Tesla Motors: Using Tech to Outsmart the Competition - Essay Sample

Introduction

In the case of Tesla Motors, technology has played a fundamental role in ensuring that the company produces the most preferred electric cars to outsmart its competitors in the global market (Mangram 2012). The company has significantly invested in technology with a great focus on research and development to produce sophisticated electric vehicles as well as producing advance power storage systems. In recent years, the concern in the motor industry has been to focus on technology that fosters the production and development of electric cars with the motive of averting the increased rate of pollution in the motor industry (Hardman et al. 2015).

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Due to advanced technology, Tesla motors has worked its best to develop excellent electric vehicles that are environmentally friendly as they capture the concept of green energy and attract a huge number of customers around the world (Karamitsios 2013). In terms of technological development within Tesla motors, the advancement of the BEV market is more contingent on the perpetual improvement in the core technologies such as vehicle performance and vehicle batteries. Such improvements include batteries, production costs as well as safety and reliability, and improved vehicle performance, including torque, efficacy, and reliability (Stringham et al. 2015). The electric vehicles are six times effective with highly reduced pollution compared to gasoline-powered cars.

How Globalisation Has Influenced Management Accounting Within Tesla Motors

Globalisation has been referred to as diminishing the distance between countries, people, and organisations to enhance social interaction among people around the world. In the motor vehicle industry, companies often have the motive to supply their products, including the sophisticated electric cars produced by Tesla, to reach the global market, and that has a great influence on the management accounting within the company (Stevanovic et al. 2018). The company is attempting to establish its existence across the world as well as outsourcing throughout the globe. For Tesla, motors to gain importance in the global market share, and efficient charging station infrastructure to be developed in the same manner as that of the gasoline-powered car infrastructure (Endsley 2017). Such development may reflect into practicable and diversified rapid charging stations that can charge the BEV in a few minutes as contrary to the hoe chargers, which consumes a lot of time to be charged.

The transport sector has been a major concern for the international policymakers since it can account for approximately 57% of the greenhouse gases that pollute the environment and nearly 80% of the petroleum used globally (Kauerhof 2017). Therefore, Tesla has concentrated on the production of electric vehicles to reduce the number of gasses that are released into the atmosphere, and such products have been targeting the global market.

How Customer Expectations Influence Management Accounting Within Tesla Motors

In terms of customer expectations, Tesla motors have focused on increasing the production of electric cars that are made available to its customers both in the local and global markets. The company has implemented a marketing strategy to sell electric cars through the increasing network of its showrooms as well as selling online (Moritz et al. 2015). The company has also been selling the patent electric powertrain components through other automakers to enhance sales and interest in electric vehicles.

The most significant strategy is to create a foundation for the sales of electric cars through the Roadster model, a strategy which the company has already accomplished (Baglino et al. 2014). The idea of mass production of the Model S Sedan and to make it more affordable is to target middle to the upper-middle class of the consumers and to increase sales. In 2011, the company reported higher sales revenue that was mainly dominated by the sales of Roadsters globally because customers demonstrated a higher rate of preference to such products; hence the mass production was to prioritise customer expectations globally (Musk et al. 2013).

Memo to Management

Subject: Limitations of Traditional Budgetary Control

I am pleased to inform the management that Tesla motors have focused mainly on research and development of its electric vehicles. That has demonstrated increased limitations on the traditional budgetary control as the company seeks to invest additional resources on technology to produce modern electric vehicles such as the Model S Sedan that is now selling and preferred by a huge number of customers in the world market. The types of electric vehicles include the Battery Electric Vehicle (BEV) that can only use the battery to provide the electric energy that is required for the propulsion of the vehicle (Nergaard et al. 2014). The company has produced electric vehicles that can now function as generators as they use the regenerative braking that saves more energy during the acceleration. Also, the BEV comprises of a high torque over an increased speed when the vehicle is accelerated compared to the internal combustion of the traditional engines.

For instance, Tesla motors produced Roadster that was even rated at approximately 288 horsepower, and the model accelerated as a speed more than that of 911 Porsche GT (Saxton 2013). The cost of maintaining the electric cars are now lower compared to those of the gasoline, with an estimation of $0.02 per mile (Stewart et al. 2013). The model reflects a lower cost because the gearboxes and the electric motors are constituted with a few moving pieces than many precision-engineered parts, which are always required for the internal combustion engine. More significantly, Tesla has produced the BEV, which always quiet and cannot produce any exhaust gas to the environment. The main challenge with the BEV is the battery because it is more expensive, and it has also shown a sign of deterioration over time. Again the battery is heavy, and it involves a lot of charging time as well as providing little energy-to-weight ratio.

