Accounting and Finance in Tesla

Accounting and
Finance

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Critical discussion of case study covering internal and external environment........................1
2. Critical application of academic theories to determine impact of digital leadership on
organisational success..................................................................................................................4
3. Critical discussion of the factors which makes a successful digital leader and the way in
which they lead successful organisational transformation...........................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Digital leadership can be defined as ability of an organisation to use its digital assets for
the purpose of attaining long term business goals. For all the business entities, it is very
important as it guides to analyse technological requirements of the company so that operations
could be executed in more effective and efficient manner. The organisation which is selected for
this report is Tesla which is one of the world's largest automotive companies (Ahlquist, 2014). It
is operating business at global level. It was founded by Marc Tarpenning, Martin Eberhard, Elon
Musk, Ian Wright and JB Straubel in year 2003. This assignment covers various topics such as
discussion of external and internal environment, example of innovation, application of academic
theories and the way in which digital leadership impacts organisational success. Along with this,
analysis of the factors which makes successful leaders and the way in which they lead successful
organisational transformation are also covered under this project.
MAIN BODY
1. Critical discussion of case study covering internal and external environment
The organisation which is selected for the analysis of digital leadership and
transformation is Tesla. It is one of the largest auto-mobile sector organisation which is
executing business all around the world. It is known as one of the companies which are highly
focused with technology and launch new and innovative products in the market. The most
promising example of technological transformation in the automotive sector is “Connected Car”
of Tesla. There are various new features which are incorporated by the organisation in the new
car (Tesla's case study, 2019). These are real time software update, 360 cameras, advanced
sensors, significant computing power and enhanced autopilot. Main reason behind using all these
innovations is to provide better driving experience to the customers who are buying the cars. The
organisation keep their customers updated with latest upgradation in their vehicles. With the help
of it, they can upgrade new capabilities like level 2 self driving feature (Bell, 2014).
It is one of the main companies which are selling self driven cars to the customers in
which level 6 self driving feature is incorporated. It relies on existing sensors and ignore use of
expensive lidar sensor. On the other hand, digital transformation is also used by Tesla in its
marketing activities as it uses different social media websites such as Twitter, Facebook etc. to
interact with its clients freely. It sells its cars online with the help of its website which helps it to
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reduce its marketing cost and currently organisation is spending less than 6 dollars on advertising
its cars. Analysis of its internal as well as external environment of Tesla in context of connected
car is as follows:
Internal environment: It can be defined as the set of different internal factors which are
required to be focused by companies to identify their impacts on operational efficiency of the
company. For the purpose of assessment, SWOT analysis could be used as it helps to determine
organisation's strengths, weaknesses, opportunities and threats. A discussion of all these
elements in the context of Tesla is as follows:
Strengths Weaknesses
Tesla is highly focused with technological
advancements and innovation which helps it to
generate higher profits by fulfilling all the
requirements of customers.
Market presence of Tesla is very low which
affects its market area.
Interest of customers in innovative vehicles is
continuously increasing which is resulting in
enhanced revenues of Tesla as it is using new
technologies such as 360 camera to
manufacture cars such as Connected cars.
Price of connected car which is sold by Tesla is
very high as it is manufactured for upper class
customers. It is not affordable for middle and
lower class customers.
Opportunities Threats
In order to overcome its weakness of higher
price Tesla launched Model 3 in the market
which costs around 35000 dollars. Price of it is
very low as compare to other models of cars of
Tesla it is an opportunity for the organisation
as with the help of it it will be able to attract
middle class customers.
Competition in the market of automotive sector
is very high which is one of the biggest threat
for Tesla. Main competitor of the organisation
is Rolls Royce which is going to launch fully
autonomous and tailor made cars in the market.
To capture larger market share Tesla is
planning to expand its business in new
locations. It will help to enhance revenues and
profits (SWOT analysis of Tesla, 2019).
As Tesla in operating its business in various
countries so it is very important for the
organisation to comply with all the dealership
regulations of the nations. There is a huge
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threat regarding to them because rules could be
changed by legal authorities frequently and if
those changes are not implemented properly
then it may result in threat of governmental
interferences in operational activities.
External environment: It can be defined as the combination of different extrinsic factors
which may leave negative or positive impact upon functionality of business. In order to analyse
it, PESTLE analysis could be used in which six different elements are assessed. All of them are
political, economic, social, technological, legal and environmental. Detailed discussion of them
for Tesla to monitor external environment is as follows:
Political: This factor leaves impact upon business directly and indirectly as it is related to
trade agreements, governmental incentives, instability of political parties etc. Due to all of them
Tesla gets affected in adverse and favourable manner. Managers within the organisation focus on
all of them while launching a new vehicle in the market in order to make sure that all the
regulations are fulfilled by them. Political instability may result in economic instability and
disruption which will be unfavourable for Tesla if information of changes in government
changes is not kept by Tesla (Creusen, Gall and Hackl, 2017).
