Operation Management

This report focuses on the operation management of Tesla and increases productivity and profitability. It discusses the overview of Tesla, target segment, operation objectives, and performance objectives. The report also covers the supply network process, volume, variety, variation, and visibility.

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Operation Management
Student Name

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Table of Contents
Introduction.................................................................................................................................................2
Overview of Tesla...................................................................................................................................2
Target Segment of Tesla..........................................................................................................................3
Operation Objectives of Tesla.................................................................................................................6
Quality.................................................................................................................................................7
COST...................................................................................................................................................7
Dependability......................................................................................................................................8
Speed/Fast...........................................................................................................................................9
Flexibility............................................................................................................................................9
Performance Objective of Tesla..............................................................................................................9
Supply network process.........................................................................................................................10
Volume..................................................................................................................................................11
Variety...................................................................................................................................................11
Variation................................................................................................................................................11
Visibility................................................................................................................................................11
Recommendation.......................................................................................................................................11
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13

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Introduction
Operation management department focuses on a proper plan, management, and for
managing the production, manufacturing, and contribution services. This department follows the
concept of delivering its services in a good manner. Operations are the major base of Tesla with
marketing, human resources, finance, and supply chain (Dhoul, 2019). This report focuses on the
operation management of Tesla and increases productivity and profitability. This department
focuses on the utilization of available resources with profitability. This report will point out the
operation management of Tesla, its customers, and supply chain process.
Overview of Tesla
Tesla established in 2003 by a group of engineers, as they want to support electric
driving. This group wants to prove, as electric vehicles can be better than gasoline cars. This
group of engineers indicates as electric automobiles are quicker and have more entertainment
compare to gasoline cars (Boylan, 2016). In today’s time, Tesla not only builds electric
automobiles but also built limitless scalable pure energy generation and storage goods
(Kumparak, Burns, & Escher, 2015). Tesla believes that the world is becoming faster as will
stops relying on fuel, oil, and on natural gases and will move towards a zero-emission future.
The first ever sedan car designed by Tesla in 2008, this becomes the world best in all class in
every category (Gregersen & Schreiber, 2019). As the customers in today’s time demands the
product with updated technology and renovation. For this tesla likes to enhance their level of
creativeness.
Contribution
In this organization working as a senior manager in the operation department of Tesla and
the contribution towards the department is to looking at the process of business. In this area, the
writer’s focus is on product quality, cost, and meaningful use of resources. Quality of product
will improve by the analysis of two products and transformation in various segment of the
automotive, solar panel and battery occupation. The productivity of the organization improves by
manufacturing in advanced electric vehicles by raising the meaningful use of skilled labour.
Organization’s technological innovation objectives depend on operation management
presentation. The production of Tesla depends on the effectiveness of operation management.
The effectiveness of operation management also depends on supply chain management and

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inventory management. Operation management reduces the negative external forces and
contributes to high productivity.
Contribution of Department
The operation management department focuses on the design of products. Operation
management of Tesla also increase the chances of innovation into their products and various part
of the battery, automotive, and solar panel business. The operation management department of
Tesla expectation is to fulfil high standards for productivity and quality. The operation
management department of Tesla utilizes its global reach for enhancing their business. The
operation management department of Tesla for maximizing sale will target the access market
(Thompson, 2018). The department of senior manager innovates its supply chain system
according to the demand of customers. This department working with the strategic decision areas
for minimizing the cost of the product and maximizing productivity.
This department focuses on adequate supply and on the effective supply chain. This
department supports the manufacturing process. Inventory costs, production, and support are the
operation management principles. This department focuses on small and intermediate plans for
resource utilization. This department supports the market -based scheduling with maximum
efficiency. In the market based -scheduling, the company monitors actual market demand and
uses the resulting data as a basis for scheduling activities, and production of the automobile.
Adequacy of production capacity and resources are the objectives in operation management
department. This department also refers to the regular monitoring of market demands.
Target Segment of Tesla
Tesla focuses on a particular people segment and initiating products according to the
demand of a related segment. A segment of Tesla divides its customers into a category according
to features such as social rank, age, psychological features, etc. (Weinstein, 2017). The segment
focuses on choosing specific groups to sell its product. The organization uses the positioning of
the choice and implementation of the trade mix with the most appropriate for the target consumer
segment (Le Beau, 2017).
Tesla operates mono-segment positioning. Products of Tesla are considered expensive for
average customers so the target segment of the organization is wealthy households and

