S., Canada, and Europe.
Similar to many other companies, Tesla’s scope consists of three factors: customer, location, and vertical integration. The company is oriented toward high-end and middle-income customers who are concerned about style, safety, and the environment. As for the location, the company does not limit itself to a particular region, focusing rather on building a global network of charging stations, which creates grounds for selling cars in every country. Vertical integration or the product, on the whole, encompasses a quality solution that is guaranteed and supported.
The scope enables Tesla to follow its organizational goals in a way that it has the ability to expand virtually anywhere in the world. The company only needs to create infrastructure to be able to attract customers to buy cars in their region as without charging stations Tesla cars are difficult to use. On the other hand, claiming lower pricing segments of the market may prove difficult, as the technology is still rather expensive. Therefore, Tesla needs to change its products, services, and scope in a developmental manner in order to achieve its business goals.
Vision, Mission, and Business Objectives
Tesla’s vision is a sustainable world that uses products that consume energy from renewable sources. Its mission is to advance that future by producing a range of solutions for people. Electric cars, solar roofs, and other products of the company aim to change the perception of a person of sustainability and bring about the world without carbon emissions. Tesla’s business objectives are claiming the budget and middle-price segment of the car market in the U.S., Europe, and the world.
Organizational and Legal Structure
Tesla is a public corporation. Its securities are traded on New York Stock Exchange and other platforms. Its organizational structure is based on a functional hierarchy. Globally it is represented in the following form:
- CEO and Chairperson;
- Finance department;
- Technology department;
- Global Sales and Service department;
- Engineering department;
- Legal relations department.
The hierarchy is dominated by the centralization principle. The company generates decisions in a central office, from where they are transferred to local departments in other cities or countries. The company’s geographical reporting structure is subdivided into four main categories such as the U.S., China, Europe, and others. Tesla’s corporate structure is also divided into vehicle production and energy production and storage.
The legal structure of the company allows Tesla to draw additional funds from shares. However, it leaves a sizable portion of control over the company to shareholders. It also allows mitigating the financial risks by spreading them over a large number of shareholders. By managing to foster the growth of share prices, Tesla is able to gain even more wealth and prestige. On the other hand, additional regulations and taxes are imposed on public companies, which is a financial burden. Shares often represent people’s expectations of the company and if the expectations are low, then the real value of the company may plummet.
Stakeholders
The key stakeholders of the organization are its investors, employees, customers, and suppliers. Owners such as Eberhard, Tarpenning, and Musk are considered owners and main beneficiaries of the company. Each employee at Tesla also changes it from inside and changes with it. Tesla also affects the customers who buy the company’s products and changes their outlook on the world. Suppliers of battery components, raw materials, and other products are also the group that can potentially develop and grow together with Tesla and vice versa.
Save a Rescue
Overview
Save a Rescue is a non-profit organization that organizes rescuing animals from hazardous conditions on streets and prevents them from involuntary euthanasia (Our mission n.d.). The organization is partners with other national and international organizations from its home office in California to help rescued pets find a new home.
Products and Services
The company does not produce anything, but instead, it offers services to homeless animals and to potential owners. The company organizes the work of animal shelters for cats and dogs in California and other states in order to foster the adoption process. Through its website and hotline, Save a Rescue helps people who want to house a cat or a dog. It also utilizes the help of volunteers who undertake efforts of saving cats and dogs from the streets putting them in shelters where they are fed and treated.
Size and Scope (P2)
The organization has a small office in Westlake Village, California. It mostly operates by matching clients and their potential pets. It employs around 40 people. It has a database of over 16000 cats and dogs categorized by breed and age. The company is not oriented to a particular customer other than a person who loves animals and is willing to help them. The company seeks people who can take either house cats and dogs, offer donations to help shelters feed and treat animals, or those who are ready to become active assistants of the organization.
Vision, Mission, and Business Objectives
The vision of the organization is for the country safe from animal abuse. Save a Rescue’s mission is to find as many homes for ownerless animals around California, U.S., and Canada (Our mission n.d.). As for business objectives the company seeks to develop its effectiveness as an organization that saves and finds shelter and owners for pets. It needs to enlarge the pool of financial and human resources to exercise better care for animals.