Economic: There are several elements which are considered as the part of it. These are
foreign exchange, inflation, deflation, taxation rates etc. As business of Tesla is growing
massively, main reason behind it is that the top level executives of the company try to be updated
regarding economic changes so that possibility of their negative impact could be reduced. Issues
regarding economic stability are continuously increasing due to political instability in most of the
regions where Tesla operates its business. Due to this, market share of Tesla may get affected
because such changes result in fluctuation in purchasing power of customers.
Social: It includes different factors such as taste, preferences, needs, demand, values,
culture, buying behaviour and attitude of customers. Popularity of low carbon lifestyle and
preference of customers for renewable energy are continuously increasing which are growth
opportunities for Tesla as these factors are focused by it to manufacture vehicles. In developing
markets wealth distribution is also improving which is also a positive sign for Tesla to grow its
business.
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Technological: This element of PESTLE analysis is concerned with technological
development, enhancement and advancement. Tesla is highly focused with technology and
innovation in its cars and other vehicles which helps it to be the first choice of its existing
customers. In order to be at the same place Tesla is required keep launching new and innovative
cars in the market. If the organisation is not able to do the same then it may result in reduced
profits and market share (Domeny, 2017).
Legal: There are various laws, rules and regulations which are related to legal factors and
all the business entities are required to comply with them in order to execute all the operational
activities in appropriate manner. Tesla is complying with legislation such as energy
consumption, dealership sales etc. which helps it to operate all the process effectively.
International patent protection is expanding at global level which is an opportunity for Tesla as
with the help of it business could be expanded in new geographic locations. If a sudden change is
made in legal forces and the organisation is not able to change its policies accordingly then it
may affect the business adversely by enhancing legal interferences (PESTLE analysis of Tesla,
2019).
Environmental: In order to run operations smoothly it is very important for companies
to make sure that their activities are not harming the environment. Tesla is considering it and
manufacturing eco friendly cars by ignoring usage of gas and using electricity. In automotive
sector concern regarding greenhouse gas emission is continuously increasing which is focused by
Tesla to grow the business. If the company fails to fulfil all its duties towards the environment,
then it will directly leave impact upon its market image.
2. Critical application of academic theories to determine impact of digital leadership on
organisational success
Digital leadership: It is an ability of an individual to find strategic options to make
digital transformations so that organisation can accomplish all its long term goals successfully. It
is very important for all the business entities as it helps to find growth opportunities available
within the market so that company get developed. There are various theories which are
promoting newer form of digital leadership which leaves impact upon organisational success.
Two of them in context of Tesla are discussed below:
Democratic leadership theory: It is also known as participative leadership style in
which top level executives allow staff members to take part in decision making process so that
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effective strategies could be formulated. It is mainly based upon free flow of ideas and
collaboration (Gerbaudo, 2014). In Tesla, it is followed in the form of digital leadership in which
leaders ask the subordinates to provide their opinion on organisational policies. It helps to find
different options which are used to manufacture new and innovative vehicles with digital
features. It is a newer form of digital leadership which contributes in organisational success
because employees have practical knowledge of interacting with customers which helps them to
determine their actual needs and requirements. Hence, they can help leaders to form effective
strategies and achieve long term success for business.
One of the major impact of this theory is enhanced employee engagement, motivation
level and work quality as it is focused with decentralised decision making. As now a days,
people are becoming friendly with technology so with the help of democratic leadership style
leaders can ask employees to share their views, opinion and suggestions on the business plan for
future. It is beneficial for Tesla because it can help to make digital transformations and achieve
success. This theory states that this style of leadership can leave positive impact upon
performance of organisation because due to this engagement and retention rate will be increased
as they are asked to share their views while taking important decision for organisation.
It facilitates employees to express and implement creative ideas to incorporate digital
features in the new cars which are going to be launched in the market by Tesla. All the leaders in
the organisation focuses on group participation and discussion as it helps to make effective
modification in the strategies which are formed to attain success in long run. It is a newer form
of digital leadership which help the organisation to accomplish all the business goals and achieve
growth (Gerbaudo, 2017).
Tuckman theory: It is another story which will be beneficial in the identification of
impact of digital leadership on organisational success. There are four different stages of it which
are analysed by leaders while building an effective team to reach business goals. With the help of
it ability of team working in employees can be enhanced. In Tesla it is used by digital leaders to
develop such team which can contribute in organisational success. All the stages of it in the
context of Tesla are discussed below:
 Forming: It is the first stage of developing a team in which digital leader in Tesla try to
formulate team by identifying requirements of organisation. It helps to develop the team
according to skills of the employees so that success could be achieved with the
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contribution of them in attainment of long term goals (Westerman, Bonnet and McAfee,
2014).
