IS & IT Management in Tesla Model

This report evaluates the role of IS & IT management in Tesla Inc. and discusses the governance structure, processes, policies, and regulatory compliance of the organization. It also highlights the corporate officers and their roles. The report concludes that Tesla's corporate governance is compatible with regulatory requirements.

IS & IT MANAGEMENT IN TESLA MODEL
IS & IT MANAGEMENT IN TESLA MODEL
Name of the Student
Name of the University
Author Note

1IS & IT MANAGEMENT IN TESLA MODEL
Abstract:
The presented report has discussed the role that IT and IS plays in an organisation. To pursue
with the objective, the paper has taken consideration of the Tesla Inc. and have evaluated
various factors that includes the corporate governance and other significant factor. On
evaluation it has been identified that the IS of the subject is in excellent shape however, it is
not free from errors and need to be mitigated to earn sustainability and competitive
advantage.

2IS & IT MANAGEMENT IN TESLA MODEL
Table of Contents
Introduction:...............................................................................................................................3
Organisation’s Overview:..........................................................................................................3
Governance structure/ Processes/ Policies:................................................................................4
Corporate officer & their roles:..................................................................................................7
Compatibility with regulatory requirement................................................................................8
Risk management:......................................................................................................................9
Possible improvements/impacts of internal changes/external factors on the 2-3-years horizon
..................................................................................................................................................11
Conclusion:..............................................................................................................................12
Bibliography:............................................................................................................................14

3IS & IT MANAGEMENT IN TESLA MODEL
Introduction:
Information System (IS) has emerged as one of the most preferred choice for the
organisations in the current era. The adoption is based on the advantage that the IS offers to
the organisations that includes efficiency, accuracy, fast operations and others (Pearlson,
Saunders & Galletta, 2016). The discussed advantages are offered by means of automation
and hence, it becomes necessary to evaluate the organisational IS. Another notable term that
is establishing itself is the “Strategic IS (SIS)”. SIS are also IS system but are designed to
offer competitive advantage to the organisation by enhancing the organisational operations
and processes (Arvidsson, Holmström & Lyytinen, 2014). The discussed paper offers an
insight in the SIS and management structure of the Tesla INC, a global leader in sustainable
vehicles and power solutions. The paper will discuss the governance structure along with the
processes & policies of the subject (Tesla) and measure their compatibility with the
regulatory requirements. Special attention will also be offered to the corporate officials and
the role they play. Additionally, the focus will also be given to the risk management
strategies of the deemed organisation and the report will be concluded with potential
recommendations (if needed) for change management after discussing its impact.
Organisation’s Overview:
Tesla Motor Inc., was established in the 2003 (later changed to Tesla Inc.) and since
then has emerged as one of the most prominent leaders in the automotive industry,
technically speaking sustainable automotive industry (About, 2013). The organisation started
its journey with Tesla Roadster, a luxury car that was powered by electricity and broke all the
myths that quoted ‘electric cars lack the power, speed, pickup and other crucial factors of a
vehicle’. The discussed model offered all of the above-mentioned factors associated with the
cars while offering a very cost-efficient fuels for it. The subject has earned a name for itself

4IS & IT MANAGEMENT IN TESLA MODEL
through innovative practices, however, another notable quality of Tesla is its dependency on
the technology. The considered organisation believes in automation and the efficiency and
accuracy they offer in the organisational processes. The organisation believes in disruptive
technology and can be understood by the fact that it houses one of the world’s largest 3D
printing machine along with over 200 robots for their organisational operations (Vance,
2017). The dependency of Tesla on the IS & IT along with the output it is receiving from
their use is the reason for selecting Tesla as the subject of the paper and will be evaluated to
determine the best suited results.
Governance structure/ Processes/ Policies:
“Implicit in this philosophy is the importance of sound corporate governance”
(Source: "Corporate Governance | Tesla, Inc.", 2018)
Structure:
The organisational system and design that decides the method by which the
interaction will take place among the organisational resources is known as organisational
structure. It is one of the core factors that decides the future of the organisation and hence is
cited special attention by the corporate leaders. The scholars and corporate leaders
themselves have identified different types of organisational structures form hierarchical to
matrix and scalar and a lot of other. The subject of the paper is also well aware of the crucial
need of organisational structure and hence follows a structure that it seems fit for its mode of
operations. The discussed organisation operates on the functional (U-form) corporate
structure taking in aspect of the managerial control and focus (Ibos, Duhamel & Hamed,
2013). However, it should be noted that other organisational structures have also been
identified at Tesla but they are significantly less visible and dominant. Another notable part
of their corporate structured is the limited expansion of the operations in global market.

