Tesla: Internal And External Stakeholders

As a huge company with a brand value of about 9.4 billion US dollars, Tesla is bound to be subjected to answer to multiple stakeholders, both internal and external. It has deployed many different strategies to ensure minimal negative impact towards their stakeholders and maximize the positive return for their stakeholders.

The most important internal stakeholder in Tesla is their shareholders. These are the people that Tesla must satisfy the most as they are the ones putting in large investments on their company. As of now (August 2019), despite the rumours of a change to a private limited company on August 2018, with the help of funding from the sovereign wealth fund of Saudi Arabia to fund the move, the company now however is still a public limited company where part ownership to the company is available through the buying of their shares.

Tesla went public on 2010 where their shares were sold at 17 USD per share. This helped them to fund about 226.1 billion USD. Their shares skyrocketed in 2013, where the price of one share increased by 3 times the original amount within a year, marking itself at 100 USD per share at the start of 2014, where it was previously at the range of 30 USD just a year ago. Now, Tesla’s shares are priced at 229 USD per share which is the highest among all automotive vehicle companies. However, this rise is helped by other ventures that Tesla has in other industries such as battery and energy industry as well as the solar panel industry.

The top shareholder in Tesla are Elon Musk who owns about 20% of Tesla. To ensure highest satisfaction of their shareholders, Tesla organizes annual meetings to discuss important subjects with their shareholders. The entire meeting is also recorded and posted for public view to allow future and potential investors to understand more about the company policies and shareholders’ powers in Tesla.

Another crucial internal stakeholder in Tesla is of course its employees. They have a total of 48,817 full-time employees at the end of 2018. A job at Tesla is always sought after by job searchers. According to a report on reuter.com, a Tesla spokeswoman said Tesla received over half a million job applications in 2017 and again in 2018 and expects to exceed that figure in 2019.

According to Payscale.com, which is an American website which provides information about salary, benefits and compensation, Tesla Motors pays its employees an average of $92,218 a year which is quite lucrative and attractive to jobseekers.

As Tesla being an automotive manufacturer, there is always large need of technicians to monitor the manufacturing of the vehicles as well as solve problems with the machines and cars. Hence, to ensure the welfare of their employees, Tesla offers their employees premium health insurances. They also offer pension plans to enable a stable cash flow even after retirement.

This seems like a perfect package for the ideal job for jobseekers. However, recent lay-offs due to Tesla’s effort to cut cost for their previously promised 35,000 USD Tesla Model 3 has caused some outburst and dissatisfaction towards the company. Tesla has had a 9% headcount reduction in June 2018 and had another 7% lay off from its workforce in January. This has caused some outburst and dissatisfaction among employees. According to Glassdoor, a famous jobs site, Tesla’s “recommend to a friend” rating fell to 49 from a high of 71% two years prior.

To avoid high employee turnover, which will cause even more instability to Tesla, the organization should pay more attention on job satisfaction. They should achieve balance between customer and employee satisfaction as employee too plays a major role in achieving organizational goals and objectives.

Next, the most important external stakeholders are Tesla’s suppliers. Due to the nature of the business, which is automotive manufacturer and even energy storage industry, there is a large amount and variety of materials needed for the manufacturing of those products. For instance, the materials need for cars generally are already very vast in variety.

Below are some of the examples of Tesla’s major suppliers:

• AGC Automotive: windshields
• Brembo: brakes
• Fisher Dynamics: power seats
• Inteva Products: instrument panel
• Modine Manufacturing Co.: battery chiller
• Sika: acoustic dampers
• Stabilus: liftgate gas spring
• ZF Lenksysteme: power steering mechanism

There are lots and lots of other suppliers that provide many different raw materials for Tesla for their production process. Another notable supplier for Tesla is Panasonic, which is the major supplier of batteries, reason being Tesla makes electrical vehicles and they will need a lot of batteries to produce those vehicles.

Due to the weak supply that Panasonic can provide, Tesla announced in 2014 that they will take on the production of batteries themselves, with the help of Panasonic by opening Gigafactory on 2016. Instead of buying batteries from Japan and having them shipped, Tesla would like to have a constant and stable supply of batteries, which Gigafactory promised to deliver. However, Tesla is plagued by multiple problems such as quality and safety issues that arose in the in-house manufacturing of the batteries. Hence, instead of a faster and cheaper production, this problems delays Tesla’s high production goals. This shows the reliance of Tesla’s upon the external suppliers. Despite producing the cars in-house, the supply of many raw materials and crucial parts are still largely dependent on the suppliers.

Moreover, Tesla’s suppliers have a special portal that can be access by at this link (https://suppliers.teslamotors.com) but access to this portal requires the correct credentials. This portal is described by Tesla as a platform for their suppliers to share key business and product information.

Lastly, another vital external stakeholder are Tesla’s customers. As a corporate business, profit is extremely important. Hence, Tesla also pays much attention on their customers. Unlike conventional vehicles manufacturers, Tesla sells their car directly to their consumers. This allows a more straight-forward and consistent preach about the selling point of their product, which leads to a higher chance of customers buying their product. Besides, when Tesla’s employee tries to promote you their product, their main focus is not actually selling the car but instead promote the environmental issues and how is Tesla working to solve those problems. This shows that Tesla stays true to their corporate mission and vision and customers tend to appeal to businesses that actually serves a purpose other than just making profits.

Besides, Tesla takes customer service as important as the manufacturing process as well. Tesla’s CEO Elon Musk personally replies to tweets about Tesla and he emphasized that this is what the whole organization to be working towards, high engagement with customers and ensuring that their services will make the customers come back willingly. It is very rare for CEOs to respond to customers but Elon Musk’s example has shown customers that Tesla really cares for the welfare and service provided to their customers.

In addition, to appeal to their customers, Tesla has a strong marketing team that allows maximum exposure to the brand name. They play a minimalistic design in most of their marketing materials, much like Apple and it appeals to a lot of customers as a minimalistic yet classy design shows quality and class.

In short, Tesla is doing a good job of attracting and keeping their customers, which is essential to maintain high profit. However, there are some problems arising that Tesla will have to control before things get out of hand. First, the Model 3 production is the first mass production car that Tesla produced. Previously, all of their cars were limited in number. Due to this, there are reports saying the wait time for services and service quality has deteriorated as the number of cars and number of customers has increased more than ever. Another problem is Elon Musk himself, who is criticized for being too active on Twitter and sending troll tweets, which affects the company image and also degrades the professionalism that Tesla tries to stand in.