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Little help here...

Hi everyone,

I am a final year Accountancy student at the University of Manchester, England. I have chosen Tesla as my case study for a management accounting module. I have read in their FAQ's that the relevant information for any academic projects should be sought in their SEC filings, but unfortunately after reading through each individual report (as well as meticulously searching the internet) I have had no luck in finding the information that I need.

The topic is based on the link between strategy and management control systems/management performance measurement within the company. I see that the strategy is clearly communicated throughout their deliverables, but I have encountered great difficulty in discovering any information relating to how Tesla measure their performance or what control systems are used within the organisation to create employee and managerial incentive systems or personnel controls.

I was also trying to uncover whether Tesla tailor their performance measures or use a system of benchmarking considering their differentiation from the typical automobile market?

I have emailed the investor relations link as well but to hedge my bets in case they don't reply (not fully expecting them to) I thought I would chance my arm to see if anyone could help me out in these discussions. Any information at all would be useful as I'm having a really hard time trying to find anything relevant on the internet (due to them being such a new company and having their IPO extremely recently, there are no research journals or historical reports to analyse for the information).

Best wishes,
Eoin Gribben

You have to consider that Tesla Motors is an engineering company. That is their primary strength as explained in their IPO documentation. You can find some more pointers right here in their keyword searchable blogs. Look also through their hiring policies on the pages where they look for new staff. They tell a lot between the lines.

I would guess that Tesla Motors is not an ideal sample for your purpose and most other startups would not qualify any better either.

- Alfred

Hi Alfred,

Thanks for your input! I had a look at the blogs, careers section and even some expired job posts on external websites and they helped quite a bit!

The basis of the assignment is to analyse the validity today of a 1999 paper entitled "Tailored Not Benchmarked: A Fresh Look at Corporate Planning." I thought that by diverting from what I assume the rest of the students will be doing (i.e. Ford, Toyota, Honda etc) my report will be a unique, contemporary take on the issue. Although the difficulty in finding the information I need is leading me towards admitting failure...

Eoin

Eoin - No failure here. By looking you may have discovered something. What you cannot find may well be the essential clue. There are two elements you might wish to consider:

Firstly I would suggest that much of what you are looking for should not be there in a startup. A startup has to concentrate all its meagre resources on the immediate goals it has chosen. If this is a technical achievement, everything else has to take the backseat. And even within this realm it has to limit the span of its technical aspirations. You can find some indirect references to this in the interviews Elon Musk gave (check Youtube). I remember one Interview e.g. where Elon stated that developing a car with range extender would have been beyond the resources of a small startup.

Secondly there is some merit in holding a few cards close to your chest in corporate planning as well as financial matters. Tesla Motors does have very clear plans and a solid vision of where it wants to go, including a firm grasp of the most important success factors as outlined in their IPO submissions. They are also far from naive in financial matters - not every startup is equally sober - and very aware of the financial indicators characterizing their current activities as you can glean from one of the most recent interviews I referred to above, but again - it may be wise to be discreet.

The topic you chose is for these reasons not the easiest to come to grips with - certainly in this case. Startups are also vulnerable.

- Alfred

Alfred,

Thank you so much for replying. I was considering throwing the towel in on my selection of Tesla but you're points have given me new-found determination.

It's quite a frustrating situation because the controls Tesla use are quite obvious after conducting some extensive reading around the company's website and reports but direct evidence to support arguments I intend to make is so scarce. There are no documents explicitly detailing that Tesla use, for example, total quality management, benchmarking, just-in-time or balanced scorecards. I feel I will have to revert to references that may require some reading between the lines.

I'm going to strive to continue to use Tesla and in the meantime pray that they reply to my email with some solid evidence I can use for reference so the legitimacy of my sources is not sacrificed!

Thanks again, Alfred

Eoin

You are on the right track Eoin.

Consider e.g. that each Roadster keeps a detailed log that is then analyzed by Tesla Motors: you cannot imagine a better quality control tool! Millions of carefully logged kilometers, all paid for by the customer! By now they have records of more than 10 million Km, driven by real drivers in the real world, from scorching deserts to the Arctic circle.

Underrated is that a newcomer to the car industry was not only able to produce a technically revolutionary car, but also got it through all necessary safety regulations with e.g. crash tests - including the novel battery, as well as having it certified in more than 28 countries with myriads of smaller or larger changes to be made for each location. What was needed to do all of that?

Also noteworthy is the continuous and speedy implementation of improvements to their roadsters. Again something that just does not happen by itself but needs good information flow and tenacious management able to translate boardroom discussions into action on the shop floor.
- Alfred

Eoin;
many of the "techniques" you mention are corporate buzz-words, practiced more in Power Point presentations than in reality. What makes an overwhelming difference for firms like Tesla is a mix of shared commitment and individuals' sense of making serious progress and seeing ideas become reality FAST (after hard cross-examination by self and others).

And there hasn't been time for the Peter Principle to install managers and bosses who have hit the wall and are fumbling and bumbling above their level of competence.

Eoin,

Maybe the arguments you intend to make are wrong. You could come up with different set of arguments to match the little information that your are getting. Just an idea.

@Samuel: sadly i have little flexibility with how i can tackle the question and so have to resort to finding the articles i need online.

@brian: as is the way with academic papers, these buzz words are necessities. Tesla, as i have gathered from reading between the lines, do use an array of these methods, even if they haven't explicitly labelled them. the main problem i'm having is finding the material needed to solidly reference these techniques. I have although, found a masters paper that features interviews with Tesla management that i'm able to go on, and linking this with the sparse articles that feature relevant reference to said techniques, i've been able to form the bulk of my argument thus far. Just struggling to find any other Tesla case studies or related articles to work on at the minute but the material I have to date should hopefully suffice :-S

Thanks again for the comments! They are helping :-)

Since I can't give you any usable advice, I will pray for you. God bless.

Eoin:

I cannot locate it now but I recently read a blog about a Tesla owner that visited the Group Lotus factory in Hethel England when his car came off of the assembly line.

That article stated that a “build book” travels down the assembly line with each car and contains notes specific to the car.

I suggest you contact Tesla in the UK by phone and/or letter to arrange for a personal visit. I think you can gain much more information in casual converstations.

That was me. It was a great visit, especially the demo ride on the Lotus test track.

Our host was a very gracious man who, unfortunately, was part of Tesla's downsizing in late 2008. Tesla's office at the Lotus plant used to house quite a few workers, but once all the supply chains were smoothed out and the build problems resolved, fewer people were needed. So, I'm not sure whom to contact at the factory. On the other hand, there is now a Tesla store in London, which was not the case in 2008.


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