Report: Analysis of Tesla Inc.’s Organizational Structure & Features

This report provides an analysis of Tesla Inc.'s organizational structure, highlighting its function-based hierarchy, centralization, and divisions. It examines how Tesla's structure supports its business growth, facilitates managerial control, and enables the implementation of new strategies. The report identifies the advantages, such as effective control of multinational operations and ease of strategy implementation, and disadvantages, such as rigidity limiting rapid adjustments. It also discusses the implications of Tesla's structure on its global operations, competitiveness, and financial reporting, while suggesting potential improvements to increase the autonomy of overseas offices. The analysis covers key features like function-based hierarchy, centralization, and divisions, offering a comprehensive understanding of Tesla's organizational design and its impact on the company's performance.

Tesla Inc.’s Organizational Structure & Its
Characteristics (Analysis)
UPDATED ONUPDATED ON SEPTEMBER 8, 2018 BY PAULINE MEYER
A Tesla Model S
sedan. Tesla Inc.’s (formerly Tesla Motors, Inc.) organizational structure and its
characteristics facilitate centralized management of the global automotive and
energy solutions business. (Photo: Public Domain)
Tesla, Inc. (formerly Tesla Motors, Inc.) has an organizational structure that supports
continuous business growth. A company’s organizational or corporate structure is
the design and system that defines the patterns of interactions among the company’s
components. In this business analysis case of Tesla, the organizational structure
takes a traditional form, considering the company’s managerial focus and control,
along with limited operational expansion in the global market. For example, as a
manufacturer of electric automobiles, batteries, solar panels, and related
transportation and energy solutions, Tesla Inc. uses its corporate structure to
facilitate extensive control of the organization. Elon Musk’s leadership effectiveness
depends on the corporate structure’s ability to disseminate and support the
implementation of new strategies for business growth and improvement. The
company maximizes its ability to implement new strategies and manage its
operational activities and objectives through its organizational structure. Tesla’s
operations management is dependent on the effectiveness of the business structure
in supporting strategic changes and implementations.
Tesla Inc.’s organizational structure creates capabilities that enable strong
managerial control of the business despite its growing international operations.
Growth increases complexity and challenges. For example, global expansion
requires a broader set of considerations to succeed in implementing Tesla’s generic
strategy for competitive advantage and intensive strategies for growth. The
corporation’s structural characteristics help maximize top-level managers’
information regarding these challenges, empowering them to respond accordingly.
Thus, this corporate structure supports Tesla’s corporate mission and vision
statements, which emphasize global leadership in the automotive and energy
solutions markets.

Tesla Inc.’s Organizational Structure Type &
Features
Tesla has a functional or U-form organizational structure. The unitary-form (U-form)
structure uses organizational function as the main defining factor. For example, the
company has a structural group of employees for engineering, and another for sales
and service. Some structural characteristics of other types of corporate structure are
also present in Tesla, although at a less significant extent. In this company analysis
case, grouping based on business function stands as the most significant feature.
The following characteristics are significant in Tesla’s organizational structure:
1. Function-based hierarchy (most important)
2. Centralization
3. Divisions
Function-Based Hierarchy. The most significant characteristic of Tesla’s corporate
structure is the function-based hierarchy in its global organization. This hierarchy
involves functional teams or offices that oversee domestic and international
operations. This feature is typically observed in traditional corporate structures,
where companies aim to maintain strict managerial control of their operations. In this
business analysis case of Tesla’s organizational structure, the following functional
offices direct and represent the global hierarchy:
1. Chairman & Chief Executive Officer
2. Finance
3. Technology
4. Global Sales and Service
5. Engineering
6. Legal
Centralization. Tesla, Inc. uses centralization in its corporate structure. The
emphasis of centralization is managerial control on the entire organization through
decisions that a central group or team generates. In this case, the heads of the
offices of the global hierarchy form the corporation’s central headquarters, which
directly control all operations. In this organizational structure, Tesla minimally
supports the autonomy of its regional or overseas offices. The company’s
headquarters make most of the decisions for overseas operations.
Divisions. This characteristic of the corporate structure focuses on the extent of
geographical or other types of divisions in Tesla Inc.’s automotive business. These
divisions are used to implement different strategies and marketing campaigns, and to
organize financial records and reports. The company’s main divisions in its corporate
structure are (1) Automotive and (2) Energy Generation and Storage. These
divisions are less significant compared to the function-based hierarchy of the
organization. Also, Tesla’s organizational structure has the following geographical
divisions mainly used for financial reporting: (1) United States, (2) China, (3) Norway,
and (4) Other.

Tesla’s Corporate Structure: Implications,
Advantages & Disadvantages
Tesla, Inc. benefits from its corporate structure in terms of effective managerial
control of multinational operations. Another advantage is the ease of implementing
new strategies throughout the organization. Also, the regional divisions support
financial reporting and analysis, and provide the foundation for future regionalization
of strategies and tactics in the international automotive market. These advantages
empower Tesla to use its organizational structure for further international growth and
to build competitiveness against Toyota Motor Corporation, Honda Motor Company,
Nissan Motor Company, General Motors Company, Volkswagen, Bavarian Motor
Works (BMW), and other car manufacturers. The organizational structure enables
the company to centrally control the development of competitive advantages.
A disadvantage of Tesla’s corporate structure is the rigidity that limits rapid
adjustment in the organization. For example, global centralization is a structural
characteristic that limits the autonomous ability of overseas offices to readily respond
to issues they experience in their respective regional markets. To address this
disadvantage, it is recommended that Tesla Inc. reform its organizational structure to
increase the level of autonomy of overseas offices. A corporate structure with a
higher degree of decentralization tends to be more effective in creating
competitiveness against local firms in overseas markets.
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