It is imperative to inform the management that the company has been committed to developing a 980-acre facility near Reno and the Nevada that develops the lithium battery and to produce up to 500000 batteries packs every year to give to its automobile assembly plants (Tang 2013). For corroborating the concept of limiting its traditional budgetary control, Tesla motors have made its patent open source, thereby making other established carmakers, including Nissan and BMW to adapt to the advance technology that is used by Tesla. The move has made Tesla surpass other companies in the motor industry, hence setting the standard for all the companies in the industry. Similarly, the company started delivering the Model S by 2012 and receiving positive feedback from the customers (Wakabayashi and Ramsey 2015). Tesla improved its production to approximately 500 electric cars per week. In its attempt to adjust on its success, the company is now working on the new seven-seat electric car; thus, model X, which is expected to integrate the features of the minivan and the SUV in one car (Liu et al. 2014). Tesla had a strategy to deliver model X in 2015 with a projection to produce a more sophisticated electric car after model X and Model S (Ramsey and Bauerlein 2013).

Notably, Tesla motors finished its IPO in 2010, and its shares closed with a price of $ 23.89 and earning $226.1 million according to the first annual report. Despite such improvements, the company also recorded an operating loss of about $ 146 million. The investors reacted to the changes, and the company's stock price increased to $280 per share in 2014. Unfortunately, Tesla relied on $3 billion in convertible debt to fund its capital investments, with a projection that the stock price will increase by up to 160% in the future.

Memo to Management

Subject: Activity-Based Management and Activity Based Costing

It is worth understanding that activity-based management is a corporate concept that will involve internal analysis of Tesla motors to identify the operational activities and then evaluating such operations depending on the cost incurred and the value that such operations have added to the company. The focus will remain on the analysis of activities conducted by Tesla in its move to produce better electric cars in the industry. Activity-based management will require the management to identify the opportunities with the motive of enhancing efficiency as well as profitability for the company. I would also like to inform the management that the analysis is expected to involve the classification of such activities into either value-added, in which the activities will be increasing customer's value of the products at Tesla or non-value-added that incur costs and will not be increasing the value of the company. Also, such activities will be ranked on a scale of 1-5 to show different levels of value.

Tesla Motors will implement activity-based management through the analysis of different operations, including the development of technology. Technological development will be classified into value-added activity. For instance, the use of advance technology in the production of vehicle batteries and improving vehicle performance is a sign of adding customer value to the company because customers would prefer using the BEV, which is powerful and environmentally friendly. Other activities include a focus on the battery innovation, which is also adding value to the company because the innovation will involve technology advancement to improve on the performance range and to lower the cost. Finally, BEV improvements are also among the activities that can be classified into value-added to the company because the process involves an electric car with higher torque capabilities and the car can deliver at a proximately 6000 rpm range with persistent delivery of power; hence, electric cars are ever faster at any rate of rpm output (Bae and Kim 2017).

On the activity-based costing concept, I would like to inform the management at Tesla motors that it is the technique that involves measuring the cost and the performance of activities, the resources, and cost objectives of the company. The management will be allocating the company's resources to the activities as they assign such activities to the cost objective depending on how they are used. Thus, the concept of activity-based costing is driven by the activities, cost, and resources involved in the activity. In the case of Tesla motor, I am glad to inform the management that activity-based costing captures on areas such as product positioning that requires the management to identify a specific sales position of the electric cars. The resources required to position the product to attract more customers compared to the competitors and the cost involved in such activities for the betterment of Tesla (Hoffman 2015). Therefore, the electric car as a product should be positioned to meet a variety of customer needs.

The other activities include market segmentation, which requires the company's management to divide potential customers into different market segments with different behaviors and needs. The activity will be aiming at prospective clustering customers who share a high level of homogeneity and are easily differentiated from other groups of customers. For instance, it is also worth informing the management that the company has targeted different consumer segments such as the luxury vehicle Sedan market, the high-end sports car market, and the mainstream vehicle consumer segment (Chen and Perez 2018). The other activity will focus on the product design strategy, in which the manageme...