5IS & IT MANAGEMENT IN TESLA MODEL
Discussing about the organisational structure of the subject, U-form abbreviation for
unitary-form main defining factor is the organisational functions. The key feature of the
deemed organisational structure are function-based hierarchy, divisions and centralisation.
They have been discussed as follows:
Function-based hierarchy: It is one of the most popular hierarchy where the functional
offices or teams are designated to look after a specified function on a global or a domestic
scale. The deemed hierarchy is adopted to maintain a strict managerial control over the
operations and controls over the operations and functions of an organisation (Ramchand &
Svenonius, 2014). In case of the Selected organisation, the hierarchical graph starts from the
Chairman & CEO (in Tesla it is Elon Musk) followed by the finance head, technological
head, sales & services team, engineering team and the legal team (Cosh, Fu & Hughes, 2012).
Centralisation: Another notable feature of the Tesla’s organisational structure is that it
maintains a managerial control over its entire organisation and its operations which vests the
decision-making powers in an individual or to a core group of governing authorities (Ibos,
Duhamel & Hamed, 2013). The heads of the corporate branches of the deemed organisation
forms the organisation’s central headquarter that directly controls, monitors and supervises
over all the organisational operations (Christensen, 2015). In the discussed scenario,
minimum authority is being provided to the branches over the decision-making as most of the
decisions are made on central level at the Tesla’s headquarter.
Divisions: Tesla Inc. has not limited its services to automobile only but also offer power
solutions like solar powered batteries and other. Hence, it has two operational divisions one
for the automobile processes and other for the power solutions. It even has sub-divisions of
its automobile division such as gigafactory and megafactory which are used for the
production of its different models. The benefits of having divisions in an organisation are

6IS & IT MANAGEMENT IN TESLA MODEL
mostly rested on the extended geographical domain it enjoys (Harper, 2015). Additionally, it
also assists in developing a larger consumer base because a user is more comfortable with a
product that has been developed close to him/her than something that is imported from
another continent or geographical distant location (Boumgarden, Nickerson & Zenger, 2012).
Processes:
Tesla is one of the organisations that believes that technology can earn them
significant advantages and it has proved to be true for the organisational till date. The
governance process of the subject includes the decision making rested on the senior officials
such as the CEO, CFO, CTO and others. The processes of the overall organisation is
personally monitored by the CEO, Elon Musk who is also responsible for the product
architecting ("Corporate Governance | Tesla, Inc.", 2018). He finalises all the corporate and
product related decisions based on the support and suggestions from CFO or CTO depending
on the task at hand. After the decision is made then the responsibility is passed on to the CTO
(Chief Technical Officer) JB Straubel if it is a technical decision regarding the product they
are offering who made the necessary changes or enhance the organisational IS accordingly to
meet up with the requirements ("Corporate Governance | Tesla, Inc.", 2018). The next
process for the CTO is to conduct a meeting with the CFO (Chief Financial Officer) Deepak
Ahuja and propose the financial requirement ("Corporate Governance | Tesla, Inc.", 2018).
The CFO of the organisation then measures the need and outcome of the process and fulfils
the necessary demands. On the contrary, if there is a need for marketing & sales or
establishment of a new division the CEO and the CFO have a meeting and the decisions are
made accordingly. The role of IS in all of this is to provide the discussed officials with
appropriate data that can assist them in concluding the data (De Haes et al., 2013). Another
notable role that the IS plays is that it enables the CTO and CFO to select the most suitable
team leader for the proposed task based on their availability and performance who further

7IS & IT MANAGEMENT IN TESLA MODEL
decides the necessary action to be taken regarding to the team (Flores, Antonsen & Ekstedt,
2014). This is how the governance process of the subject operates and is proving to very
efficient for the organisation.
Policies:
Governance policies of an organisation guides while defining the relation among the
owner of the organisation, CEO and the Board of Directors. The subject of the paper is a
private organisation who have sold its share making the shareholder’s the owners of the
organisation. The governance policy of the subject cannot be called a strong one because
recently there have been demands to give more authorities control to the board of directors
("Investor group calls on Tesla to fix 'flawed' board in wake of SolarCity bid", 2016). The
reason for failure of the governance policies are attached to the CEO, Elon Musk (Hull &
Chasan, 2017).
Corporate officer & their roles:
The table following shows the name of the corporate officers along with their roles at
Tesla Inc.
Officer Role
Elon Musk CEO, Product architect, Board Chairman
Jeffrey B. Straubel CTO
Deepak Ahuja CFO
Doug Field Vice-President (Engineering)
Kimbal Musk Director
James Murdoch Director
Linda Rice Director
Antonio Gracias Independent Director (Lead)

