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The goal of Elon Musk is to turn Tesla Inc. into a mass producer of electric vehicles by measuring up against some of the most productive car factories in North America. The productivity of Tesla’s automobile manufacturing depends on the operations management effectiveness in the areas of inventory management and supply chain management. Tesla considered 10 operational strategy that could improve the organization’s ability to produce electric cars.
Tesla’s generic competitive strategy to improve productivity is differentiation. In applying the differentiation focus strategy, the company emphasized the uniqueness of its products, but also focused mainly on early adopters in the high-end market for electric vehicles. These early adopters are affluent customers who have a high tendency to purchase newly introduced products. However, now that the company is already popular and production costs are declining, Tesla’s generic competitive strategy has shifted to broad differentiation. The declining production costs and increasing brand popularity enables the company to broadly target customers in the automobile market. Recent sales shows that on an average there is 40% increase in Year-on-Year Sales.
Tesla follows six main organizational culture: Move fast, Do the Impossible, Constantly Innovate, Reason from First Principles, Think Like Owners and We are All In. Some of its practices like Think Like Owners and Constantly Innovate provided employee the autonomy to innovate and provide technological solutions.
The operations management decision area focuses on business processes, along with related investments, resources, and standards. Tesla, Inc. integrates automation for this concern. For example, the company automates manufacturing processes combined with human intervention. This condition helps Tesla achieve high productivity through operational efficiency in the automotive and energy solutions business. In the last 7 days of the 2nd quarter of 2018, Tesla produced 53,339 vehicles, a 55% increase in production from Q1, making it the most productive quarter in Tesla’s history by far.
Tesla’s Marketing mix strategy of placing in appropriate locations, Price and Targeted Promotions benefitted in huge numbers. Tesla follows Premium Pricing strategy for its electric cars because of its advancement in technology and it follows Market-oriented Pricing strategy for other products. In terms of resources, Tesla’s operations managers utilize its global reach. This OM approach involves high-density areas for displays and sales transactions, considering the company’s relatively high prices and specialization in electric vehicles and energy products.
Strategic decision area focuses on short-term and intermediate schedules for resource utilization. Operations managers at Tesla, Inc. address these concerns through market-based scheduling, combined with automated processes for maximum efficiency. In market-based scheduling, the company monitors actual market demand and uses the resulting data as basis for scheduling automobile production.