7/13/2017 Tesla Motors, Inc.

s Organizational Structure, Characteristics (An Analysis) - Panmore Institute

Panmore Institute

BUSINESS, MANAGEMENT

Tesla Motors, Inc.s Organizational

Structure, Characteristics (An Analysis)
UPDATEDFEB 21, 2017 | PAULINE MEYER

Tesla Motors, Inc. has an organizational

structure that supports continuous
business growth. A companys
organizational or corporate structure is
the design and system that de nes the
patterns of interactions among the
companys components. In the case of
A Tesla Model S. Tesla Motors Inc.s organizational structure
facilitates centralized control of the automotive business. Tesla, the organizational structure takes
(Photo: Public Domain) a traditional form, considering the
companys limited approach to its
production facility development. As a major producer of fully electric automobiles, Tesla
uses its corporate structure to facilitate extensive control of the organization. The
company also maximizes its ability to implement new strategies and manage its
operational activities through its organizational structure.

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7/13/2017 Tesla Motors, Inc.s Organizational Structure, Characteristics (An Analysis) - Panmore Institute

Teslas organizational structure creates business capabilities that enable strong managerial
control despite growing international operations. Thus, this organizational structure supports
Teslas mission and vision statement, which emphasize global leadership for electric products in
the automotive market.

Features of Tesla Motors, Inc.s Organizational Structure

Tesla has a functional organizational structure. This structure involves organizational
function as the main de ning factor. Other characteristics observable in other types of
organizational structure are also present in the rms structure, although at a less
signi cant extent. The following characteristics are signi cant in Teslas organizational
structure:

1. Global hierarchy (most important)

2. Global centralization
3. Minimal regional divisions

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Global Hierarchy. The most signi cant characteristic of Teslas corporate structure is
global hierarchy. Global hierarchy involves functional teams or of ces that oversee
domestic and international operations. This feature is typically observed in traditional
organizational structures, where companies aim to maintain strict control of their
operations. In Teslas organizational structure, the following functional of ces direct and
represent the global hierarchy:

1. Chairman & Chief Executive Of cer

2. Chief Financial Of cer
3. Chief Technology Of cer
4. Vice President Vehicle Engineering
5. Vice President Powertrain Operations
6. Vice President North America Sales
7. Chief Designer
8. Vice President Manufacturing
9. Vice President Autopilot Hardware Engineering
10. Vice President Worldwide Services & Deliveries
11. General Counsel

Global Centralization. Tesla Motors, Inc. uses global centralization in its organizational
structure. The emphasis of global centralization is control on the entire organization
through decisions that a central group or team generates. In this case, the head of each
of ce of the global hierarchy form Teslas central headquarters, which directly control all
operations. In this organizational structure, the company does not support autonomy of
its regional or overseas of ces. Instead, Teslas headquarters make most of the decisions
for overseas operations.

Minimal Regional Divisions. This characteristic of the corporate structure focuses on

the extent of divisions in Teslas automotive business. These divisions are used to
implement different strategies and marketing campaigns, and to organize nancial
records and reports. Teslas organizational structure has the following divisions mainly
used for nancial reporting:

1. United States
2. China
3. Norway
4. Other

Teslas Organizational Structure Implications,

Advantages & Disadvantages
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7/13/2017 Tesla Motors, Inc.s Organizational Structure, Characteristics (An Analysis) - Panmore Institute

Tesla Motors, Inc. bene ts from its organizational structure in terms of effective control
of global operations. Another advantage is the ease of implementing new strategies
throughout the organization. Also, the minimal regional divisions support not just
nancial reporting and analysis, but also possible future regionalization of strategies and
tactics in the automotive business. These advantages empower Tesla to use its
organizational structure for further international growth.

However, a disadvantage of Teslas corporate structure is the rigidity that limits rapid
adjustment in the organization. For example, global centralization is a structural
characteristic that limits the ability of overseas of ces to readily respond to issues they
experience in their respective regional markets. To address this disadvantage, Tesla can
reform its organizational structure to increase the level of autonomy of overseas of ces.
Also, an organizational structure with a higher degree of decentralization tends to be
more effective in creating competitiveness against local rms in overseas markets.

References

Liao, C., Chuang, S. H., & To, P. L. (2011). How knowledge management mediates the
relationship between environment and organizational structure. Journal of Business
Research,64(7), 728-736.
Management Tesla Motors.
Menguc, B., & Auh, S. (2010). Development and return on execution of product
innovation capabilities: The role of organizational structure.Industrial marketing
management,39(5), 820-831.
Tesla Motors, Inc. Form 10-K.

TAGS:
AUTOMOBILE INDUSTRY,AUTOMOTIVE INDUSTRY,CASE STUDY & CASE ANALYSIS,
ORGANIZATIONAL STRUCTURE,TESLA MOTORS INC.

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