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Essay: Tesla analysis (Balance Scorecard)

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1.0 Introduction

The companies have to consider different factors in order to attain the goals and objectives. According to the words of Martin Eberhard (2005), the founder of Tesla Motors, customer’s plays, a significant role in their decision process and the company is giving more importance to the customer needs and interests. In this paper, we are analyzing different aspects related to the operations of Tesla Motors in a detailed way.

2.0 Body

2.1 Analyzing the impact of technological change, globalization and customer expectations in the management accounting process of Tesla Motors

While analyzing the management accounting process of tesla motors we can understand that the process is affected by different internal and external factors. Any changes in the technology or systems will directly affect the management accounting system of the company.

Technology change

According to the words of Thomas (2016) companies are using management accounting for taking the right decisions. Tesla Motors is giving more importance to innovative tools and practices. Tesla Motors is using advanced manufacturing technology for producing goods. The company is also using computer integrated manufacturing tools and strategies. Based on the tools introduced by the company they have to make changes to their management accounting policies and practices. Management accounting also helped the company for taking quick decisions related to the implementation of new technologies and products (Smith et al 2017, p.12). New tools always help the organizations for managing the major issues and it also for integrating different functions in a effective way. Management accounting always helps the Tesla Motors for identifying the best technology that helps the company for improving the efficiency.


Management accounting process of Tesla motors is also influenced by the globalization and other related trends. According to the words of Elon Musk (2015) CEO of Tesla motors due to the globalization the company is facing different problems from the domestic and international market. The company expanded the operations to different parts of the world, they are also planning to start their branches in Asian countries. Management accounting practices in one country are different from another country, so the accountants have to create special provisions for managing the accounts in different countries (Lanzara et al 2017,p.63). Tesla Motors is using three major practices for completing their management accounting process in a productive way.

Three Major Practices Used by Tesla

1. Strategic management

2. Performance management

3. Risk management

Due to the impact of globalization, they have to make changes to all the practices and policies related to management accounting. As per the report of Business Insider (2017) management accounting also helps the business managers to take important business decisions. The company Tesla motors required more information and ideas for implementing new products and services. Management accounting always helps the company for introducing cost-effective plans and activities. Company required the resources for introducing new changes and it also helps for attaining the organizational goals. In the case of Tesla Motors Management accounting policies and practices helped the company for identifying the right resources for managing the operations of the organization. Management accounting also helped the Tesla Motors for identifying KRA (key performance areas).

As per the report of Business Insider (2016) Tesla motors is giving importance to the concepts of integrity, innovation, customer and quality. In order for attaining these objectives, they have to understand the changes in the global market based on that they have to make changes to the management accounting policies.

Customer Expectations

Customer expectations about the Tesla products are very high, they considered Tesla as a technologically competent company. In order for meeting customer expectations in a productive way, the managers have to create a daily or weekly budget. Management accounting also helps the company for creating daily budgets and it helped for improving the operational efficiency of the organization (Martins et al 2015,p.99). Management accounting also helps in managing the customer expectation about different products and services offered by the company Tesla.

2.2 Memo -1

Memo for the Management of Tesla Motors

2.2.1 Limitations in the Use of a Traditional Budgetary Control System in their Modern Workplace


Management of Tesla Motors



Date: 7/01/2019

Subject: Use of a Traditional Budgetary Control System

Our company is using modern tools and strategies for controlling the internal and external functions. Some companies are still using the traditional budgetary system for controlling the activities in a productive way. Use of traditional budgetary system has some problems and it affects the overall operations company Tesla

Limitations of Traditional Budgetary Control System

1. Budget is prepared on the basis of estimates

While analyzing the process of traditional budgetary control system we can understand that it is mainly based on estimates, if the estimates are wrong it will affect the overall activities of the organization. In the case of Tesla, we can understand that it is not possible for the company to prepare the estimates. Tesla has to make changes to the existing policies and practices for attaining the sustainable competitive advantage. (Yang et al 2018,p.3687). It is not possible for the company to make accurate estimates about the different activities of the organization.

2. It incurs a high cost for introducing traditional budgetary control system

Most of the US based companies are using different methods and tools for reducing the cost of operations. They are also searching for new methods and tools that help in improving the productivity of the organization. The company invested a huge fund for introducing electronic cars and other related products. It is not easy for the company to spend more fund for managing the traditional budgetary control system. In order for managing the traditional budgetary control system the company also has to incur more administration expenses.

3. The traditional budgetary control system is not a substitute for efficient management

As per the report of Business Insider (2016) budgeting will not help for replacing the management functions and policies. While analyzing the case of Tesla, the company required the support of employees and top-level executives for attaining the goals and objectives (Sohn et al 2018, p.115). To a certain extent, the budgetary control system helps for making the right decisions but it will not help for executing top-level plans and actions.

