Tesla Company was formed in 2003 with the mission of countering the use of fossil fuels, which pollutes the environment. Tesla manufacturing company is situated in Gigafactory Shanghai, California, and Fremount. The Company's most valued employees are the production workers who take part in the delivery of quality products in the market. Also, the Company provides on-the-job-training to its production employees, a move that enhances the quality production of the company products.
The training has seen safety ratings tending to increase with an increase in the overall production. The Company manufactures Spaceship, solar-powered batteries, solar and electric cars. In 2008 Tesla Company designed Model S, and in 2015 the Company released the Model X car. From then on, Tesla has come up with Solar Roof, Powerpack, and Powerwall to enhance renewable energy solutions in the world (Timothy, 2018). The Company's products are more affordable since it adopts the renewable energy generation, which has also proved to be more powerful as compared to fuel cars.
The company CEO is Elon Musk, who, for a long time, has proved his managerial skills and role in the Company. In 2018, Tesla Company was faced with massive expenditures with less profit generation. The company CEO Elon Musk came up with a cost-cutting initiative to curb the problem of the higher cost of production (Timothy, 2018). Thus, Musk decided to flatten the organization's structure with the salaried being the most affected lot.
The company CEO realized and recognized the maximum contribution of the production workers who were dedicated to the Company's mission in the global world. Moreover, the CEO speed-up new car production to meet the growing demands of consumers in the market. The company management increased cash-flow to provide affordable and easy access to its product in the market.
On June 12, 2018, the Company Mr. Musk came up with a corporate restructuring method to reduce costs in the Company. The method affected 9 percent of the workforce. The corporate restructuring came at a time that the Company had its Model 3, which gained popularity and increased demand in the market. Tesla management desired to layoff workers also to increase profit generation in the market.
Corporate measure taken by the Company was addressed through a letter as the CEO expressed her concern on the move terming it as "difficult but necessary" (Kolodny, 2019). Tesla desired to increase the output of Model 3 by a cost-cutting initiate. Tesla, by 2017 had 37,534 workers, and by 2018 the Company, through the use of a corporative restructuring method, the company executive decided to cut-off close to 3,400 workers. The move saw the Company reducing the production amount and increase in its profit generation.
Additionally, CEO Elon Musk desired to reach sustained profitability with the Tesla Company. Musk took the role of job cuts to meet the market demand and also gain a competitive advantage in the market. Besides, the CEO's move was to make Tesla less bureaucratic in its managerial structure (RobertoFerris, 2018). Tesla corporative restructuring move came after 15 years of the company formation.
The CEO tried to convince the investors to increase their input in the Company for the realization of an increased profit generation. The CEO believed he could reach a sustainable financial position with the Company and collect more capital and increase more cash flow in the production. Mr. Musk planned to accomplish the attainment of a sustainable financial position within six months, and he also needed extra capital.
Tesla company key executives left the Company, and this saw a decline in its profit generation. The CEO had to come up with a corporate restructuring to eliminate job functions that were created by the executives. Mr. Musk needed to get rid of the salaried workers' positions that were not necessary for the Company's progress. Tesla Company CEO's use of the corporate restructuring method took into consideration the Model 3 production, which had increased demand in the market.
The CEO laid-off more of the salaried employees and let the production employees continue with model production (RobertoFerris, 2018). The company goal of increasing production in the market was met with an increased profit generation in the long-run. At the time of the employees' lay off, the Company provided a 60-day salary to employees, including those who had no contract with the Company. The action was to appreciate the employees' contribution to the Company's growth. Also, the CEO cost-cutting initiative was undertaken to prevent a future occurrence of the corporate restructuring action.
Corporate Restructuring agreement of Tesla Company
Tesla Company, on its corporate restructuring, laid down policies that the laid-off employees were to respect. The policies were instituted after the workers where promise a 60 day pay after being laid off. Tesla Company expected the employees to pledge not to belittle the company CEO, managers, executives, staff, owners, associates, suppliers, and its products (Kolodny, 2019).
The Company took the move to prevent its reputation from being destroyed. Also, the Company expected its laid-off employees to desist from speaking to the media and public on their contract termination agreement. The move was to protect the Company's brand in the global market. Tesla also required maximum cooperation from the laid-off employees when requested for a court hearing on the Company's corporate restructuring procedure (Timothy, 2018). Besides, the corporate restructuring agreement by the Company agreed on the use of arbitration in settling conflicts surrounding the laid-off employees' settlement agreement. Since the notice of Tesla Company layoff of the employees, the Company experiences a sharp drop in the market.
