Project Deliverable 5: Capstone Final Project and Presentation Due Week 10 and worth 180 points This assignment consists of two (2) sections: a final capstone project plan and a closing process Powe

Running head: THE ORGANIZATION’S RESPONSE TO CHANGE 0

The Organization’s Response to Change

Current Stage of the Automotive Industry

Since its establishment in the 1990s, the automotive industry has played a significant role in providing essential services within the transport sector. Throughout the years, the sector has depicted various transformations in its production, organizational structure, and planning. With such projections, it’s wise enough to ascertain that the industry is indeed growing and maturing at a tremendous speed. As per the industry lifecycle model: introduction, growth, maturity, and decline set the phases of any production in the market. Depending on the right measures, firms may either expand their markets or drop sales, leading to the firm's closure. Over the years, the United States had dominated the industry until Japan and China took over recently.

For the past decades, automotive firms have been providing clients with high-end vehicles that fully meet their demands. It's, therefore, undoubtedly that the docket is beyond the introduction phase. In the introduction phase, firms would assemble military vehicles that would later be used during World War II. Companies such as Packard, Nash, Willys, and Studebaker dominated the market. However, as technological advancements evolved, upcoming firms with the likes of General Motors, Chrysler and Ford shaped the industry. The twenty-first century paved the way for the launch of modern electric vehicles. A vast number of individuals were uncertain of the future of the E.V.'s in the market. However, Tesla Inc. re-shaped the industry and has since become the leading manufacturer of E.V.'s across the domain (Bruijl, 2017). Consumers across various continents have indeed embraced the firm's multiple efforts contributing to the broad market Tesla Inc.

One notable aspect that has played a significant role in the automotive industry's growth is incorporating updated specialized software in its production. The tremendous progress within Tesla Motors has been denoted since the first electric car was launched in 2003. Critical stakeholders in the docket are on toes to ensure that present techniques have been incorporated during the manufacturing of E.V.'s. It thus becomes somewhat easy for consumers to enjoy a wide range of environmentally-friendly vehicles. The outstanding team that oversees both the firm's management and production is yet another aspect that fortifies Tesla’s maturity (Stringham, Miller, J. K & Clark, 2015). With the ideal brand and innovative culture created by Tesla Inc., chances of the firm to exploit more avenues are relatively high. Tesla Inc.'s C.E.O. has taken a personal initiative to market the firm, thus creating awareness in other regions. Unlike other automotive firms that limit their marketing and sales in Asia and Europe regions, Tesla seems to be determined to reach a large market. The zeal present in the firm will surely give its competitors a cumbersome time in the industry.

Porter’s National Diamond Theory

Porter’s National Diamond theory is often applied to evaluate the significant pros and cons of using vertical integration against outsourcing. Under the idea, it's denoted that an organization's competitive advantage relative to a nation depends on certain factors highlighted in Porter's National Diamond model (Ceil, 2019). The model's common aspects range from government intervention, domestic demand conditions, organizational structure, factor condition, strategy, prevailing competition, and supporting industries present. It's easy to determine potential advantages and disadvantages in the Tesla Company with such aspects.

Vertical Integration vs. Outsourcing

Advantages and Disadvantages of Vertical Integration

Despite enjoying a large market overseas, Tesla Inc. tends to focus more on first-world nations. Individuals in developed countries tend to provide a high purchasing power parity, thus eliciting the demand for E.V.'s manufactured by Tesla Inc. The United States of America stands out as Tesla’s leading market. Additionally, developed countries tend to enjoy state of the art infrastructures, especially in the transport sector hence increasing the demand for assembled electric cars from Tesla. Besides, government officials in developed countries agitate for vehicles that are in line with their fundamental goal of curbing environmental pollution.

However, high labor costs pose a critical disadvantage of vertical integration. Unlike developing regions such as India and China that provide cheap labor, the U.S. is well known for the relatively high labor costs that increase production costs. Thus, Tesla Inc. ends up investing too much on work to the extent that they may fail to realize the targeted profits at the end of the day (Pinopoulos, 2019). Over the last years, the U.S. government has approved various bills that have increased the minimum hourly wages tampering with the expected gross margins. Nevertheless, vertical integration may inhibit Tesla Inc. from recalling focus on key business activities.

Advantages and Disadvantages of Outsourcing

Outsourcing entails the process of fishing out specialists overseas to provide the required services in a different firm. Venture capitalists have begun considering outsourcing as their primary tool for production. With several investors citing that outsourcing makes work much more comfortable and faster for them, it’s not clear whether outsourcing as a tool is indeed profitable. Investors should, therefore, consider all factors before deploying outsourcing as their primary production tool.

