Value Chain Design and Operational Activities in Tesla

This document discusses the value chain design and operational activities in Tesla, a globally recognized organization in the car manufacturing industry. It explores how Tesla's value chain design helps the organization to improve its operational activities and stay competitive. The document also provides recommendations for managing operational activities and discusses the challenges that the organization may face in the near future.

Running head: OPERATIONS MANAGEMENT 1
Operations Management
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Table of Contents
The Background of the Organization………………………………………...………4
Value Chain Paradigms and Perspectives…………………………………………….5
How Value Chain Design Can Help the Organisation
To Improve Operational Activities and Why It Is Important…………………….…....7
Recommendations………………………………………………………….…………..8
How can the organization manage its operational activities to stay competitive ...........8
What are the challenges associated with the organization in the near future?.................8
Conclusion……………………………………………………………………..………..9
References……………………………………………………………………..………..10

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EXECUTIVE SUMMARY
Tesla is an organization that is globally recognized, and this is because it has been one of the
most innovative and strategic organizations in the modern business world. Irrespective of the
stiff competition that has been evident in the car manufacturing industry, Tesla stands as one of
the organizations that deliver quality and unique cars in the market. The company has been able
to do so because of its value chain. For an organization to stand out in the market, it must have a
value chain design that is exceptional and strategic. Tesla's value chain design considers the
needs and expectations of the customers, and at the same time, it makes sure that extra
characteristics that are appealing to the customers are added to the products. As a result, Tesla
continues to be a competitive organization and a dominant organization when it comes to the
manufacturing of electric cars.

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THE BACKGROUND OF THE ORGANIZATION
Started in 2003, Tesla is an organization that has been able to change the car
manufacturing industry by a big percentage. The minds and intellects that are behind the
foundation and establishment of Tesla Motors are Martin Eberhard and Marc Tarpenning. The
two founders identified a need and came up with the strategy to meet the need and fill the gap in
the car manufacturing industry. The world has been advocating for the reduction of activities that
might have negative effects on the environment, and the use of fuel cars is one of the factors that
affect the environment. In this case, the use of renewable energy would come to help in
conserving the environment. It is at this point that the two founders saw it appropriate to start an
organization that considered the well-being of the environment.
Eberhard and Tarpenning took different roles at Tesla with the main aim of driving their
agenda of changing the car manufacturing industry. The role of a Chief Executive Officer was
taken by Eberhard while the role of Chief Financial Officer was taken by Tarpenning. However,
there was a need to have some money that would help in making sure that the dream of the two
entrepreneurs became a reality. It is at this point that Elon Musk came to the picture and injected
$30 million and also took the role of the chairman in 2004. Tesla Motors released the first car
model in 2008, and this is where they came up with Tesla Roadster. The car passed the quality
test, and it could accelerate for 0-60 miles per hour, and this would be in less than four seconds.
The use of carbon fiber also made the car light, and this is one of the characteristics that made
the company to boost its sales on the car.

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After coming up with different models and many cars, Tesla saw the need to have
charging stations and the idea was implemented in 2012 (Curry, 2016). The areas of location
were the United States and Europe, and this is because these were the areas where the company
sold most of its cars. The company was targeting the customers with an additional value of
providing free charging services to all customers (Mayer, Phillips, & Posthuma, 2017). After the
manufacturing and distributing of Roadster, the company realized that the model would only
meet the needs of the rich in the society and this was because of the price of the car. It is for this
reason that the company saw the need to come up with a different and cheaper model (Gereffi &
Fernandez-Stark, 2011). Model 3 was the answer in this case, and it came at a cheaper price of
$35,000. The model was released to the market in 2017.
The year 2018 was not one of the best years for Tesla and Musk, and this was because of
the tweet by Musk where he stated that Tesla was ready to go private. The remarks were not
taken lightly by the authorities, and this is because Musk might not have been talking from a
reality perspective. As a result, Musk and Tesla were both fined $20 million (Gereffi &
Fernandez-Stark, 2011). However, it is evident that under the leadership of Musk, Tesla has
revolutionized the car manufacturing industry. It is also amazing that the company has acted as
an example to other organizations that are also working towards manufacturing electric cars.
VALUE CHAIN PARADIGMS AND PERSPECTIVES
Trends that are evident in the value chain can also be referred to as value chain
paradigms. Paradigms have different effects on organizations. It is essential to note that
organizations are in business because of their need to meet the needs of the customers (Jaligot,
Wilson, Cheeseman, Shaker, & Stretz, 2016). Therefore, while embracing and utilizing value

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chain models, organizations make sure that the models can help the organizations to reach their
specific goals. At the same time, they make sure that the expectations and needs of the customers
are met (Tobin, Bates, Brennan, & Gill, 2018). While choosing the value chain models, it also
becomes imperative for an organization to understand its abilities because an organization should
only embrace a model that it is able to implement. Considering that the value chain models affect
the operations of an organization, it is evident that the customers and the organization are all
affected (Alcacer & Delgado, 2016). However, the effects that value chain models have on
customers are not the same effects that they have on organizations. When it comes to
organizations, they promote efficiency and help organizations to align the operations with the
needs and expectations of the customers. When it comes to the aspect of the customers, the value
chain models promote customer satisfaction (Mudambi & Puck, 2016). The reason behind it is
associated with the fact that when an organization factors in the needs of the customers, it
manufactures products that meet the needs of the customers. As a result, the customers get the
products that they are satisfied with.
Value chain trends are in manufacturing and service-providing industries. The trends
have effects on the final products, and this is because of their utilization in the operations of an
organization. One of the trends that is evident in the case of Tesla and it is evident in many other
organizations is the utilization of technology (Hernández & Pedersen, 2017). In the modern day
world of business, technology has become part and parcel of organizations, and this is due to the
fact that it has come to change things and also to promote advancements that have effects on
production of goods and provision of services. The trend is evident in Tesla in different ways.
For example, cars at Tesla are a hundred percent electric. In the car manufacturing industry, the
manufacturers have been concentrating on the manufacturing of cars that use fuel (Alcacer &

