Tesla Inc.

Analysis

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 Abstract
In the modern world, businesses must depend on certain models in order to succeed.
These models provide the principles under which an organization should operate to satisfy its
customers and maximize profits. One such model is the Total Quality Management (TQM)
system. TQM aims to continuously improve a company’s products through well defined
processes. Over the years, companies that apply this model have recorded an unprecedented
success rate compared to companies which do not. One such company is United States based
company, Tesla Inc.
Tesla Inc. deals in automotives and production of renewable energy sources. All these
products go hand in hand with its mission to lead the world in achieving net zero emissions in the
near future. Tesla has used some TQM processes in its operations to gain more market share in
the automotive industry and also overcome the challenges it faces. Tesla’s autonomous cars are
as a result of the company applying TQM principles. The company engages employees in all
activities form production to decision making thus benefiting from their innovative ideas.
The document also discusses the advantages TQM brings to organizations. Additionally,
the paper advices managers on the reasons they should adopt the TQM system in their
companies.

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 Table of Contents
Abstract……………………………………………………………………………………..2
Introduction…………………………………………………………………………………4
Mission and Vision…………………………………………………………………4
Core Values………………………………………………………………………...4
Financial Performance……………………………………………………………...4
Operational Activities………………………………………………………………5
Total Quality Management…………………………………………………………………5
Quality Challenge………………………………………………………………………...…8
Challenge Management……………………………………………………………………..8
Conclusion…………………………………………………………………………………..9
Recommendations………………………………………………………………………….10
Appendix……………………………………………………………………………………11
References………………………………………………………………………………….12

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 Tesla Inc. Analysis
Introduction
Every organization seeks to remain competitive in the market in order to be profitable.
The organizations use different approaches to improve the quality of their products and stir up
their employees’ morale. One of these approaches is the use of Total Quality Management
(TQM). Tesla Inc. is amongst the many companies that apply the TQM model in their
operations. This document discusses the TQM processes the company utilizes and the challenges
facing the organization.
Mission and Vision
Tesla Inc. is an American company in the automotive and clean energy industry. The
company produces electric vehicles, batteries and, solar panels. In a world where pollution has
led to devastating climatic changes, Tesla’s mission is to help the world reach its goal of using
sustainable energy (Tesla, 2023). The company’s electric vehicles are a major leap in achieving
the goa as the number of combustion engine vehicles are gradually reducing on the roads. The
solar panels and batteries also ensure people no longer have to rely on non-renewable sources of
energy like coal.
Tesla’s vision is to become the most luxurious car company in the 21st century. The
company’s electric vehicles back this vision as most people are transitioning to using electric
vehicles (Benny, 2022). As a result, Tesla will soon have a large market for its products as it is
among the few companies producing electric vehicles.
Core Values
Core values merge an organization with its mission and vision. One of Tesla’s core
values is to steer the world to evolution with its electric vehicles and new unprecedented
technology. Another core value is the company’s commitment to electric machines (Benny,
2022). All of Tesla’s products use electricity, therefore, no environmental pollution is caused.
Financial Performance
Profitability determines every company’s growth potential. Without profits, no company
can survive in the market. Tesla has recorded an upward trend in its revenue since 2010. The
continuous growth is attributed to the global campaigns worldwide to promote the use of
renewable sources of energy. As of December 2022, Tesla’s annual revenue stood at $81.462
billion (MacroTrends, 2023). This figure shows the company is making huge profits regardless

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of other automotive companies like Ford and Mercedes being in the market. Also, most urban
apartments are installing solar panels on their rooftops thus widening Tesla’s market.
Well performing organizations always pay their employees well to keep them motivated.
Tesla has not lagged behind either as its employees receive incomes close to $98, 416 (WSJ,
2023). The high salary shows the company is performing well financially. The cost of production
is another area Tesla has worked hard to minimize. Most organizations often have good products
but fail to make maximum profits because of high production costs. The company’s ‘next
generation’ versions of cars will reduce the production cost to 50% of what the company
currently uses. This reduction would bring the cost of electric vehicles down to $20, 000
(Bleakley, 2023). Therefore, Tesla’s profits are set to shoot even higher as more people will be in
a position to purchase its electric vehicles.
Operational Activities
Tesla focuses a lot of its resources to research and development. This initiative enables
the company to innovate new products and also improve already existing technology. The
projects from the research and development team ensure Tesla is always ahead of competition
and is the number one company in promoting the use of sustainable energy. Currently, the
company is working on developing autonomous electric vehicles and has made some significant
progress so far. This unprecedented technology has attracted more customers into buying the
company’s cars.
Tesla operates its sales and marketing sector in a rather peculiar manner. The company
does not rely on adverts like other companies in the automotive industry do, instead, it believes
the high quality of their products is enough to bring in customers. The company also has its own
distribution channel which ensures the customers receive personalized services. As a result,
Tesla has established a strong bond with its customers.
Total Quality Management (TQM)
TQM is a is a management model that focuses on improving an organization’s products
as a way of satisfying customers. This model often involves the co operation of everyone in the
company from the top bureaucrats to the junior employees (Gillis & Pratt, 2023). This
management system ensures product quality is always improving through research and new
inventions. This improvement is what is known to many as Kaizen (Gillis & Pratt, 2023). Kaizen
focuses on continuous improvement of products in a cyclic manner. The company involves