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individuals. This organization also deals with the anticipatory kind of positioning. The electric
manufacturer positions its services and product for a market place segment that has small
turnover with a forecast that sale will rise in the future (Debord, Business Insider, 2018).
The expectation of the customer of Tesla is to get the product with the high quality and
satisfied their need at higher level as they would pay the higher amount for the product.
Below table illustrates target segment of Tesla
Types of Segmentation of
Tesla
Criteria for Segmentation
of Tesla
Target customer segment of
Tesla
Demographic of Tesla
products
Gender of customers of Tesla Tesla design their products
for both Male and female
Age of customers of Tesla Average Age for a customer
of Tesla is falling between
30to65
Life-cycle stage This organization follows the
customer of the full nest I, II,
and III which belongs to the
organization
Occupation Occupation of Tesla product
is for Professionals, students,
and worker
Lifestyle Aspirer
Succeeder

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Psychographic
Explorer
Reformer
Social class The middle class & upper
class
Geographic
Density Urban & Rural
Region North America, Asia, Europe
Behavioural
Personality Determines & Ambitious
Degree of Loyalty Soft-core loyal
Hard-core loyal
Switchers
User Status Perception of being
environmentally friendly
Benefits sought Long-term cost-effectiveness
(Dudovskiy, 2018)
Tesla focuses on fulfilling the requirement of customers and identifying the need for
customers and expectation in the market regarding their products. Tesla focuses on the
renovation of its products with future sustainability with various aspects. Tesla also puts its
efforts to manufacture its product with a good expectation of the customers. Product of Tesla
designed in a format that produces the most of the logical use of the manufacturing capacity.
The mission of Tesla is to provide a good product with environment-friendly features,
good design, good function, and excellent quality. CEO of Tesla visualizes Tesla as an
automated company and an independent car manufacturer, whose target is to supply modest
electric vehicles to average consumers (Campbell, 2018).

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While choosing the section market of Tesla it did not ask, which section is the most fuel-
conscious but which section authorized the organization to build innovative model vehicles and
long-term benefits. Tesla did not choose the mini car segment but the option was the cost
insensitive performance car section, and the lower volume that enables them to generate brand
identity, earn premium pricing and establish significant feature gross margins by choosing the
affluent and rich customers who are happy to spend extra amount compared to their vehicles.
Tesla has been selling an all-electric luxury vehicle that has done well with its good
performance in the market and has distributed the record of 100,000 automobiles for 2017. Tesla
holds a unique position in the market that shows its strength with the sale of technology. The
mission and vision of statement of Tesla are to dominance in the world electric vehicles and
battery market.
Operation Objectives of Tesla
There are different operation objective such as quality, dependability, cost, flexibility,
speed, and that highlighted by Tesla depending on the requirements of the consumers and
competitor strategy (Dlebecki, 2014). Operation objectives of Tesla defined in a subsequent way:
(Sharma, 2019)

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Quality
Manufacturing management deserves credit for producing quality luxury vehicles.
Operation management of Tesla focuses on Tesla motors as the future of automotive
manufacturing. The Tesla motors rise in a good standard of financial and investment sector of
Tesla. Quality is the main expectation of customers and this is one of the main objectives of
operations management. The strategic objective of Tesla is a regular quality improvement,
quality checks, and investigation on the energy solutions market. For providing the high-quality
standards and productivity, operation managers regularly conduct quality reviews of the product
and follow the procedure of enhancements their products. For improving the quality of the
product organization, manufacture its own parts and this helps them to solve the issue of the
manufacturer of vehicle parts, as they were not providing them quality products. This will
improve product quality and quality control. By performing the right thing, the organization will
get success to attaining the quality advantages. The store of the organization designed with a
unique layout with ensuring their brand identity. The employees of the organization like to
provide good quality products with quality service to the consumers (Seaton, 2016).
COST
The cost structure of Tesla includes direct labor and indirect labor involved in car
manufacturing. For calculating, the operating expenses both labor cost involved in
manufacturing. The price of labor is the sum of each wage paid to workers. It also includes the
payroll taxes and price of employee benefits paid by an employer. The cost of labor allocated to
the indirect and direct cost. Indirect cost includes support labor, as employees who maintain
factory equipment, and direct cost includes the wages of the employees. The total of Material
cost, overhead cost, and cost of labor decided the sales price of a product. The sales price
involves the total cost generated by the organization, if any cost miss by the organization for
calculation than the sum of profit will be lower than expected. If the demand for the product is
lesser then competition will force to reduce the cost of the product and this will affect the nature
of reducing the cost of labor to remaining profitable. The organization can reduce production, the
number of workers, and other factors in production cost. Production cost also includes the
payroll expenses of their employees that include the salaries and wages paid to employees.
Payment made to them as they rendered the service to the business. This factor of Tesla includes
the thought of executing actions cheaply. The effectiveness of quality, flexibility, speed, and

