Overcoming Challenges at Tesla Inc.

This assignment discusses the challenges faced by Tesla Inc. due to its innovative approach and how the company can overcome these challenges through strategic communication and a change in management structure, focusing on one step at a time and effectively communicating with stakeholders to build a strong brand image.

Running head: INTERNATIONAL BUSINESS
International Business
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Executive Summary
The purpose of this assignment is to understand the innovation aspect of a company that is
known for its innovation in terms of its products and services and also business model. The
organisation that is selected for identifying the aspects is Tesla Inc, which is led by Elon Musk.
He is known for his visionary actions and decisions in creating products that are unique in
nature. The company has a disruptive innovation business model and the leadership style
supports this business model as well.

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Contents
Introduction......................................................................................................................................3
Overview of the company................................................................................................................3
The business case for innovation.....................................................................................................4
Impact of leadership in the organisation..........................................................................................5
Leadership challenges..................................................................................................................5
Evaluation of the impact of different leadership styles...............................................................7
Solutions to leadership problems.................................................................................................7
Analysis of innovation systems.......................................................................................................8
Disruptive innovation and its benefits.........................................................................................8
Innovation challenges..................................................................................................................8
Conclusion.......................................................................................................................................9
Reference list:................................................................................................................................11

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Introduction
Innovation is the process of developing and improving an idea. In a business organisation
innovation in every stage is important because these companies operate in micro and macro
environment factors which keep changing and evolving with time. In order to keep up with the
dynamics of the business environment the companies have to innovate. In many business
institutions innovation is one of the major strategic management ways in which they attract and
engage their consumers like Tesla Inc, Amazon etc. On the other hand there are organisations
that have subtle innovations in the business model or organisation structure to ensure that the
operation process is smooth and easy. In this assignment the process of innovation undertaken by
Tesla Inc is going to be studied in order to understand the dynamics of the processes (Gokhberg
andMeissner 2013).
Overview of the company
Established in 2003, Tesla Inc is an organisation that has shown rapid growth and
development in the industry and has quickly gained goodwill in the market as well. The company
is led by the dynamic CEO, Elon Musk who is also one of the founders of the company. The
organization was set up by a group of engineers who were of the perspective that consumers do
not have to compromise on other aspects of a car that is energy efficient according to them the
electric vehicles can be innovated in order to make them work better, quicker and also fun
elements can be added to the cars (Tesla.com 2018).

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The organisation has faced many ups and downs in all these years and by 2013 the
organisation gained prominence in the American market and at the same time they have been
focusing on expanding the operations of the business in Europe as well (Mangram, 2012).
The foundation of the company has been innovation, hence the company has been
investing a lot in the research and development industry. Some of the first innovations of the
company are: revolutionary battery technology and electric powertrain.Next, the engineers
createdthe firstfinestquality all-electric sedan car from the Model S car.This has become a bench
mark item in the industry. There are three factors that were incorporated in the design and
function of the car: Combining safety, performance, and efficiency. The company is driven by
innovation as the leaders of the organisation think that they can provide the customers with better
options. The approach of the business model that is followed by the company is consumer
centric.The fact that they are driven by innovation is from the idea of providing their customer
with the best possible product and service. The company has also a diversified line of products
which cater to the energy efficiency needs.This makes the organisation sustainable in nature as
well (Tesla.com 2018).
The business case for innovation
Innovation is essential in an organisation like Tesla as the focus of the business is based
on providing the consumers with product that are innovative and are not available already. This
in turn helps theorganisation get an edge over the competitors. The objectives of the company are
driven by innovation and one of the reasons why the company has gained popularity is because
they have new products to offer the customers in the old market. The energy industry is looking

