Tesla Corporation: Organizational Structure


In this case study, Tesla is the organization that will be described and analyzed. Tesla’s goal is to hasten the world’s shift to renewable energy sources. According to the mission, Tesla was formed in 2003 by a team of engineers who intended to convey that driving electric vehicles does not have to be a compromise, and they can be better, faster, and much easier and cheaper than gasoline automobiles. Tesla’s corporate strategy is to start at the top of the market, where buyers are willing to pay extra and quickly continue with larger unit volume and cheaper pricing with each new model. Considering lines of business, subsidiaries, and acquisitions, the last concept represents the most common strategy for businesses to achieve vertical integration and diversification (Hill et al.). Referring to the company’s history, business, and subsidiaries, Elon Musk funded Martin Eberhard’s company in 2004, resulting in the acquisition and emergence of a united organization.

Company’s description

It is worth noting that the Tesla corporation is involved in more than just automobile production; it also focuses on technology, engineering, and energy innovation. Therefore, the differentiation business-level strategy connected to the diversification of processes is the one that was selected by the company’s management (Hill et al.). Moreover, it is possible to emphasize focus strategy aspects since it strives to provide exceptional creativity to its clients at the upper-income level through its popular automobiles. Considering the investment strategy, instead of focusing on building a reasonably inexpensive car that it could mass-produce and market, Tesla invested in creating an attractive automobile that would generate the electric vehicle market. Tesla’s fundamental competencies include creative production processes, car architecture, and engines, while rechargeable battery technology, protective design, and distribution are the company’s specific competencies. The company’s functional competencies are sufficient for achieving the SWOT strategy since they affect all areas of the organization and completely penetrate the production process.

The area for improvement

What concerns the area for improvement, globalization strategies can be upgraded with the help of boosting the emergence of multinational companies that can operate in two or more countries. Considering the process of globalization, the unique skills that underpin a company’s manufacturing and marketing processes are critical to its success (Hill et al.). Referring to the globalization strategies, it is possible to mention global standardization, transnational, international, and localization strategies (Hill et al.). According to the micro level entry modes, the current strategies in business globalization include licensing, exporting, franchising, joint ventures, and wholly-owned subsidiaries (Hill et al.). The set of the innovation strategies is compiled of going it alone, allying, and licensing the innovation methodologies (Hill et al.). Concerning the improvements of innovation strategies, due to the development of Information and Communication Technologies, it can be proposed to enhance the level of collaboration on local objectives and joint projects.

The organizational structure

Considering the organizational structure of Tesla, it can be stated that the firm utilizes centralization in its corporate activities. The structure of the firm is composed of the placement of decision-making duties, the official segmentation of the organization into divisions, and the construction of compliance requirements to synchronize the subunits’ actions (Hill et al.). Centralization concentrates on a leadership group or team’s decision-making authority over the whole business. What concerns Tesla’s control system? It is possible to suggest it has a personal control system since its CEO Elon Musk contributes to all business spheres and provides consultations. To some extent, the mentioned system and structure do not match the organizational strategies since they emphasize more diversity in production and ideas that various people can reach.

The ethical issues

The ethical issues of Tesla include charges of fraud, concerns about safety, Musk’s promises that have yet to be delivered, and misuse of public funds. Tesla has a corporate responsibility strategy that is centered on the company’s culture and products. The firm’s electric vehicles, for instance, are commonly seen as a solution to the detrimental effects of cars with internal combustion. According to the case facts, in 2016, Tesla created Gigafactory, which is a large lithium-ion battery factory built in Nevada (Hill et al.). This fact confirms that the company has a differentiation strategy and a desire to protect nature and its resources. Considering the future recommendations, it can be proposed to emphasize the advertising campaigns related to the promotion of the importance of green issues.

The financial position

Referring to the financial position of Tesla, it can be concluded that the company is becoming successful in managing resources. For instance, the Gross Profit of Tesla doubled in 2017 in comparison with 2015 (Hill et al.). In terms of liquidity, the organization’s result is equal to 0.86 since it represents a ratio between total current assets in the numerator and total current liabilities in the denominator. Tesla’s yearly operating cash flow was $-0.003 billion in 2018, showing a decline compared to 2017 (Hill et al.). Based on the company’s activity, leverage, and shareholder-return ratios, it can be stated that Tesla was able to increase its profit from sales while investing more assets in future discoveries and projects. What concerns recommendations for improving the company’s financial position? It is possible to suggest an entire audit of the whole operational and financial activities to detect potential leakages and drawbacks.

The recommendations for improvement

Considering the recommendations for improving the company’s strategy and competitive position, it can be proposed to pay additional attention to ethical behavior and advertising. Relating to the SWOT analysis, the company’s threats represent the drawbacks in communication and unethical behavior. In addition, the organization’s financial condition will benefit from improved communication and enhanced marketing and advertising campaigns. In order to implement the recommendations, Tesla should analyze its past activities and drawbacks and elaborate a new roadmap that will identify the key steps for improving ethical behavior and advertising.

Work Cited

Hill, Charles, et al. Strategic Management: An Integrated Approach. Cengage, 2020.

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1. BusinessEssay. "Tesla Corporation: Organizational Structure." January 13, 2023. https://business-essay.com/tesla-corporation-organizational-structure/.


BusinessEssay. "Tesla Corporation: Organizational Structure." January 13, 2023. https://business-essay.com/tesla-corporation-organizational-structure/.