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reliability directly involves the cost objectives with the operational strategies. This factor helps to
attain the cost objective on behalf of various point of view, as the organization focuses on the
automation feature. This helps an organization to provide a fast response. This response helps the
organization to save the cost of organization in unforeseen conditions (Kosak, 2018).
(Desjardins,
2017)
Dependability
Products of Tesla depends on electricity. One of the major priorities for Tesla is
improving service operations. For this Tesla promised to expand the number of the service center
and hire more technicians. The organization will also introduce the mobile service program to
perform basic service jobs at your home or place of business. This will provide a sign of
improvement. This will create the conversation better. For solving the issues of dependability,
Tesla is also improving its dependability with upgrading their software and hardware with its
model. Automakers are starting to explore and include artificial intelligence in their cars. This
organization refers to the best innovate and regulate them. With the lots of capital, seasoned
supply chains, and solid supplier bases went to work in churning and developing out their own
electric cars, as consumers and governments pursue low-emissions, eco-friendly transit options.

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Tesla also likes to perform their activities on time for this organization maintains a system of
simple record in a change of sales pattern, and new stock arrival (Valdes-Dapena, 2018).
Speed/Fast
Tesla has introduced the ultimate car, with the fast acceleration on a single charge. These
numbers show as with the dependability on the electricity is also producing fast cars as well.
This organization stands at a good number in terms of speed and this provides it a well-known
status for speed. Operations of Tesla are providing the organization benefits of speed by
executing the activities faster. This organization also provide the service of warehouse facilities
and exclusive layout with parking facilities. This organization also provides an enjoyable place
for the children such that their guardians can focus on their shopping (Anthony, 2014).
Flexibility
Tesla is introducing them by providing electric vehicles. The charging station of Tesla is
better than comparing to its competitors. If we compared the solar plants of Tesla with the others
as they are attractive and available in the multiple styles.
Product of Tesla is capable enough to provide good services to its customers with
flexibility. Operations of the company create flexibility to established new products and services.
The operation of Tesla enables mix flexibility and is capable to offer a variety of goods and
services. The objective of Tesla also includes the satisfaction of the customers at a good level.
The organization also likes to add extra facilities along with their products.
The organization always support flexibility as they hold the ability to change the level of
output in a good manner. This department decides the level of stock of every product. This
department also ensures to provide good service with a variety of choices (Kwak, 2013).
Performance Objective of Tesla
For an organization, performance objective plays an important role in ensuring and
monitoring the organization meets all of its prescribed targets and goals. This helps to
communicate the achievements effectively to its key external stakeholders. Tesla imposes
various measurement and techniques to keep track of the organization performance. Organization
measures its performance of manufacturing number of cars produced in a day, for the division of
the service of the customers, number of the inquiries resolved, answers of emails, and complaints

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handled. For this organization establishes indicators of key performance to monitors its
inventory, production, and generally assess the success of achieving the goals within the
predetermined duration.
Supply network process
There are 17 stores & galleries of Tesla around the world. Suppliers of the product of this
organization situated across the world. This is a very big industry in terms of providing a good
quality product to the customers. All the product of Tesla is producing according to the
particularly framed code of conduct. This organization offers the relationship of the company
with international suppliers. The organization continuously focuses on the improvement of the
quality of the material at a big level. The global EV market predicted to grow at a compound
annual growth rate of 21.4% between 2018 & 2026 according to buyer report (Debord, Business
Insider, 2018).
This organization is very much fond of social media. On social media, in contrast to other
auto organization, Tesla is in top three. Tesla does not pay money for advertisement, as free
media coverage and word of mouth are enough for the sale of the product. Tesla is one of the
strong brand identity, which requires fewer followers and promotion. Tesla website plays a big
role in the promotion of their product through sales and marketing. This organization used
Twitter to attach to the huge base of followers and fans (Debord, Business of Tesla, 2017).
This organization also use the operative utilization of the resources and interpret them
into bottom-line results. Tesla desires to gain a number of powerful buyer with the innovation of
its product and services because a revolution is a choice if the distributor of the organization
wishes to obtain a powerful buyer. This innovation initiates the regulation and promotes
suppliers to fulfill the new requirements of the customers. This operation management
department focuses on the innovation of its product with the market demand, design, and
material innovation along with the economic efficiencies. This will introduce the product with
high quality (Ferrari, 2018).
Operational task of Tesla is focused on the innovation and manufacture. This has been
done through optimization of organizational capacity for innovating car parts and electric cars.
The (4) V’s of operational management are Volumes, Variety, Variation and Visibility.