Groups affected by Tesla Company layoff
Tesla Company employees' layoff was as a result of the Company making choices on the employees' performance index. The Company decided to retain the employees that that had the skills and ability in the Company's operations. The corporate restructuring of the employees was carried out to maximize productivity and efficiency at a lower cost (Kolodny, 2019).
CEO Elon Musk considered whether a number of the positions created by the executives were useful for the company operations. Mr. Musk realized the Company was spending a significant amount on the tasks that had little impact on the Company's mission. CEO Elon Musk opted for the dissolution of the departments, and this saw a decrease in the Company's spending towards its production goal. Tesla Company desired to maintain the Company's brand and image in the market.
Thus, the CEO promised the laid-off employees substantial compensations for their diligent services in the Company. Also, the Company provided the employees with a stock investment concerning operation life, a move that reduced the employment loss effect on the employees.
Tesla's company workers' dismissals impacted receptionists, recruiters, and factory employees. Yet drastic changes occurred in the distribution, manufacturing, and developments of the car model production. The company employees working in California, Freemont car plant were denied access to the factory, a situation that gained media coverage with trade unions citing the move as illegal (Kolodny, 2019). Also, Nevada and Reno battery plant saw its workers laid-off by the security officers, and the Company removed night company production.
The production employees of the Model 3 car were least affected by the employee layoff. This came at a point that the Company still desired for more production workers for the Model considering its high demand in the market. The Company resorted to removing the night production instead of reducing the production workers (Kolodny, 2019). Also, the Company reduced the production workers' pay to increase its profit generation. The workers in the Model 3 cars were moved to fill the salaried positions left blank by the laid-off employees. Such that they could multi tusk in the Company's operations and reduce spending in the Company. The Company's use of corporate restructuring led to a significant improvement in the production of Model 3, and the Company registered an increase in revenue generation.
The need for Corporate Restructure
Tesla Company desired to increase its production of Model 3. Doing so meant the Company would generate more profit. At the beginning of the year, Tesla had $2.6 billion that it planned to invest. The amount was unrealistic, considering that it spent $2 billion a half a year. This meant that the Company had stipulate strategies that will, in turn, increase profit generation in the introduction of Model 3 in the market.
The introduction of the Model X and Model S saw the Company generating profit at a slower pace. Thus, the Company had to come up with cost-cutting initiatives in the realization of maximum profit generation in the Company (Timothy, 2018). The company CEO at fast though of increasing advertisement measures in improving the sale of Model 3, a move that was disputed since the strategy required capital to actualize. The company investors pressured the executive to flatten the organization structure as opposed to more borrowing.
Also, the Company, since its formation, had a mission of accelerating the world's transition to sustainable and clean energy (Timothy, 2018). The mission could not be met for nearly 15 years of the Company's operations. Tesla has not realized any profits annually. This forced the Company to opt for a sustainable, profitable corporate restructuring. The Company's corporate restructuring saw its sale for the Model 3 increase in the market with up to $500 million per day earnings.
The earning superseded the initial amount with customers acknowledging the quality placed on the Company's products (RobertoFerris, 2018). The increase in the Company's profit generation is a result of Mr. Musk's elimination of excessive Company's meetings. Such meetings saw the company employees wasting much time that would have been converted to productions—the meeting where presided with massive spending on allowances to the salaried employees. Tesla Company also failed to meet its increased profit generation since the management had many unskilled employees that had poor communication on the organization's activities. Poor communication led to confusion in the Company's operations and derailed the achievement of Tesla's ambitious goals.
Kolodny, L. (2019, January 23). Tesla slashed Model S and X staff in recent layoffs. Retrieved June 27, 2020, from https://www.cnbc.com/2019/01/23/tesla-layoffs-details-reduced-hours-model-x-model-x-production.html
RobertoFerris. (2018, June 12). Tesla to cut 9% of jobs in 'difficult but necessary' reorganization. Retrieved June 27, 2020, from https://www.cnbc.com/2018/06/12/tesla-to-cut-about-9-percent-of-jobs-across-company-report.html
Timothy B. Lee - June 12, 2., & Deanrozz Ars Praetorian jump to post. (2018, June 12).
Tesla lays off thousands of workers in corporate restructuring. Retrieved June 27, 2020, from https://arstechnica.com/cars/2018/06/tesla-is-laying-off-9-percent-of-its-workforce/
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