Impact of Leadership on Business Performance: A Case Study of Tesla

This report examines the leadership approaches and internal management practices of Tesla and their impact on business performance. It analyzes different theories and models of management and leadership used by Tesla, key performance metrics of the company, and evaluates the impact of leadership performance on overall business performance. The report also compares Tesla's performance with Toyota in terms of cost, profit, and business performance.

BUSINESS REPORT
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EXECUTIVE SUMMARY
This report determines that leadership approaches and internal management practises of
manager and leaders improves the performances of the business. In the context of Tesla which is
a multinational automotive organisation, in order to achieve business success it formulates and
implement different leadership approaches to manage the workforce of the company. This report
cover hoe employee can be satisfied by rendering them effective motivation tools. The business
performances of Tesla in comparison with Toyota in term of cost, profit and business
performance is stated in the discussion.
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Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION...........................................................................................................................4
Determine theories and models of management and leadership used by Tesla in the internal
management of its workforce.................................................................................................4
Key performance metrics of TESLA......................................................................................7
Evaluate the impact of leadership performance in overall business performance of TESLA8
CONCLUSION.............................................................................................................................10
REFERENCES................................................................................................................................1
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INTRODUCTION
This report covers different leadership and management theories which are needed to
achieve business success. Leadership and management theories are needed in order to conducts
different business functioning in the most effective manner. Leadership skills is needed in order
to direct the employees in a particular direction whereas internal management is needed to
control and monitor different function to achieve organisational objectives. Leaders ns manager
performs different business functions right from the setting objectives and achieving business
success and growth. Leader an manager are responsible to evaluate business stability ion the
market. Different department of the organisation coordinates with each other in order to develop
cooperation and control in the business activities. In the context of Tesla which is an American
multinational organisation based out of Palo Alto, California. This company was coined by Elon
Mask and Nikola Tesla in the year 2003. It manufactures electric cars, battery energy storage,
solar panel and other electric products in order to promote sustainable energy consumption. Tesla
produces electric cars and energy plug inns, it the world largest manufacturer of battery energy
storage. The company was framed by the sole motive of promoting sustainable energy and
saving the environmental concerns. This report covers evaluate different theories and models of
management and leadership models followed by the Tesla, different leadership skills followed
by the leaders in Tesla and the impact of the of these leadership and management theories which
helps to enhance the performances of the business (Anderson and et.al., 2017).
Determine theories and models of management and leadership used by Tesla in the internal
management of its workforce
Transactional and transformational leadership are two leadership approaches which
involves directing and guiding employees so that each employees are able to perform business
activities in a specific direction to accomplish organisational objectives (Antonakis and Day,
2018). Transactional leadership involves strict controlling over the actions of the employees,
where leaders strictly guides the employees so that they are able to work in accordance to the pre
determined standards set. Transaction leaders takes both promotional tool and punishment for
employees so that they are able to work efficiently. These involves promotional tools which
includes both monetary and non monetary tools to encourage employees to perform better.
Transactional leader also punish the the employees who are not able to work in accordance to the
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pre determined standards. Transactional leadership are performed in the organisation where rules
and regulation are strictly followed with the specific hierarchical structure.
Transformational leadership involves where leaders inspires the employees and boost there
mental spirits to achieve business objectives. Transformational leaders develop new innovative
policies and strategies in order to encourage employees to work effectively (Bratton ed., 2020).
In TESLA, different leaders are been deployed for each team, these leaders are been
deployed in accordance to the competencies and skills acquired by them. Leaders have to
performs different roles which involves managing and controlling the performs of the
employees. For managing and controlling employee performances, leaders in Tesla follows the
transformational leadership which involves analysing the needs of employees and rendering
them motivational tool which best suits the need and wants of the employees. Leaders in Tesla
also involves employees in the decision making roles which helps employees to feel valued in
the organisation as there opinion are been counted.
Scientific management theory is defined by Fredrick Taylor which involves managing the
internal workforce of the organisation in order to build highly efficient workforce. It involves
five principles based on which the internal management of any organisation is been monitored
and controlled. These principles are as:
Science not thumb of rule: This principle is defined that the old technique of doing the business
must be replaced by new way of performing different business activities. According to this
principle, Tesla adopts new technological advanced tools in the business to acknowledge the
current market demand. With the increase environmental concerns, TESLA has adopted
technological changes like electric cars, driverless cars, and solar energy in order promote the
use of sustainable energy (Bush, Bell and Middlewood, eds., 2019).
Harmony not discord: It involves promoting harmony and discipline in the workplace.
Manager should promote harmony in the workplace by valuing the opinions of each employees
in the workplace. Manager in Tesla practices harmony in the workplaces so that employees feel
comfortable and valued in the organisation.
Cooperation not individualism: It is defined by the promoting cooperation between the
individuals in the organisation in order to coordinate the efforts of each individual to achieve
organisational objectives. Tesla promotes cooperation between individuals to achieve groups
goals where individual interest and goals are secondary and group goals are been prioritised.