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Volume
Volume of the Tesla refers the level of the satisfaction of demand. Operations of low
volume to be less repetitive with staff performing more in multitasking of Tesla. High volume of
Tesla refers to process of repeat. This can be turn for the standardized. Level of higher demand
can be easily satisfied, as the process of production is faster due to automated activities.
Variety
Variety refers the service and goods to be sold and produced to customer of Tesla.
Variety of the products with the high flexibility of goods or services for matching the
requirements of customers with flexibility.
Variation
Variation of Tesla refers the level of demand changes for a time due to external factors. A
number of factors make it difficult to predict variation for customer of Tesla.
Visibility
Visibility of Tesla refers to how much of the organization’s process does the customer
actually experience. The service industry of Tesla has a high level of visibility.
Recommendation
The demand for the product of Tesla is continuously expanding. The market of Tesla
expanding in Europe, the United States, and now with an increased focus on China, Demand of
the product of Tesla is going to be high for a long time.
As a senior manager will choose the market segment of China. China is the largest and
newest potential market for Tesla. For this, there is a change as having lower priced vehicles can
pose as an entry model for Tesla. With the emerging market of China, This organization will
have enough demand to overcome its current high fixed cost of doing business.
Along with the increase in the production, operation management department will
improve upon the supply chain network in order to reduce cost and get the right parts, at the right
time, at the right place.
As this organization is a very big organization, as a recommendation an organization
needs to invest a large amount of development and research in order to stay ahead to produce

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more good vehicles with its competitors in the future. The operation management department of
Tesla will enhance the production efficiency with expanding their manufacturing plants to keep
up with demand. For meeting the objectives department has announced a program to produce the
two of their own battery factories that will exceed the current demand for their battery needs.
The operation management department with the help of expansion on the supercharger network
they are increasing customer satisfaction at a large level. It is my recommendation that they keep
pursuing this business approach as a long-term investment in the success of Tesla.
Conclusion
Tesla is continuously growing its reputation with the unique and exclusive idea of their
business. This will offer the organization a good and specific segment. This organization holds
corporate level strategies at a different level as this show the difference in their operation
objectives compares to the other organization. This organization focuses on the different
operational objectives such as quality, dependability, cost, flexibility, and speed that highlighted
by the organization to keep at the higher priority with the satisfaction of their customer
requirements. This organization has attained edge based on these parameters by compactor and
hence attempt to attain an aggressive edge for the organization. This organization focuses on
generating a system of supply and investing in technologies and procedures. This report
highlights the operations of an organization that helps in indicating the effectiveness and success
strategies of the organization.

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References
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Boylan, C. (2016). History of Tesla. Clean Technica, 89-92.
Campbell, P. (2018). Tesla's Factory. Financial Times, 34-42.
Debord, M. (2017). Business of Tesla. UK: Oxford University Press.
Debord, M. (2018, 03 10). Business Insider. Retrieved from Target Segment of Tesla:
https://research-methodology.net/tesla-segmentation-targeting-and-positioning-overview/
Desjardins, J. (2017, 08 18). The World's Largest Automaker. Retrieved from Automotive:
https://www.visualcapitalist.com/tesla-worlds-4th-largest-auto-maker/
Dhoul, T. (2019). Operation Management. Defination Of Operation Management, 5-8.
Dlebecki. (2014). Tesla Motors Operational Strategy. Forums, 62-65.
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Overview: https://research-methodology.net/tesla-segmentation-targeting-and-
positioning-overview/
Ferrari, B. (2018). Supply Chain Matters. Supply Chain Potential, 62-78.
Gregersen , E., & Schreiber, B. (2019). Tesla. Industry of Tesla, 1-17.
Kosak, E. (2018). Clean Technica. Tesla's Cost Of Material Curtain, 56-68.
Kumparak, G., Burns, M., & Escher, A. (2015). Introduction Of Tesla. Techcrunch, 8-11.
Kwak, J.-Y. (2013). Flexibility Of Tesla. UK: AAMAS.
Le Beau, P. (2017). Tesla's Target. Market Of Tesla, 6-12.
Seaton, Y. (2016). Tesla Motors. Operation Management Analysis, 1-8.
Sharma, G. (2019, 04 02). Operation Strategies. Retrieved from Strategies Of Tesla:
[https://www.slideshare.net/GaganSharma3/ikea-operational-startegies]

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Thompson, A. (2018). Management. Operation Management, 62-68.
Valdes-Dapena, P. (2018). Dependability Report. Business Of Tesla, 18-24.
Weinstein. (2017). Market Segment. US: Routledge.