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employees and together they identify the list of problems in the organization and try to come up
with viable solutions. Next, the solution is continuously tested to detect any weakness. If the
solution s successful, the company adopts it. Then the cycle begins again.
TQM is a customer-based management model as it mainly seeks to satisfy the customer
more. Tesla uses most of the TQM processes in its operations, some of these processes include:
Employee Involvement
Employees are often the corner stones in most successful organizations as they
understand the products better thus can come up with better innovative ideas. Therefore, the
involvement of employees in major company decisions is mandatory for an organization’s
success. Tesla’s products are still new technology; therefore, the company needs a lot of creative
ideas to ensure the products fit into the market. Tesla has granted its employees the freedom to
come up with new ideas and test them within the organization. The company also allows the
employees to critique its products before launching them to identify any error that might lead to
customer dissatisfaction. As a result, Tesla’s products have become better over the years due to
employee involvement.
Data Utilization
TQM relies heavily on data to come up with new solutions or methods to improve
products. Tesla has a policy that allows its customers to return their electric vehicles back to the
company within seven days of purchase if they are dissatisfied (Nedelea, 2020). Through this
policy, Tesla is able to collect data on the car model most customers return thus working on
improving it.
Integrated Business System
TQM encourages the integration of all departments in an organization. This network
ensures data and information freely flows within the organization to enable all employees to be
on the same page (Barone, 2023). As a result, confusion is reduced and more solutions develop
as a result of employee interaction. Tesla has taken advantage of the internet and created a
system which links both its employees and customers. Employees in different departments
within the organization can freely share ideas with each other and also customers can send their
share of thoughts to the employees. This integration has greatly boosted the quality of Tesla’s
products.
Continual Improvement

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 Companies in all industries have to continuously improve the quality of their products to
remain competitive else their competitors will out match them. Tesla is constantly improving its
car models to make them more efficient. The company’s contemporary technology to sell
autonomous cars has been its ground breaking innovation. The idea is still new and employees
have to constantly come with methods to make the cars safe on the road. The cars are currently
able to navigate traffic autonomously and park in the right parking spot.
Strategic and Systematic Approach
A good product without proper planning is as good as a failed product. TQM takes a lot
of consideration when it comes to a company’s planning and management strategy. Tesla’s
mission is to promote the development of a sustainable world; therefore, all its strategies must
align with this mission (Furrier, 2023). As a result, Tesla spends a lot of resources researching
methods to improve or invent new products without harming the environment. This strategy has
enabled Tesla to open many branches all over the world as countries openly welcome them to do
business within their borders as they do not pollute the environment.
Tesla releases its car models one at a time with the contemporary model being better than
the preceding one. This strategy gives the company the opportunity to sale the new models to
customers who already own different Tesla models. Customers on hearing the release of a new
model with better features, are always willing to abandon the old model and go with the new
market trend. As a result, Tesla widens its market reach while at the same time maintaining its
earlier customers.
Customer Focus
The business cliché that ‘the customer is always right’ is a statement most organizations
sing the TQM model have come to adopt. A new product might seem appealing to the employees
and management however, the customers might have a different opinion. Therefore, it is
imperative that organizations engage their customers when developing new products or adding a
new feature to a product. Tesla is a keen listener to its customers reviews. For example, the
company makes close to 20 changes weekly on its Model S cars based on customer reviews
(David, 2021). Customers send the company their driving experience and point out the
challenges they had and their opinions on what the engineering team could do to eradicate the
fault.