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Development of Every Person for greater efficiency: It involves rendering training and
development to the employees in order to improve soft skills and technical skills of the
employees. Human resource manager in TESLA render training and development activities to
the employees so that they are able work efficiently by improving their skills and knowledge
pertaining the the specific job profile (Bush and et.al., 2018).
Maximum, not Restricted Output: This report covers where the employees are able to perform
to the extent which involves maximum output. Manager in adopts to work in a way which render
maximum output, it helps to achieve profit goal of the company.
X and Y theory
This theory was coined by which involves motivating and encouraging the employees so
that they work better. Human resource manager in Tesla motivates employees so that they can
work effectively. Analysing X and Y theory helps to determine the nature of the employees and
their needs which pushes theme to work effectively. X and Y theory states that theory X shows
the negative behaviour of the employees and theory Y shows the positive behaviour of the
employees. X theory implies that the employees does not wants to work until and unless they
finds string motivation to encourage them to work. The X an y theory states that every individual
have psychological and social needs which ate determined in the Maslows need hierarchical
structure, the manager should analyse these needs of each employee and render effective
motivational tool to accomplish then needs of these employees. Human resource manager in
TESLA applies this theory of motivation in order to motivate and push employees to
work better and effectively by closely supervising the work performed by each individual and
motivating them to perform in the cost effective manner. Leaders and manager in Tesla
motivates employees so that they are able to wok effectively in order to achieve organisational
objectives (Chen, 2018).
In order to promote effective communication and render direction and control leaders in Tesla
follows the charismatic leadership styles which involves influences the employees by promoting
effective communication and cooperation between the individuals. Leaders collects the views
and opinions of each individual in order to value the opinions of each individuals.
Elton Mayo’s behavioural theory
It involves defining the human dimension and behaviour of the employees in order to
evaluate the factors which helps motivates the employees to increase the productivity at the
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work. The management theory developed by Elton Mayo states Hawthorne experiments on the
employees. Tesla adopts to these managements theories in the workplace to increase the
productivity of the employees in the workplace by rendering them leaves, breaks while the work
so that they feel comfortable which further helps to achieve the productivity at work.
Key performance metrics of TESLA
As Tesla incorporation deals around manufacturing cars, acquiring the world largest
electric cars manufacturers. It one of the leading company with the idea of promoting sustainable
energy acquiring the large share of market it earns huge revenues from its innovative business
strategies (Cherry and Jacob, 2016).
According to the data, Tesla revenue in the year 2019 was generated about $21billion. Whereas,
gross margin of Tesla in the year 2019 went down to 21% compared from 2016. the research and
development department of Tesla continually focusses on developing innovation in the new
product development. With the increasing efficiencies in the new business ideas Tesla
continually earns huge revenue over covering the cost incurred in manufacturer expenses. Tesla
recorded the compound annual growth of 48%. Tesla delivered over 4 million vehicles recorded
in the year 2020. The gross margin of Tesla was recorded I the 2018-20, where overall revenue
generated from the business operation was over 31.5 billion and the cost incurred was under 25
billion.
Working capital ratios
working capital ratios are calculated by dividing the current liabilities and current asset of the
company. The higher working capital ratios indicates capabilities of the company to manage its
inventory. According to the data in 2019, the total working capital ratios of Tesla was recorded
by 5x, the receivables collection period of Tesla was calculated as 20 days (Crosby and Bryson,
2018).
Vehicles delivered per employee:
Tesla is completely focussing on improving its production scale as compared to its competitors,
total deliveries per employee was recorded in the year 2019 was 9 vehicles per employee.
Fixed assets and capital expenditure ratios
Fixed asset turnover helps to determine the fixed asset value by dividing the gross revenue and
average fixed assets, it helps to determine that how the company is managing its fixed assets.
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The fixed asset turnover of Tesla was estimated as 1.9x for Tesla whereas the Capex was
estimated as $1.3 billion.
The total deliveries of the Tesla in the year 2019 was recorded over 3,68,000 vehickles.
Employee turnover of Tesla
According to the key executives of Tesla, the annual employee turnover rate was recorded as
27%.with high employee turnover rate, it defines how demanding and dynamic the working
culture of Tesla.
Evaluate the impact of leadership performance in overall business performance of TESLA
In order to increase the productivity of the employees at work it becomes important to
measures employee satisfaction. Employee satisfaction plays an important which contributes to
the overall business performances. Where employees feels there needs and desires are been
satisfies and addressed it helps to retain the employees in the organisation for the longer period
where employees work with full enthusiasm in order to accomplish organisational objectives.
Human resource manger uses Maslows hierarchy needs to analyse the needs and desires of
employee and motivating them to accomplish organisation objectives. According to Maslows
need hierarchy there are 5 needs of an individual in an workplace, an employees moves to the
other need only when he feels that his prior needs are been fulfilled (Ellis, 2018). These needs
are as:
Physiological needs: It involves the basic needs like food shelter of the employees. Human
resource manager in Tesla fulfils the basic needs by rendering facilities of food, water,
accommodation and medical facilities.
Safety needs: It involves rendering safety and security to the employees. Human resource
manager in Tesla render job security and stability in the workplace.
Social needs: this involves the relationships and belongingness of employees in the workplace.