Organizational and Legal Structure
The legal structure of Save a Rescue is a non-profit organization or A 501(c) 3 organization that is by order of federal law exempt from taxes. It is classified as a charitable organization financed by donations that it spends solely for the purpose of saving, feeding, and treating animals. The organizational structure of this particular organization is comprised of the board of directors, call center staff, and around 60 volunteers. The board manages organizational issues such as financing, coordination, and advertisement. Call center staff answer and direct the calls to volunteers in specific shelters.
Stakeholders
The main stakeholders are charity givers, animals, potential pet owners, and citizens of the state and country. People benefit from the organization because their neighborhoods become safer from unattended and sick dogs. Charity givers can influence the organization by enlarging its operation scope and effectiveness. Pet owners can help unload the overburdened shelters and empty the space for new pets.
Analysis of Scope, Size, and Structure
The organization targets an unlimited amount people as virtually any person may want to have a pet or to help the organization financially or by offering their labor. Additionally, the services they offer may exceed the boundaries of a single state. To achieve the organizational goal of boosting the effectiveness of the company it should actively advertise its services. In this regard, a virtually unlimited audience will only benefit from this objective. The same could be assumed about gathering the resources. Depending on how actively the company markets its services depends on the number of people who will want to help. The size of the organization directly influences its power and effectiveness.
The non-profit legal structure significantly decreases the amount of paperwork for the board. On the other hand, such a structure often dictates a systemic lack of funding. The sources of funding should be transparent and frequently change, which poses certain difficulties. If an organization becomes a part of a federal program, it becomes accountable for the use of the fund by the federal government. When the support period ends, it returns under the jurisdiction of the lower branches of government. Given that, the legal and financial issues may divert the organization from paying attention to increasing its popularity and following objectives. The organizational structure seems to be lacking a team approach and management of volunteer teams. The company utilizes the limited human resources it possesses but in a non-organized way. The board, therefore, bears too many responsibilities and does not always have time to deal with operational or HR issues.
Eleven Madison Park
Overview
Eleven Madison Park is a high-end restaurant located in New York, near Madison Square Park. It first opened in 1998 but in 2017 changed owners and was renovated (Welcome to Eleven Madison Park n.d.). The restaurant serves mainly European and American dishes cooked by Chef Daniel Humm. Eleven Madison Park has been awarded three Michelin stars.
Products and Services
The restaurant offers a variety of meat dishes, vegetables, seafood, etc. It has a large wine and whiskey collection for all tastes. Apart from serving food and drinks, the restaurant sells its cookbooks and gift cards. In addition, one could arrange a memorable event such as a wedding dinner or other celebration.
Size and Scope (P2)
The restaurant occupies a medium-sized hall on the first floor of the historic building on Madison Avenue. The capacity of the dining hall is 80 people. It has no other facilities in New York or elsewhere and currently stays the only restaurant with this name. The scope of this business is the upscale public with a taste for good meals and good service. The location is strictly set, as the history of the restaurant is dependent on it. The product includes the atmosphere, service, and reception of the customer.
Vision, Mission, and Business Objectives
The vision of this restaurant is to serve as an example of excellence in everything that concerns food. The mission is to perfect the dishes already served, and invent others that promote new American cooking style traditions. Business objectives include satisfying customers to the degree that he or they would return and raising awareness of other people of the restaurant. This will ultimately increase the profit made by owners.
Organizational and Legal Structure
The present owners, Daniel Humm and Will Guidara are partners. The restaurant is, however, the property of Make It Nice hospitality group (Welcome to Eleven Madison Park n.d.). The organizational structure is hierarchical. The hierarchy is as follows:
- Owners
- General Manager
- Front-of-house staff
- Executive Chef
While financial issues are run by the owners, general managers incorporate the function of HR, cashier, and manager. Front-of-house includes waiters and waitresses that service the dining area. Executive Chef oversees kitchen operations and prepares meals, trains kitchen staff, and helps managers determine to price.
Stakeholders
The key stakeholders are its visitors, owners, staff, and food suppliers. Based on their experiences, the clients may or may not recommend the restaurant to others, which influences the flow of visitors. Owners define the policy, financing, and staffing issues while yielding profits or suffering losses. Suppliers determine the quality of food in the restaurant by shipping better or worse ingredients.