8IS & IT MANAGEMENT IN TESLA MODEL
Ira Ehrenpreis Independent Director
Stephen Jurvetson Independent Director
Bradley Buss Independent Director
Robyn Denholm Independent Director
Table 1: LIST OF THE SENIOR OFFICIAL ALON WITH DESIGNATION AT TESLA
(Source: Created by Author)
(Inspirational Source: "Management | Tesla, Inc.", 2018)
Compatibility with regulatory requirement
Tesla Inc. maintains a strict policy of not disclosing its sales number making it
difficult to earn its figures however, an article by Business Insider (Australia), the country
owns over 600 Model S in 2016 (Tucker, 2016). While, another article claims that in the
months April, May & June of last year, a total of 142 new Tesla cars where registered in the
NSW alone (McCowen, 2017). This shows the major impact and the popularity that the Tesla
cars are having in the Australian market. The above-stated figures are shown to cite the fact
that Australia has emerged as one of the most profitable market for the organisation and
surely, it does not wish to let go of such desirable situation. Hence, it must abide by the
regulatory requirements of the Australia to sustain in the market. Additionally, there have
been instances when vehicles have been banned because of regulatory violations by them
such as the case of Volkswagen (Dowling, 2018). The organisation also does not own a
manufacturing plant in Australia so, it does not have to abide by the regulatory requirement
of Australia. The offerings by the subject abide by the requirements stated in “Motor Vehicle
Standards Act 1989” in all the sales, vehicle features, import of the vehicle and others

9IS & IT MANAGEMENT IN TESLA MODEL
("Motor Vehicle Standards Act 1989", 2018). It is not just the case of Australia; no cases of
regulatory violations have been identified about Tesla’s offering globally.
However, a notable claim of regulatory violation was filled by an employee of the
Michigan Tesla plant in the September. The employee claimed that the organisation is
violating safety regulations at the Plant. The investigation is still underway which raises the
question over the governance structure and policies and how they take consideration of the
human resources at the lower levels. Additionally, what are the flaws in the IS of the
organisation that are the cause for such safety violations. However, recent claims have been
made by the subject and the Cal/OSHA (“California’s Occupational Safety and Health
Administration”) that the ratio of safety risk has reduced by great extent in the recent years
(della Cava, 2018). In another, scenario, Salt Lake City banned the Tesla by citing that the
subject does not take consideration of account dealer protection (Kane, 2015).
The above-discussed cases, reveal that there have been violations of the regulatory
requirements by the Tesla. Though, it is notable that the claims of violation have not been
proved and are still under the justification period and a final decision is yet to arrive on the
cases. However, the official website of the organisation suggests that the organisation does
abide by the regulatory requirements. Additionally, on evaluation of the governance structure,
processes & policies of the subject it is found to be justiciable and the satisfactory results of
its offering also supports the claim made by the website. Hence, in conclusion it can be stated
that Tesla Inc.’s corporate governance is compatible with the regulatory requirements.
However, in certain situations it fails to sustain the necessary standards.
Risk management:
Risk is one of the most crucial factor for any organisation because it challenges the
sustainability of an organisation and should be addressed before it does any significant

10IS & IT MANAGEMENT IN TESLA MODEL
damage to the organisation. The risks that are associated with an automotive company are
market & sector risks, financial risks, firm-specific risks and legal risks. Out of all the above
discussed risk, the subject of the paper faces legal risks, financial risks and firm-specific risks
(Cardona, 2013).
Legal risks:
This risks are associated with the legal factors such as the contracts with the external
stakeholders, structural changes and others. It also includes the risk associated with the
regulations and the subject has faced such scenarios which is evident from the discussions
above.
The legal risks are managed by the organisation through a framework that measures
the firm and the risk’s tolerance level and responds accordingly. If, the risk is identified
above the tolerance level then they brought down to the tolerable level before treating them
adequately (Smith et al., 2017). After, the risks are neutralised, the case is registered in the
risk register that are included as part of the organisational IS to avoid any similar situations
from developing in future.
Financial risk:
The deemed risks are associated with the capital of the organisation. In case, the
products are not offering appropriate ROI (Return on Investment), or the threats due to the
liquidity of the organisational assets and currency of operation and similar others.
Tesla has one of the best financial risk management plan in place. It takes
consideration of the exchange & interest rate risk, liquidity and other financial risk in
account. To manage the exchange rate risk, the organisation uses derivative instruments and
the interest rate risks are managed by the hedging process. Liquidity risk refers to the risk of