4. Problem of Co-ordination

If we are introducing a budgetary control system, it is not easy for the company to coordinate the activities in a productive way. The company has to face problems in coordinating the operations of the different departments. Lack of coordination among different departments affects the productivity of the business. If the departments work as a team will surely help in implementing the budgetary control system. Budgetary control system helps in minimizing the cost and maximize the profit.

5.Conflicts in departments:

Conflict can happen when there is a difference of opinion among the people. The employees of the organization should have a common objective to maximize profit. If the employees are giving more importance to the individual’s goals than the organizational goals which lead to conflict in the departments. Miscommunication among the department also leads to conflict which will directly affect the budgetary control framework.

6.Need more time:

If every organization implementation of budgetary control system involves cost and time. We have an excess amount of monetary funds is required for implementing the system. The management should pre-plan properly before implementing the budgetary control system

While analyzing all these aspects we can understand that the traditional budgetary control system is not effective for the company Tesla.

Memo -2

2.2.2 Analyzing the use of Activity Based Management (ABM)’ and ‘Activity Based Costing (ABC) in Tesla Motors to achieve its strategic objectives


Management of Tesla Motors



Date: 7/01/2019

Subject: Use of Activity-Based Management and Activity Based Costing

Activity-Based Management

Activity-based management helps the company to attain the strategic goals and objectives in a productive way. Activity-based management always uses financial and non-financial tools for measuring performance. It also helps managers in implementing productive strategies and plans. With the help of activity-based management,, we get information about all the activities introduced by the management and it also helps for implementing board and flexible product costing method. The company Tesla can use Activity-based management for attaining the objectives such as;

Developing corporate strategy

It helps the company in developing competitive strategies and plans. The company is facing tough competition from the battery electric vehicle market. The company required long term plans and strategies, for managing the competition. With the help of Activity-based management the company can reduce the cost and it also helps for providing high-quality products to the customers at less cost (Laurin et al 2018,p.181). In order for attaining the competitive advantage, the company has to give importance to low products and services. Activity-based management helps the organization for introducing low-cost products.

Making Activity Analysis and helps for reducing customer response time

Activity-based management also helps Tesla management to conduct activity analysis in a productive way. It also helps in identifying value-added activity and non-value added activity. Most of the companies are trying to provide value-added services to the customers for improving their growth level. Activity-based management helps the managers for identifying the different value-added services and products offered by the company and they can introduce productive strategies for promoting the services in an effective way. It also helps the company for eliminating the non-value added services in an effective way, by doing this the company can able to reduce the customer response time (Chang et al 2018,p.27). We know the fact that customer’s responses are very important for the company and by using Activity-based management the company can reduce customer response time and it also helps for introducing new strategies and programs.

Helps for identifying target customers

Activity-based management also helps the company for identifying the target customers and the company can develop specific strategies for attracting the target group of customers. Activity-based management information always helps for categorizing the customers based on their interest in the product. It also helps the company for improving the marketing process designed by the company for attracting the customers.

Product pricing and mix decisions

Activity-based management also helps Tesla management for taking product pricing and mix decisions. In order for taking decision-related to the product pricing, the management has to consider different aspects. With the help of Activity-based management, the management can understand the value of each activity connected to the production and development of the product.

Activity Based Costing

Activity-based costing is also helping for controlling the overhead costs in a productive way. It also helps in taking the right decisions related to pricing. We know the fact that Tesla is incurring a huge cost for introducing products and services. With the help of Activity-based costing the managers can understand the actual cost for the product in an effective way. Activity-based costing also provides information about the cost behaviour of the organization and it helps the management for taking allocating the resources in a productive way.

2.3 Adoption of a Balanced Scorecard Approach in Tesla Motors

2.3.1 Introduction

Most of the companies considered balance scorecard as an effective mechanism for understanding the performance of the organization. More than 50% of companies are using the tool balance scorecard in order for improving the performance (Van et al 2018,p.107). Balanced Scorecard Approach always helps the organizations for reducing the cost and helps for improving the efficiency. While analyzing the case of Tesla we can understand that the Balanced Scorecard Approach helped the organization for measuring the performance of different departments.