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for several alternatives to the non-renewable sources that are available.This ensures that the
process of innovation in the companies like Tesla Inc will help in this endeavor. Innovation
always runs on risk as the products that are being made available by the company for the
customers have to be in sync with the needs and requirements of the target market (Tidd et al.
2013).
It can be said that sincethere are several environment factors which are associated with
the operations of the business,risk is certain with any business model - be it innovation driven or
any other focus. Macro business environment cannot be manipulated by the management of the
company.Therefore in that case innovation becomes the process of survival and development for
many organisations. The case of Tesla is a little different.The company is built on the foundation
and the values of providing the consumers with innovative products and services (Tidd et al.
2013). The organizationencourages its employees to make sure they get their space to be
innovative and increase their performance(Rocoand Bainbridge 2013).The company operates in
the energy and automobile industry which is both heavily competitive and one of the major
objectives of any business operation is to gain edge over the competition and innovation helps
the company in this sector. The company has also built a brand image of being innovative in
their approach and hence any products that the company comes up with the consumers will be
innovative and different from what is available in the market (Tidd et al. 2013).
Impact of leadership in the organisation
Leadership challenges
“Leadership is the process of influencing others to understand and agree about what
needs to be done and how to do it, and the process of facilitating individual and collective

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efforts to accomplish shared objectives”(Yukl 2013). A leader is responsible for helping and
supporting the subordinates in achieving the goals of the company. The role of a leader is
important as he or she channelizes the values and principles that are prevalent in an
organization.It is the duty of the leader to understand the issues and grievances of the employees
or subordinates so that they are satisfied with the process of business operation. The leadership
style of an individual depends upon the personal behavioral attributes as well as the situation in
which they are places, the circumstances in which an organisation operates(Yukl 2013).
Tesla operates under the visionary leadership of Elon Musk the organisation has been
able to innovate and make a mark in the industry because of the outgoing and extraordinary
visions of the Elon Musk. He not only leads Tesla Inc but is also heads the aerospace company
SpaceX. Musk is the co-founder of the non-profit Open AI that aims to prevent risky artificial
intelligence program. He is also the entrepreneur of Neuralink.This is a company that is aimed to
build a connection with computers and human brain.Thus the innovative approach of the leader
in the organisation is clear -He has a vision for the future and believes that with the help of
technology and science new heights can be achieved. Tesla continues to be an organisation that
is different in its product approaches from other automobile manufacturers (Taylor et al. 2014).
Some of the challenges that are faced by Elon Musk are : acceptance of the idea of
innovation, this is one of the major challenges that is faced by any organisation that drives on
innovation.The public are firstly skeptical of accepting the product as they are usually used to the
product in an outdated version.the upgraded version that is provided by the company will be
reviewed critiqued and analyzed in a much crucial way than any other product, which is just an
extension of the product and the product line. The company has to make a lot of effort in

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communicating with the stakeholders and especially customers in giving them an in-depth
understanding of the innovation and the advantages that come with(Yukl 2013).
One of the challenges that the company has faced in the early days is of bad press
situation. There were rumors that the company was unable to launch their highly ambitious
electronic car as the process had taken 4 years to bring the product to the market. The capabilities
of the company as well the leaders associated with the company were questions which had made
it difficult for the company to combat the situation unless the products were ready. Musk had all
these rumors build up without giving any official statement and then when the company
launched the Tesla Roadster, an all-electric sports car, the negative publicity worked for the
company as they had already been popularized by the press(Yukl 2013).
Evaluation of the impact of different leadership styles
The leadership style that is followed by Elon Musk is a combination of visionary and
transformational leadership.The farsightedness and his vision of the future for his company and
overall society makes him a visionary leader and the urge to change with the changing dynamics
of the business environment and incorporate innovation in the product makes him a
transformational leader (Taylor et al. 2014).
Solutions to leadership problems
 Improve communication and make it more effective for the stakeholders
 The focus should be at one aspect at one point of time
 The process of innovation declaration and launch of the actual product should be less
 The management of the organisation should keep some short term objectives which will
help in gaining easy access to achieving the larger and long term goals.