Tesla Inc. may increase its overall production performance through outsourcing since professionals within automotive industries from other regions may provide unique assembling methodologies. By combining such skills, Tesla will thus be able to conduct its assembling processes faster and more efficient. Cost reduction is yet another advantage associated with outsourcing. Unlike the permanent employees hired in Tesla Inc., outsourced workers are usually employed on a short-term basis.

Regardless of the various merits that Tesla may reap from outsourcing, loss of control stands out as the major con that may hit the firm. It's apparent that once outsourced specialists are recruited, the possibilities of them coming up with new techniques are relatively high. Such new techniques may prompt Tesla Company to lose control of how activities are being performed and monitored. Data breach positions as yet another blow Tesla Inc. is likely to face. With stiff competition in the automotive industries, firms are likely to pay dearly to expatriates to access rivals data (Minerva, 2017). Once such a breach is conducted, Tesla's production may be jeopardized as rivals can access their plans.

Tesla Inc. Strategic Positioning

The Boston Consulting Group Matrix tends to evaluate the various organization's strategic positions in their distinct market sectors. In most instances, the B.C.G. growth matrix provides a relative analysis amidst different products or service lines of a corporation hence evaluating each market status (David & David, 2017). Under the matrix, four quadrants, namely: Stars, Cash Cows, Dogs, and Question Marks. The Stars quadrant denotes the products that enjoy a large market share, thus generating the most cash. On the other hand, the Cows quadrant signifies product lines with high market shares but low growth prospects. Dogs and Question Marks act as the other quadrants; the Dogs quadrant is sometimes described as cash traps in that no returns are currently being produced, but future investments are promising. In the case of question marks, products under this segment tend to consume a vast number of investments without necessarily creating any returns.

Over the years, Tesla Inc. has undergone numerous diversifications with the recent opening of markets in Japan, Poland, Germany, Hong Kong, Canada, and Turkey, providing additional returns. With respect to B.C.G., Tesla Inc. strategic position is as follows;

Implementing the Strategic Change

There is a need for Tesla Inc. to capitalize on the multiple market gaps present in the industry. Besides the manufacturing of luxury cars and E.V.'s, the firm's innovation techniques should focus on the sector's existing loopholes. All stakeholders need to carry out their SWOT analysis to depict potential areas the firm may maximize on. However, the company must undergo some management changes to facilitate the smooth implementation of the strategies.

Changes in decision-making style

Tesla needs to make modifications within its decision making. Adopting a collaborative decision-making approach would ensure that all stakeholder's views are represented during decision-making processes. Work-personnel needs to be prioritized during decision making to create accord in the desired changes and how they will be beneficial to them by sharing their workload. Active communication through the change progression will aid in building robust ties with workers. Collective decision-making will allow the organization to efficiently implement the concept of change by alleviating any probable resistance (Politi & Street, 2016).

Changes in planning structure

Tesla, Inc. needs to deploy various changes within its planning structure. Currently, the corporation is based on a functional structure. To attain a higher innovation rate, Tesla Inc. ought to embrace a decentralized organizational structure. The firm should simultaneously focus on providing the right middle manager's platforms to enjoy sovereignty and create equality in all organizational departments. It's easier for the firm's plans to be analyzed by all stakeholders, thus creating a consensus with such a direction.

Indicators of success

The performance of the endorsed strategy could be measured through quantitative indicators of performance. One notable measure entails the growth of returns over a specific period. Through the sales revenue, it becomes somewhat easy to designate the upsurge in visitor-base. Similarly, Tesla Inc. ought to create a twenty-four-hour based feedback system that allows customers to air out their suggestions regarding the firm's innovation.

References

Bruijl, G. (2017). Tesla Motors, Inc.: Driving Digital Transformation and the Digital Ecosystem. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3053142

Ceil, C. (2019). Michael Porter’s Theory About Value Chain and Knowledge Management. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3521075

David, F. R., & David, F. R. (2017). Strategic management: Concepts and cases; a competitive advantage approach.

Gupta, M. (2019). Recent Trends in the Automotive Industry. International Journal For Research In Applied Science And Engineering Technology, 7(4), 1027-1031. https://doi.org/10.22214/ijraset.2019.4185

Minerva, G. (2017). Integration versus Outsourcing with Vertical Linkages. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2980869

Pinopoulos, I. (2019). On the welfare effects of vertical integration: Opportunism vs. double marginalization. Economics Letters, 174, 169-172. https://doi.org/10.1016/j.econlet.2018.11.023

Politi, M., & Street, R. (2016). The importance of communication in collaborative decision making: facilitating shared mind and the management of uncertainty. Journal Of Evaluation In Clinical Practice, 17(4), 579-584. https://doi.org/10.1111/j.1365-2753.2010.01549.x

Stringham, E. P., Miller, J. K., & Clark, J. (2015). Overcoming Barriers to Entry in an Established Industry: Tesla Motors. California Management Review, 57(4), 85-103. doi:10.1525/cmr.2015.57.4.85