Analysis of Scope, Size, and Structure
The company orients only on the high-end public, which gives it a strong motivation to pursue quality as its business objective. By training personnel and expanding the menu, the restaurant raises the interest of the public and raises the quality of service and products. The limited nature of seating capacity seems to formally limit the amount of profit the restaurant could make since the company is not planning to expand.
The partnership as a legal form of organization imposes certain difficulties such as a high probability of disagreements over profit or management. Also, the liability of partnership is virtually unlimited which may incur substantial losses. Organizational structure is rather straightforward which results in management simplicity. On the other hand, it implies certain rigidity and complicates bottom-up process improvement.
Discussion, Comparison, and Analysis of Tesla (P3, D1, M1, M2)
Tesla as a representative of a large multinational technology company has a complex business structure and intricate interrelations between its departments. Tesla exemplifies a typical global hierarchy with the CEO and chairperson being the decision-makers for all teams in regional departments. The simple organizational chart of Tesla Inc. can be seen in figure 1.
As can be seen from an organizational chart, all the functions of Tesla interrelate. Despite the fact that Tesla is produced in the U.S. it has to be sold around the world. Therefore, Tesla has offices around the globe that help resolve issues with advertising, design, and selling the product. CEO designs the general policy and guidelines supervises the work of all departments and makes visionary decisions. A centralized structure, however, requires a CEO to be responsible for nationwide disasters. Regional VPs only oversee and report the situation in their regions while no decisions are being made there.
Functions within Tesla are, as in many companies, can be informally divided into front-end and back-end (Menguc & Auh 2010). Front-end functions as all relations of a company and its clients. Tesla strongly emphasizes front-end in everything the company produces. It can be noticed through their visually-appealing and animated website. Tesla knows its target audience and recognizes that style and appearance are some of the main values among the upscale public. Therefore, to achieve its goals the company aligns everything to outer form.
Back-end or operational functions are connected with HR, infrastructure, warehousing, shipping, and other inner aspects (Menguc & Auh 2010). In this regard, an international technology company has to have everything made in accordance with schedules. However, this requires experienced managers and authority to make decisions on site. This is where the back-end is linked to organizational structure. Global hierarchy does not allow Tesla to utilize swift decision-making and, therefore, back-end functions are not yet polished and smooth.
On the one hand, such strict hierarchy and control allow Tesla to easily implement new strategies and decisions (Menguc & Auh 2010). This organizational structure also provides an opportunity to create a solid theoretical basis for further expansion. Since regional managers do not make decisions, they have more time for observation and research. Since one of the main objectives of Tesla owners is to expand and occupy new niches of the automotive market, this organizational strategy and functions of the department are all working towards achieving those goals.
On the other hand, such an order of functioning within Tesla also may undermine its effectiveness as a multinational company (Menguc & Auh 2010). Due to the fact that the decision-making process is top-to-bottom and is made from a head office in California, it could take time before issues are resolved. The rigidity does not allow for a swift resolution, as the whole chain of command has to be informed about the issue and pass it along to the highest in ranks. Territorial departments may compete with each other, which may undermine coordination between them. As such, Tesla recently demonstrated this issue, when it delayed the production of the Model 3 by half a year. Gigafactory faced problems with automated production line synchronization, which was the issue of coordination between specialists of several departments.
Conclusion
All things considered, Globalization has made the companies adapt their corporate structure and cooperate on a totally different scale. Even small non-profit organizations and restaurants are composed of different departments and manage complex multi-layered processes. As exemplified by Tesla, multinational technology companies are one of the most intricately designed. This intricacy and sophistication leads to errors in management and underlines the need for optimization and standardization as well as other forms of decision making.
Reference List
Kim, T 2013, Tesla (organizational chart), Web.
Menguc, B & Auh, S 2010, ‘Development and return on execution of product innovation capabilities: the role of organizational structure’, Industrial Marketing Management, vol. 39, no. 5, pp. 820-831.
Our mission n.d., 2018, Web.
Tesla factory n.d., 2018, Web.
Tesla gigafactory n.d., 2018, Web.
Welcome to Eleven Madison Park n.d., 2018, Web.