 Storming: In this stage the team members consider them as a part of the group. There is
a high possibility that at this step they may challenge each other to prove themselves right
if any type of conflict take place between them. The digital leaders of Tesla in this stage
try to resolve them and supervise them to work collaboratively (Kreutzer, Neugebauer
and Pattloch, 2017).
 Norming: At this stage, all the members in the teams starts to work together and
effectively for the purpose of attaining personal as well as organisational goals. The
digital leader in Tesla try to establish harmonious working practices so that all the plans
which are formulated for digital transformation of organisation could be executed. One of
the main benefit of this stage is that team members begin to trust each other as they work
collaboratively for the attainment of goals (Weinman, 2015).
 Performing: It is the last stage of team development in which team becomes strategically
aware regarding the things which are done by them. At this stage all the individuals in
team become capable to take their own decisions for the accomplishment of tasks which
are allocated to the at Tesla by the digital leaders.
By following all the above described steps a digital leader can establish a team in which
all the members will work productively for success of organisation. With the help of all of them
an effective team could be developed in which all the individuals can contribute to the
development of organisation. For example, in Tesla the digital leader follows all the steps to
build teams, so that all of them can help to reach long term goals of the company such as
capturing large market share (McLeod, 2015). If all the objectives are achieved by the company,
then the newer form of digital leadership leaves positive impact on organisation success by
making it easy to be attained.
Integrated model of digital leadership: This model states that currently the world is
experiencing end number of digital transformations due to continuous enhancement in new
techniques such as artificial intelligence and other technologies. In order to remain competitive
in the market the digital leader of Tesla Elon Musk recognise such types of changes in the
market and develop plan accordingly. As currently demand of self driven cars is continuously
increasing therefore this situation is assessed by Elon and idea of Connected Cars is being
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formulated. It has helped the organisation to be transformed digitally and reach to high level of
growth.
3. Critical discussion of the factors which makes a successful digital leader and the way in which
they lead successful organisational transformation
Digital leader: The individuals who are responsible to identify requirements of an
organisation regarding technological enhancement are known as digital leaders. Main
responsibility of them to contribute in the development and success of the company so that
higher profits and revenues could be generated. Elon Musk is a digital leader who is taking Tesla
forward by launching digital and innovative products in the market (Wagner, 2018). There are
various factors which helps individuals such as Elon to become digital leader. All of them are as
follows:
Vision: It is one of the major characteristic of digital leader which helps them to think for
long run and find growth opportunities for the organisation. Elon Musk is a visionary person who
analysed market situations and formed business idea of launching Connected Cars in the market
so that Tesla can attain success. This quality of a leader helps the company to make digital
transformations such as launching self driven cars which is beneficial for it to attain competitive
advantage for the enterprise (Northouse, 2014).
Curiosity: Digital leaders are always being curious about market situations and new
technologies and this quality help them to become most successful. This characteristic motivates
them to challenge old systems and analysing issues which are affecting customers. Elon Musk is
having this quality which helps to examine the problem in detail and formulate a new solution.
As most of the customers are willing to buy a car which is self driven so Elon analysed it and
launched Connected Car in the market which fulfilled requirements of clients. With the help of it
Tesla has achieved long term success by becoming first choice of the target market which is a
great transformation for the organisation (Tapscott, 2015).
Collaborative nature: For all the digital leaders, it is very important to have
collaborative nature as it helps them to interact with different divisions of an organisation. Elon
Musk is the founder of Tesla who is collaborative in nature and communicates with all the
departments of company. This quality of Elon helps gain new ideas for business activities such
as manufacturing, marketing and promotions. For example, with the help of this characteristic of
Elon Tesla is able to reach the higher level of success because various new ways such as social
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media websites are used for marketing purpose. It has transformed the organisation by improving
its way of digital marketing (Parkay, Anctil and Hass, 2014).
Experimental and risk taker: Digital leaders are not afraid of taking risk and trying
experiments as it can help them to find growth opportunities for the organisations in which they
are working. With the help of it Digital leaders such as Elon Musk conduct in depth analysis of
customer data which guides them to determine their taste and preferences and launching highly
technological products in the market. For example, currently individuals are becoming friendly
with technology and innovation and they pay for such products or services which are supplied or
manufactured with the help of latest technique. This situation of the market is assessed by Elon
Musk and motivated to launch new cars such as Connected car in the market with innovative
features such as 360 camera, real time software update etc. With the help of all of them Tesla is
achieving success in market because cars with such features are highly in demand. Due to this
profits and revenues of the organisation are being increased. If Elon would have ignored to take
risk of introducing cars with such features then Tesla may face a failure in being transformed
digitally (Characteristics of digital leaders, 2019).