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 The feedback th company receives not only helps in improving the products but also in
making the customers feel the company appreciates them. Especially when a customer provides a
solution and the company implements it, the customer feels proud thus reinforcing their loyalty
to the company.
Quality Challenge
Tesla, like many other companies, faces challenges especially when launching new
products. These challenges are often attributed to customers dissatisfaction with a product the
company thought would be appealing. For example, Tesla’s Model 3 car received a lot of
criticism as it had a myriad of flaws (Isidore, 2021). Customers raised complaints with some
posting videos on social media showing how unreliable the new model was. The company,
therefore, had to recall most of the Model 3 cars customers had purchased. In this case, the
challenge was as a result of the company’s poor innovations.
Challenge Management
Tesla’s Model 3 was to be one of the company’s most successful project. However, Tesla
rushed the production and testing process of the model. As a result, problems started arising in
the manufacturing sector and on customers cars. The company was in a hurry to meet the
growing market demand with production culminating at 2000 vehicles per week (Gibbs, 2018).
This pressure meant the company had to speed up the production process and spend less time
testing each car model. After few days of selling the Model 3 cars, the company had to pause
production as a lot of manufacturing problems were arising. Customers were also raising
complaints on the issues their new cars came with.
Tesla was however, able to overcome this problem. After the company called back most
of the cars, it worked on the issues the customers had raised. Some of the issues included paint
issues. This problem arose as a result of the cars receiving less time to dry once manufactured.
The paint was gradually degrading in quality once the customers started using the cars. In
addition, Tesla came up with new models like the Model S in 2021 which was an improved
version of the preceding models (Hogan, 2021). This new model won the trust of the company’s
customers who had lost confidence in its products after the Model 3 incident.
Still on the Model 3, Tesla improved its charging system and interior design to make it
more appealing. The model is now compatible with both AC and DC chargers making it more
efficient for use (Man, 2023). Tesla added a fine leather finish to the model’s interior with an

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additional touchscreen to control most of the car features. The speedometer also displays in the
screen. All these new features have won the hearts of Tesla customers who now demand for
more Model3 cars.
Conclusion
TQM greatly benefits organizations that implement its principle into their operations.
Some of these benefits include:
i. Reduced product defects – TQM aims to ensure products reaching the market are an
epitome of perfection. The management model states that the products have to pass
through various stages of testing to eliminate all possible errors and input better ideas.
As a result, an organization’s products will attract more customers as they are of
higher quality and more reliable.
ii. Lower costs – Reduced product defects lead to lower costs in that, organizations
spend less funds on replacing or repairing defective products. TQM also encourages
companies to use strategic planning gin their production. This plan enables companies
to note areas where it could cut on costs and ways to source for cheaper raw
materials.
iii. Customer satisfaction – Companies that use TQM never disappoint their customers.
TQM principles lead to production of high-quality products. The high-quality
products then lead to customer satisfaction as their will be less complaints. Once a
company’s product start trending among customers for its high quality, more people
will demand for the product. As a result, the company broadens its market reach.
iv. Strong cultural values – Organizations with long records of success often have well
defined values that guide their employees on how to operate. TQM emphasizes on the
importance of creativity and innovation. These values eventually lead to the
improvement of products thus benefiting organizations.
From the above, it is clear that TQM is a system which every organization should adopt.
Tesla has benefited greatly from the use of TQM in its operations. The company has developed
unprecedented innovations thanks to the involvement of its employees in decision making and
research. Most features in the company’s electric vehicles are a result of ideas from the
management, employees and customers. Therefore, this integration has greatly benefited the
company.

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 TQM has again enabled Tesla to satisfy its customers more by listening to their reviews
and implementing them. The Model 3 vehicles were initially a failure however, due to customer
reviews, the models are now one of Tesla’s most demanded products. This rejuvenation shows
how much the principles of TQM could benefit an organization.
Recommendations
It is not subject to controversy to say that different management models could
successfully apply to different companies. However, I would recommend that managers should
adopt the TQM system as it has benefitted most companies over the years. Organizations ae
often successful when they first launch a new product as they face no competition. Over time,
other companies adopt the same technology and start competing with the company’s product. At
this point, most organizations lose the competition as they do not invent new products or
improve the initial product. With TQM, managers could avoid being in such a situation as TQM
encourages organizations to continuously improve their products.
In the document, it is evident how Tesla has used TQM to gain more market share and
also solve all the problems that come its way. This evidence shows managers should use this
system to remain relevant in the market. Finally, TQM makes managers’ work easy as all
employees are united with similar values that enabling cooperation amongst them.

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 Appendix

Fig. 1. NASDAQ, TSLA Financials, 2023.

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 References
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Benny. (2022, March 30). Let’s Know More About Tesla, Its Core Value, Brand Personality,
Mission and Vision. Medium. https://benny0522.medium.com/lets-know-more-about-
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Bleakley, D. (2023, March 2). Tesla flags paradigm shift in vehicle manufacturing as it looks to
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solving-its-quality-issues-according-to-elon-musk/

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Isidore, C. (2021, February 3). Elon Musk admits Tesla has quality problems. CNN.
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