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Analysis of innovation systems
Innovations can be segmented in various divisions: Disruptive, Incremental, Major and
Strategic. Tesla falls under the category of Disruptive innovation as the company has products
which can replace other items in the industry (Christensen et al. 2015).
Disruptive innovation and its benefits
Disruptiveinnovation can be defined as the process of innovation which has the capability
of replacing old goods and services and gain an instant edge over the competition, and
ultimatelyenhancethe user-friendliness and affordability for the market. The innovations of Tesla
Inc can be categorized in this segment as they have the potential to replace traditional gas energy
power cars in the near future. Some of the merits of this innovation are:
The process can help the organization develop its market with the help of innovative
ideas with new and existing products or services (Christensen et al. 2015).
The process of innovation of this kind helps the company open opportunities and new
scope to explore and expand further as these organisations continue to improvise and research on
the products.
As mentioned above the company will gain an instant preference over the other
competition or rather there will be no direct competition to the product as it is new and no other
company has such technologies available (Christensen et al. 2015).
Innovation challenges
One of the challenges that the company is facing is merging some of the operation of the
business with other organisation in order to provide the customers with product that are energy
efficient andinnovative. The idea of integrating SolarCity with other lines of business of Tesla

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brings with it $3 billion debt. Apart from this the idea of conjoining the products of an
automobile manufacturing company with a solar-panel leaser and installing company is the main
challenge. The crucial question in this merger is whether it will create value for the organisations
or not (Roco and Bainbridge 2013).
Finance is another challenge for any organisation that operates in the innovation driven
business model, the research and development unit requires funds to operate on the other hand
the company also requires to increase the production rate by 2018.
As the products are innovative the company has a lot of risk of failure and Tesla has seen
some major failure in the tenure of its operations. The challenge here is to provide the customers
with a product that is innovative as well as has traditional ideas. The merger of old and new has
to be in a correct proportion so that people can understand the product as well as understand the
advantages that the innovation has bought around (Souto 2015).
Investors and other stakeholders of the company are also skeptical to invest in a new idea
many times the investors do not understand of the operations of the technology or science that
goes behind an innovation. In that case they might be skeptical and they may not want to invest
in a risky project (Roco and Bainbridge 2013).
Recommendation
 With the help of communication the company should involve the stakeholders of
the company in the innovation and the ideas that has been strategies for product
development.
 The company should focus on one step of a product at a time, as the CEO also
heads other organisations the must be a position in the management that has

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almost similar authority as the CEO but will be focused just with Tesla Inc
management.
 Effective communication and developing on the brand image of being an
organisation that runs on innovation. This can be done with the help of elements
the promotional mix. Focus can be on digital media.
Conclusion
It can be concluded from the above discussion that Tesla is an organisation that is not
aiming to achieve the objectives that are usually aimed by other automobile manufacturing
organisations, the vision and mission of the company is to invent ideas and to operate and
innovate upon existing concepts. This revolutionary perspective of the company is led by a
visionary leader Elon Musk who has help the company achieves heights and set benchmarking
examples in the industry. The company has come a long way of success from the time they had
developed the first product but there will be challenges in business, which can overcome
challenges with strategic communication and few changes in the management.

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Reference list:
Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. What is disruptive innovation.
Harvard Business Review, 93(12), pp.44-53.
Dyer, J. and Gregersen, H., 2018. Tesla's Innovations Are Transforming The Auto Industry.
[online] forbes.com. Available at:
https://www.forbes.com/sites/innovatorsdna/2016/08/24/teslas-innovations-are-transforming-the-
auto-industry/#3470f40319f7 [Accessed 22 Mar. 2018].
Gokhberg, L. and Meissner, D., 2013. Innovation: superpowered invention. Nature, 501(7467),
p.313.
M. Taylor, C., J. Cornelius, C. and Colvin, K., 2014. Visionary leadership and its relationship to
organizational effectiveness. Leadership & Organization Development Journal, 35(6), pp.566-
583.
Mangram, M. E., 2012. The globalization of Tesla Motors: a strategic marketing plan analysis.
Journal of Strategic Marketing, 20(4), 289-312.
Roco, M.C. and Bainbridge, W.S., 2013. The new world of discovery, invention, and innovation:
convergence of knowledge, technology, and society. Journal of nanoparticle research, 15(9),
p.1946.
Souto, J.E., 2015. Business model innovation and business concept innovation as the context of
incremental innovation and radical innovation. Tourism Management, 51, pp.142-155.

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Tesla.com.,2018. About Tesla. [online] tesla.com. Available at: https://www.tesla.com/about
[Accessed 22 Mar. 2018].
Tidd, J., Bessant, J. and Pavitt, K., 2013. Managing innovation. Hoboken.
Yukl, G.A., 2013. Leadership in organizations. Pearson Education India.