Human resource manager in Tesla conducts different informal meet in order develop the social
interaction and relationship among the employees.
Esteem needs: These involves acquiring higher job position in the workplace. In Tesla,
employees are rendered appraisals in order to motivate employees in order achieve productivity
and increase the performances (Gopee and Galloway, 2017).
Self actualisation needs: It involves where employee wants to put there innovative opinions and
policies to accomplish organisational objectives and accomplish personnel career growth.
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Human resource manager in Tesla collects the opinions of each employee in order to formulate
strategic decision and long term planning. Moreover, in Tesla employees are rendered training
and development programmes so that employee are able to satisfy their career growth goals.
Positive impact of transformational leadership
Transformational leadership involves inspiring and guiding the employees to the best by
taking their opinion and views regarding different business events and valuing decisions of the
employees. The positive impact of transformational leadership of discussed below:
Positive working culture: Leaders and manger in Tesla practices transformational leadership in
order to contribute positive working environment. It helps to analyse the behaviour of each
employee, motivating them in accordance desires and indulging them in the decision making
which helps to build employee engagement the workplace and further contributes to the positive
working environment (Hallinger and Chen, 2015).
Productivity: Tesla practices transformational leadership which helps to achieve productivity of
employees by rightly guiding them and directing them, it also involves addressing their opinions.
It helps to increase the productivity of employees by valuing the opinions of each employees in
the workplace which helps achieve productivity and enhance the performances of employees.
Benchmarks sets by Tesla in terms of turnover rate of employees, job performance, costs,
quality, market share, profit, growth etc. in comparison to Toyota
Toyota is a multinational organisation which is a Japanese company which is the largest
automotive manufacturer and a strong competitor of Tesla.
The total revenue in the year 2019 of Toyota was recorded as $53 billion where the revenue
estimates of Tesla was $21 billion.
Th gross margin of Toyota was 17% whereas the gross margin of Tesla was recorded as 21%.
Toyota is the big competitor to Tesla staying ahead in terms of growth, market share and profit
gaols. Comparing compound annual growth of both the businesses where Tesla recorded growth
in the revenue with 48% in the year 2019 (Lee, 2021).
Total deliveries of Toyota was estimated around 9 million vehicles in the year 2019 where the
deliveries of Tesla was recorded around 368000 vehicles in 2019.
The above stated discussion states comparison between two companies which are Tesla
and Toyota. Toyota is the leading international automotive companies and the big competitors
of Tesla, Tesla needs to implement different measures in order to achieve the production
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efficiencies. Employee turnover annually was 44% in last 6 months. One of the reason of higher
employee turnover is the increasing the demanding working culture, Tesla needs to improve its
workforce management in order to achieve productivity and efficiencies (Northouse, 2021).
CONCLUSION
This report concludes different leadership and management theories and approaches
which helps to accomplish and conduct business functioning of the business. Business follows
these leadership approaches in order to direct the employees in coordinate the efforts of different
individuals into a particular direction. Leaders and managers monitors the performances of the
employees to determine business functions are performed accordance to business objectives.
Business applies these leadership and management approaches in business practices in order to
achieve efficiencies in the business. Leadership skill are important which are possessed by the
leaders in an workplace which are needed to motivate the employees to achieve productivity,
organising the work performed by different individuals, promoting cooperation and coordination,
promote communication at all levels of organisation and other business functions in order to
achieve business objectives. Moreover, the leaders are also responsible for performing different
duties that contributes to business success. Through different leadership approaches a leader
analyse the business environment and implement the leadership approaches which best suits the
business events. Leaders and managers sets the goals for the business which are to be achieved,
moreover the coordinate the efforts of different individual by delegating the job roles and
monitoring the work performed by different individuals to achieve effect. As highly efficient
workforce is needed to conduct business functions in the most effective manner.
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REFERENCES
Books and journals
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of present leadership theories for the new generation. The Leadership Quarterly. 28(1).
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Bratton, J. ed., 2020. Organizational leadership. Sage.
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management. Sage.
Bush, T. and et.al., 2018. School leadership theories and the Malaysia Education
Blueprint. International Journal of Educational Management.
Chen, C. C., 2018. Leadership and management in China. Cambridge.\
Cherry, B. and Jacob, S. R., 2016. Contemporary nursing: Issues, trends, & management.
Elsevier Health Science s.
Crosby, B. C. and Bryson, J. M., 2018. Why leadership of public leadership research matters:
and what to do about it. Public Management Review. 20(9). pp.1265-1286.
Ellis, P., 2018. Leadership, management and team working in nursing. Learning Matters.
Gopee, N. and Galloway, J., 2017. Leadership and management in healthcare. Sage.
Hallinger, P. and Chen, J., 2015. Review of research on educational leadership and management
in Asia: A comparative analysis of research topics and methods, 1995–
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Lee, M. R., 2021. Leading virtual project teams: Adapting leadership theories and
communications techniques to 21st century organizations. CRC Press.
Northouse, P. G., 2021. Leadership: Theory and practice. Sage Publications.
Thorpe, R., 2016. Gower handbook of leadership and management development. CRC Press.
Van Wart, M., 2017. Leadership in public organizations: An introduction.
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