11IS & IT MANAGEMENT IN TESLA MODEL
not having enough cash to run the operations for which the subject maintains a limited
inventory size and resource utilisation plans.
Firm-specific risks:
The risks that fall under the deemed category are production risks that includes risks
associated with the product launches, expenditure, plant failure, production stalls and others.
Another risk that falls under this category are warranty & goodwill claims. Technological and
personal risks are also categorised under the same category.
The subject addresses the production risk by maintaining a quality plan for the
organisational assets. As stated earlier the organisation is very much dependent on the
organisational IS and so it maintains it in proper health. However, it does not omit the error
chances and so, the organisation have contingency equipment in place. Another notable fact
is that the subject believes in disruptive technologies and hence only buys the best product
reducing the risk of failure. The warranty & goodwill claims are managed by maintaining a
sound relation with the customers and providing them a platform (Tesla Forum) to voice the
opinion.
Tesla Inc. has been considered as one of the most innovative organisations and the
procedure by which it addresses and mitigates the risk supports the earned reputation. The
exponential rate at which the subject is growing in the competitive market supports its risk
managing strategy.
Possible improvements/impacts of internal changes/external factors on the 2-3-years
horizon
Tesla Inc. recently has undergone a major change and that is related to its production.
50,000 units per year to 500,000 units per year the production ratio of the organisation has
changed significantly and assisting the organisation in its objective is the organisational IS.

12IS & IT MANAGEMENT IN TESLA MODEL
After, Elon Musk announced that they are jumping into mass production of Tesla Model 3,
the concerns about excessive workload over the IS of the organisation was building.
However, to rest that the organisation introduced their gigafactory which was more capable
both technological and geographically, to maintain the workload offered by the mass
production of its cost-efficient car. The IT capability of the gigafactory could be understood
by the fact that the discussed factory is the largest building in the world that extends up to
“5.5 million square feet” and is connected by means of IT and IS (Anderman, 2015). The
gigafactory has one of the largest 3D printing machine installed within it along with multiple
other robotic machinery for integrating the car components together. However, delay in the
delivery of the Model 3 can be concussed to state that the load on the IT is proving to be
challenging for the organisation. The organisation can enhance their IT capability by
employing more skilled employees to assist the system in fulfilling its objectives. The
employees will maintain the health of the systems and will also ensure that the workload on
the systems do not extend to such a limit that the system breakdown. Tesla is offering
sustainable product so the external factors are also supporting it (Lane, 2013). The external
factors here are referred to the low interest loan offered by the government along with the
incentives that are offered to the customers for buying electric cars (which market is leaded
by the Tesla).
Conclusion:
The report can be emphasised to state that Tesla is emerging as one of the sustainable
leader in the car making industry and the most support tool for this achievement of the
subject has proved to be its choice of IT. The report has discussed various aspects of the
organisation and on evaluation various factors have been identified and they all have proved
to be somewhat dependent on the IT and IS of the organisation. However, the report has also
identified some errors that the IT system has offered to the organisation which needs to been

13IS & IT MANAGEMENT IN TESLA MODEL
managed to earn a competitive advantage in the automobile industry. Hence, in conclusion, it
can be stated that IS plays a significant role in the operations and other relevant needs of the
organisation and maintaining it appropriately can offer sustainability and competitive
advantage to Tesla Inc.

14IS & IT MANAGEMENT IN TESLA MODEL
Bibliography:
About Tesla | Tesla. 2018. Tesla.com. Retrieved 20 April 2018, from
https://www.tesla.com/about
Anderman, M. (2015). Tesla Motors, the Gigafactory, and their impact on the xEV Industry.
In Adv. Automot. Batter. Conf (Vol. 2015, pp. 1-22).
Arvidsson, V., Holmström, J., & Lyytinen, K. (2014). Information systems use as strategy
practice: A multi-dimensional view of strategic information system implementation
and use. The Journal of Strategic Information Systems, 23(1), 45-61.
Boumgarden, P., Nickerson, J., & Zenger, T. R. (2012). Sailing into the wind: Exploring the
relationships among ambidexterity, vacillation, and organizational
performance. Strategic Management Journal, 33(6), 587-610.
Cardona, O. D. (2013). The need for rethinking the concepts of vulnerability and risk from a
holistic perspective: a necessary review and criticism for effective risk management.
In Mapping vulnerability (pp. 56-70). Routledge.
Christensen, L. T. (2015). The return of the hierarchy: SOEs in marketisation. International
Journal of Public Sector Management, 28(4/5), 307-321.
Corporate Governance | Tesla, Inc.. (2018). Ir.tesla.com. Retrieved 21 April 2018, from
http://ir.tesla.com/corporate-governance.cfm
Cosh, A., Fu, X., & Hughes, A. (2012). Organisation structure and innovation performance in
different environments. Small Business Economics, 39(2), 301-317.
De Haes, S., Van Grembergen, W., & Debreceny, R. S. (2013). COBIT 5 and enterprise
governance of information technology: Building blocks and research
opportunities. Journal of Information Systems, 27(1), 307-324.