Networking proficiency: For all the successful leaders it is very important to create their
own network by establishing good relationship with the individuals around them. If they are not
having a professional network, then it is not possible for them to share creative ideas with others
and achieve success for their company. Elon Musk is one of the most successful digital leaders
because of a large and well maintain business network. With the help of it various innovative
ideas are analysed and studied to launch Connected Car with digital features. This characteristic
of Elon has helped to develop commercial eco system of Tesla, build business bonds and share
valuable information to meet the level of current digital landscape. All these changes resulted in
higher level of success and transformation for Tesla (Sheninger, 2019).
From the above analysis it has been determined that in order to become a digital leader,
individuals are required to acquire some specific skills and qualities. With the help of all of them
they will be able to think creatively, establish good relations, take risk and do experiments. For
example, Elon Musk have all the characteristics which are required by a digital leader. It has
resulted in organisational success of Tesla because various new cars and other vehicles are
designed by Elon to launch in the market. All the new models are loved by customers as these
are based upon latest technology and trends. Another reason behind the attainment of success is
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fulfilling demand and requirements of clients. One of the major trend in the automotive sector is
related to fully autonomous or self driven cars. It was analysed by Elon different new models
such as Model S, 3 etc. of cars were launched in the market. It has resulted in enhancement of
profits and sales of organisation because one of the vehicle was less expensive as compare to
others as it was mainly launched for middle class customers. The analysis shows that digital
leaders such as Elon Musk analyse market in depth and then find growth opportunities so that
business could be developed. In context of Tesla, same thing was done by the owner and
different new cars were launched in market with digital features. It has resulted in long term
success of the organisation (Smith, 2014).
CONCLUSION
From the above project report, it has been concluded that digital leadership can be
defined as a quality of leaders which guides them to identify technological requirements for the
organisation so that success could be achieved. In order to analyse that the business is attaining
growth or not internal and external environment could be analysed with the help of SWOT and
PESTLE analysis. There are various qualities of individuals which makes them digital leaders so
that they can contribute in the achievement of long term business goals.
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REFERENCES
Books and Journals:
Ahlquist, J., 2014. Trending now: Digital leadership education using social media and the social
change model. Journal of Leadership Studies. 8(2). pp.57-60.
Bell, S., 2014. Servants and friends: A biblical theology of leadership. Andrews University
Press.
Creusen, U., Gall, B. and Hackl, O., 2017. Digital Leadership: Führung in Zeiten des digitalen
Wandels. Springer-Verlag.
Domeny, J. V., 2017. The relationship between digital leadership and digital implementation in
elementary schools(Doctoral dissertation, Southwest Baptist University).
Gerbaudo, P., 2014. The persistence of collectivity in digital protest. Information,
Communication & Society. 17(2). pp.264-268.
Gerbaudo, P., 2017. Social media teams as digital vanguards: the question of leadership in the
management of key Facebook and Twitter accounts of Occupy Wall Street, Indignados
and UK Uncut. Information, Communication & Society. 20(2). pp.185-202.
Kreutzer, R. T., Neugebauer, T. and Pattloch, A., 2017. Digital business leadership. Digital
Transformation–Geschäftsmodell-Innovation–agile Organisation–Change-
Management.
McLeod, S., 2015. Facilitating administrators’ instructional leadership through the use of a
technology integration discussion protocol. Journal of Research on Leadership
Education. 10(3). pp.227-233.
Northouse, P. G., 2014. Introduction to leadership: Concepts and practice. Sage.
Parkay, F. W., Anctil, E. J. and Hass, G., 2014. Curriculum leadership: Readings for developing
quality educational programs. Prentice Hall.
Sheninger, E., 2019. Digital leadership: Changing paradigms for changing times. Corwin Press.
Smith, P. A. ed., 2014. Impact of emerging digital technologies on leadership in global business.
IGI Global.
Tapscott, D., 2015. The digital economy. McGraw-Hill Education,.
Wagner, D. J., 2018. Digital Leadership (pp. 36-47). Wiesbaden: Springer Fachmedien
Wiesbaden.
Weinman, J., 2015. Digital disciplines: Attaining market leadership via the cloud, big data,
social, mobile, and the Internet of things. John Wiley & Sons.
Westerman, G., Bonnet, D. and McAfee, A., 2014. The nine elements of digital
transformation. MIT Sloan Management Review. 55(3). pp.1-6.
Online
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<https://www.thefuturefactory.com/blog/tesla>
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