Tesla's Operations Management

Tesla, Inc. (formerly Tesla Motors, Inc.
) has an organizational structure that

supports continuous business growth. A company’s organizational or corporate
structure is the design and system that defines the patterns of interactions among
the company’s components. In this business analysis case of Tesla, the
organizational structure takes a traditional form, considering the company’s
managerial focus and control, along with limited operational expansion in the
global market. For example, as a manufacturer of electric automobiles, batteries,
solar panels, and related transportation and energy solutions, Tesla Inc. uses its
corporate structure to facilitate extensive control of the organization. Elon
Musk’s leadership effectiveness depends on the corporate structure’s ability to
disseminate and support the implementation of new strategies for business
growth and improvement. The company maximizes its ability to implement new
strategies and manage its operational activities and objectives through its
organizational structure. Tesla’s operations management is dependent on the
effectiveness of the business structure in supporting strategic changes and
implementations.
Tesla Inc.’s organizational structure creates capabilities that enable strong

managerial control of the business despite its growing international operations.
Growth increases complexity and challenges. For example, global expansion
requires a broader set of considerations to succeed in implementing Tesla’s
generic strategy for competitive advantage and intensive strategies for growth.
The corporation’s structural characteristics help maximize top-level managers’
information regarding these challenges, empowering them to respond
accordingly. Thus, this corporate structure supports Tesla’s corporate mission
and vision statements, which emphasize global leadership in the automotive and
energy solutions markets.
Tesla Inc.’s Organizational Structure Type & Features
Tesla has a functional or U-form organizational structure. The unitary-form (U-

form) structure uses organizational function as the main defining factor. For
example, the company has a structural group of employees for engineering, and
another for sales and service. Some structural characteristics of other types of
corporate structure are also present in Tesla, although at a less significant
extent. In this company analysis case, grouping based on business function
stands as the most significant feature. The following characteristics are
significant in Tesla’s organizational structure:
1. Function-based hierarchy (most important)
2. Centralization
3. Divisions
Function-Based Hierarchy. The most significant characteristic of Tesla’s

corporate structure is the function-based hierarchy in its global organization.
This hierarchy involves functional teams or offices that oversee domestic and
international operations. This feature is typically observed in traditional
corporate structures, where companies aim to maintain strict managerial control
of their operations. In this business analysis case of Tesla’s organizational
structure, the following functional offices direct and represent the global
hierarchy:
1. Chairman & Chief Executive Officer
2. Finance
3. Technology
4. Global Sales and Service
5. Engineering
6. Legal
Centralization. Tesla, Inc. uses centralization in its corporate structure. The

emphasis of centralization is managerial control on the entire organization
through decisions that a central group or team generates. In this case, the heads
of the offices of the global hierarchy form the corporation’s central
headquarters, which directly control all operations. In this organizational
structure, Tesla minimally supports the autonomy of its regional or overseas
offices. The company’s headquarters make most of the decisions for overseas
operations.
Divisions. This characteristic of the corporate structure focuses on the extent of

geographical or other types of divisions in Tesla Inc.’s automotive business.
These divisions are used to implement different strategies and marketing
campaigns, and to organize financial records and reports. The company’s main
divisions in its corporate structure are (1) Automotive and (2) Energy
Generation and Storage. These divisions are less significant compared to the
function-based hierarchy of the organization. Also, Tesla’s organizational
structure has the following geographical divisions mainly used for financial
reporting: (1) United States, (2) China, (3) Norway, and (4) Other.
Tesla’s Corporate Structure: Implications, Advantages & Disadvantages

Tesla, Inc. benefits from its corporate structure in terms of effective managerial
control of multinational operations. Another advantage is the ease of
implementing new strategies throughout the organization. Also, the regional
divisions support financial reporting and analysis, and provide the foundation
for future regionalization of strategies and tactics in the international automotive
market. These advantages empower Tesla to use its organizational structure for
further international growth and to build competitiveness against Toyota Motor
Corporation, Honda Motor Company, Nissan Motor Company, General Motors
Company, Volkswagen, Bavarian Motor Works (BMW), and other car
manufacturers. The organizational structure enables the company to centrally
control the development of competitive advantages.
A disadvantage of Tesla’s corporate structure is the rigidity that limits rapid

adjustment in the organization. For example, global centralization is a structural
characteristic that limits the autonomous ability of overseas offices to readily
respond to issues they experience in their respective regional markets. To
address this disadvantage, it is recommended that Tesla Inc. reform its
organizational structure to increase the level of autonomy of overseas offices. A
corporate structure with a higher degree of decentralization tends to be more
effective in creating competitiveness against local firms in overseas markets.
References
 Liao, C., Chuang, S. H., & To, P. L. (2011). How knowledge

management mediates the relationship between environment and
organizational structure. Journal of Business Research, 64(7), 728-736.
 Menguc, B., & Auh, S. (2010). Development and return on execution of

product innovation capabilities: The role of organizational
structure. Industrial marketing management, 39(5), 820-831.
 Sakhartov, A. V. (2016, January). Selecting Corporate Structure for

Diversified Firms. In Academy of Management Proceedings (Vol. 2016,
No. 1, p. 11521). Academy of Management.
 Tesla, Inc. – About Tesla.
 Tesla, Inc. – Form 10-K.
 United States Department of Commerce – International Trade

Administration – The Automotive Industry in the United States.
 Vernimmen, P., Le Fur, Y., Dallochio, M., Salvi, A., & Quiry, P. (2018).
Choice of Corporate Structure. Corporate Finance: Theory and Practice,
Fifth Edition, Fifth Edition, 748-770.
 Withey, M. J., & Gellatly, I. R. (2015, January). Organizational Structure,

Situation Strength and Employee Commitment: Test of a Process Model.
In Academy of Management Proceedings(Vol. 2015, No. 1, p. 14587).
Academy of Management.
TAGS: AUTOMOBILE INDUSTRY, AUTOMOTIVE
INDUSTRY, CASE STUDY & CASE
ANALYSIS, ORGANIZATIONAL
DESIGN, ORGANIZATIONAL STRUCTURE, TESLA
INC. (TESLA MOTORS INC.)

Tesla's Operations Management

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Tesla, Inc. (formerly Tesla Motors, Inc.

) has an organizational structure that

Tesla Inc.’s organizational structure creates capabilities that enable strong

Tesla Inc.’s Organizational Structure Type & Features

Tesla has a functional or U-form organizational structure. The unitary-form (U-

1. Function-based hierarchy (most important)

Function-Based Hierarchy. The most significant characteristic of Tesla’s

1. Chairman & Chief Executive Officer

4. Global Sales and Service

Centralization. Tesla, Inc. uses centralization in its corporate structure. The

Divisions. This characteristic of the corporate structure focuses on the extent of

Tesla’s Corporate Structure: Implications, Advantages & Disadvantages

A disadvantage of Tesla’s corporate structure is the rigidity that limits rapid

 Liao, C., Chuang, S. H., & To, P. L. (2011). How knowledge

 Menguc, B., & Auh, S. (2010). Development and return on execution of

 Sakhartov, A. V. (2016, January). Selecting Corporate Structure for

 Tesla, Inc. – About Tesla.

 Tesla, Inc. – Form 10-K.

 United States Department of Commerce – International Trade

 Withey, M. J., & Gellatly, I. R. (2015, January). Organizational Structure,

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