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Delgado, 2016). The use of technology is the reason behind the replacement of fuel to electricity,
and that means that credit goes to technology.
HOW VALUE CHAIN DESIGN CAN HELP THE ORGANISATION TO IMPROVE
OPERATIONAL ACTIVITIES AND WHY IT IS IMPORTANT
The essentiality of a value chain is seen in its ability to guide an organization in choosing
the processes and activities that are involved in value addition. The design of a value chain is
essential, and this is because the type of a design that a company chooses dictates the types of
results that the company is likely to attain (Arthur, Adraki, & Allotey, 2018). Tesla stands out as
one of the organizations of its kind, and this can be associated with the design that it has chosen
to work with. Working with an effective value chain design fosters the creation of high-quality
goods (Barton, 2017). It is for this reason why Tesla has products that are unique and have no
competition (Alcacer & Delgado, 2016). In this case, the importance of value chain is seen in the
ability to help Tesla to select activities and processes that lead to the manufacturing of quality
and unique cars.
One reason why value chain design is important in an organization is that it acts as a
roadmap to manufacturing processes. Therefore, if the value chain design is weak, it will lead to
the manufacture of weak and low-quality products (Klankermayer & Leitner, 2016). However, if
the value chain design is strong, the company will come up with high-quality products. At the
same time, the value chain design helps an organization to manufacture goods and offer services
that are in line with the expectations of the customer (Alcacer & Delgado, 2016). In summary,
value chain design is important because it helps to control all operations and when the

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identification of the best value chain takes place, an organization is able to see its benefits in its
final products.
RECOMMENDATIONS
How can the organization manage its operational activities to stay competitive?
The best way for Tesla to stay on top of the list of the best organizations in the industry is
by meeting the expectations and needs of the customers. The company should stop limiting its
products to specific regions and social class. At the same time, the company should also invest in
coming up with more charging stations, and this is to motivate the customers to purchase the
cars. The company should look into the needs of the middle class by manufacturing cars that are
price friendly (Kano, 2017). The company would rather reduce the size and specifications of the
car than only concentrate on manufacturing expensive cars for the rich only.
What are the challenges associated with the organization in the near future?
The emergence of other organizations that manufacture long life batteries and electric
cars is a threat to Tesla. Currently, Tesla is dominating in the industry, and this is because of the
uniqueness of the products that it is releasing to the market. Other competitors are getting into
the same market, and some of them are organizations that already have a strong brand and
customer loyalty (Scholtens, 2016). For example, if Toyota came up with models that are
appealing to the customer, it is likely to be a threat to Tesla. The reason behind it is associated
with the fact that Toyota already has a big number of loyal customers and it has been in the
industry for a longer period (Nikodinoska, Buonocore, Paletto, & Franzese, 2017). Therefore, the
challenges in the near future are associated with the invasion of other organizations in the same
industry which will increase the competition.

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CONCLUSION
Value chain plays an essential role in dictating the success or failure of an organization.
The operations that an organization engages in have an effect on the final product. When the
operations are efficient, it is more likely that the products that are manufactured are of higher
quality. The alignment of a value chain with the needs and the expectations of the customers
make it easier for an organization to increase the rate of customer satisfaction. The reason behind
it is associated with the fact that if an organization meets the needs and expectations of a
customer, the customer is not likely to buy from another seller. Without fear of doubt, it is
evident that Tesla has one of the most effective value chains and this is seen in its success. There
is a connection or relationship between the end product and the value chain. When the value
chain is effective, the end product of a company is likely to be of high quality, and this is
because the value chain affects the operations and processes that are involved in the
manufacturing of goods.

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References
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value chain. Management Science, 62(11), 3213-3234.
Arthur, A. A., Adraki, P. K., & Allotey, S. S. K. (2018). Value Chain Interventions and Business
Performance: A study of Beneficiary Shea Value Chain Actors in Northern Region,
Ghana.
Barton, D. (2017). Refocusing capitalism in the long term: ownership and trust across the
investment value chain. Oxford Review of Economic Policy, 33(2), 188-200.
Curry, E. (2016). The big data value chain: definitions, concepts, and theoretical approaches.
In New horizons for a data-driven economy (pp. 29-37). Springer, Cham.
Gereffi, G., & Fernandez-Stark, K. (2011). Global value chain analysis: a primer. Center on
Globalization, Governance & Competitiveness (CGGC), Duke University, North
Carolina, USA.
Hernández, V., & Pedersen, T. (2017). Global value chain configuration: A review and research
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Kano, L. (2017). Global value chain governance: A relational perspective. Journal of
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Klankermayer, J., & Leitner, W. (2016). Harnessing renewable energy with CO2 for the
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