15IS & IT MANAGEMENT IN TESLA MODEL
della Cava, M. (2018). Tesla hit with workplace safety probe as it cranks up factory. USA
TODAY. Retrieved 22 April 2018, from
https://www.usatoday.com/story/tech/news/2018/04/18/californias-workplace-safety-
agency-opens-probe-tesla-plant-after-injury-report/529799002/
Dowling, J. (2018). VW, Audi diesel car sales halted. NewsComAu. Retrieved 22 April 2018,
from http://www.news.com.au/technology/innovation/motoring/volkswagen-audi-
forced-withdraw-diesel-cars-from-sale-in-australia-over-emissions-scandal/news-
story/6cd835c13291d7230cc89f462bdb366a
Flores, W. R., Antonsen, E., & Ekstedt, M. (2014). Information security knowledge sharing
in organizations: Investigating the effect of behavioral information security
governance and national culture. Computers & Security, 43, 90-110.
Harper, C. (2015). Organizations: Structures, processes and outcomes. Routledge.
Hull, D., & Chasan, E. (2017). Tesla Seeks Independent Directors as Board's Musk Ties
Eyed. Bloomberg.com. Retrieved 21 April 2018, from
https://www.bloomberg.com/news/articles/2017-04-11/tesla-investors-press-for-more-
board-members-without-musk-ties
Ibos, G., Duhamel, J. R., & Hamed, S. B. (2013). A functional hierarchy within the
parietofrontal network in stimulus selection and attention control. Journal of
Neuroscience, 33(19), 8359-8369.
Investor group calls on Tesla to fix 'flawed' board in wake of SolarCity bid. (2016). CNBC.
Retrieved 21 April 2018, from https://www.cnbc.com/2016/06/28/investor-group-
calls-for-tesla-board-governance-fixes-in-wake-of-solarcity-bid.html

16IS & IT MANAGEMENT IN TESLA MODEL
Kane, M. (2015). Tesla's Vice President of Regulatory Affairs Discusses Direct Sales -
Video. Insideevs.com. Retrieved 22 April 2018, from https://insideevs.com/teslas-
vice-president-regulatory-affairs-discusses-direct-sales-video/
Lane, B. W., Messer–Betts, N., Hartmann, D., Carley, S., Krause, R. M., & Graham, J. D.
(2013). Government promotion of the electric car: Risk management or industrial
policy?. European Journal of Risk Regulation, 4(2), 227-245.
Management | Tesla, Inc.. (2018). Ir.tesla.com. Retrieved 21 April 2018, from
http://ir.tesla.com/management.cfm
McCowen, D. (2017). Tesla on track to double its numbers in a year. Drive. Retrieved 22
April 2018, from https://www.drive.com.au/motor-news/tesla-on-track-to-double-its-
numbers-in-a-year-65044
Motor Vehicle Standards Act 1989. (2018). Legislation.gov.au. Retrieved 22 April 2018,
from https://www.legislation.gov.au/Details/C2016C00857
Pearlson, K. E., Saunders, C. S., & Galletta, D. F. (2016). Managing and Using Information
Systems, Binder Ready Version: A Strategic Approach. John Wiley & Sons.
Ramchand, G., & Svenonius, P. (2014). Deriving the functional hierarchy. Language
Sciences, 46, 152-174.
Smith, L., Liang, Q., James, P., & Lin, W. (2017). Assessing the utility of social media as a
data source for flood risk management using a real‐time modelling
framework. Journal of Flood Risk Management, 10(3), 370-380.
Tucker, H. (2016). This is how many Tesla cars are in Australia. Business Insider Australia.
Retrieved 22 April 2018, from https://www.businessinsider.com.au/this-is-how-many-
tesla-cars-are-in-australia-2016-1

17IS & IT MANAGEMENT IN TESLA MODEL
Vance, A. (2017). These Giant Printers Are Meant to Make Rockets. Bloomberg.com.
Retrieved 20 April 2018, from https://www.bloomberg.com/news/articles/2017-10-
18/these-giant-printers-are-meant-to-make-rockets