2.3.2 Body

Basically, the performance categories of organization (Tesla) as per balance scorecard is classified in four

Analysis of Financial performance, Customer value performance, Internal business process, Learning and growth

Financial Perspective

Finance called as the backbone of every business. Tesla Motors is giving more importance to financial management principles and policies. The company is collecting fund for their operations from the internal and external investors. For attracting the investors, the management has to improve the overall productivity of the organization. The management also has to consider the monetary policies implemented by the government for making changes to the financial practices. The company has to attract investors for managing their future activities in a productive way. According to the words of David (2015), it is the duty of the company to provide accurate and reliable financial data to the interested parties in an effective way (Suwandi et al 2019,p.509). So they suggest that companies can attain this objective only by focusing on financial performance. The company also has to reduce manufacturing costs for improving the financial capacity of the organization.

According to the words of Elon Musk, CEO of Tesla Motors (2015), companies are trying to implement sustainable operation management policies and methods. In order, attaining this objective the company have to use balanced scorecard as a strategic tool for creating innovative changes. Due to the impact of globalization and other recent trends, the company is facing tough competition. In order to control the cost of different processes,, the company has to give more importance to the operation management tools and methods. Balance scorecard helps the organization for conducting the internal audit process in a effective way. It also helps for integrating different financial functions in a productive way. It is the duty of the financial managers to consider legal factors influencing the financial functions of the company. With the help of BSC the company develop risk less policies and practices, for managing the legal issues. The company identify the source of fund and it also helps for allocating the fund for different operations.


Customers called as the revenue points for the companies. The management has to understand the need of the customers based on that they have to introduce new policies. It is not easy to get the customers, by providing quality services we can attract new customers. While analyzing operations of Tesla Motors we can able to understand that, they are two major factors the company have to give importance,

• Customer focus

• Customer satisfaction

The company have to generate new customers by introducing innovative products and services. The managers also have to introduce high-quality products and it helps for attaining competitive advantage. The company also has to collect feedback from the customers for understanding the major problems related to the product and services. The company has to use different methods for evaluating the customer satisfaction in a productive way. They can use online forums and social media for collecting information about the products and services. Based on the information the company can make alternation to the existing products and services. (Mud et al 2018, p.22). With the help of balance scorecard, Tesla can easily control and satisfy the customer in a productive way. Balance scorecard is also helpful for the company for analyzing the actual performance compared to the competitors. Customer complaints and issues also can be managed by using (BSC) Balanced Scorecard effectively.

Internal Business Processes

In order for satisfying the internal and external customers, the company has to select the best internal business process. The company has to focus on four areas for improving the internal business process in a productive way.

• Operational Excellence

• Improving brand image

• Innovation process

• Social responsibility

Objectives Measures Initiatives

Improve manufacturing efficiency and productivity Percentage of defective parts

Automobile manufactured per week Monitor reduction of manufacturing defects

Daily monitoring

Improve design efficiency No. of overall parts Proper monitoring methods

Develop new innovative products No. new and developed products Grow supercharger network

Offer vegan interior option

The companies have to identify effective ways for improving the internal business process and practices. Internal business process always helps the organization for implementing new changes and practices. Companies are using open communication and quality circles for improving the performance internal systems and policies. Time to time the managers has to evaluate the internal business process and policies. If it is required they can make changes to the existing policies and practices. Internal business process always helps the organizations for controlling the external activities of the organization in a productive way. (Dumay et al 2019,p.60).
Learning and Growing

According to the words of Francis (2017) in order for getting better output, the companies have to provide training and development programs for the employees in a productive way (Salmon et al 2018,p.67). The company Tesla is mainly focused on three important areas for improving the efficiency

• Employee efficiency

• Employee satisfaction

• Customer acceptance

Objectives Measures Initiatives

Enhance employee efficiency Employee per vehicle produced Providing training and development programs

Employee satisfaction Employee turnover rate Implement work breaks

Increase benefits to the employees

Customer acceptance Collect the sales data Informative commercials

Word of mouth

Balance Scorecard helps the organization for making changes to internal system and it also helps for sharpening the talents and skill level of employees at right time.

3.0 Conclusion

While analyzing all these aspects we can understand that the Balance Scorecard is highly helpful for the company for managing the competition and for improving the productivity

4.0 References

Smith, S. S. (2017). Sustainability: How Accountants Can Add Value and Deliver Results. Management Accounting Quarterly, 19(1), 19.

Giannetti, R., DELLO SBARBA, A., Lanzara, R., & Yacoub, B. (2017). Managing Costs Through Business Model Servitization: A Strategic

Management Accounting Perspective on the RESOLVE Project. In Global Conference on Services Management (GLOSERV 2017) (pp. 63-66).

Martins, L. L., Rindova, V. P., & Greenbaum, B. E. (2015). Unlocking the hidden value of concepts: a cognitive approach to business model innovation. Strategic Entrepreneurship Journal, 9(1), 99-117.

Guo, X., & Yang, Q. (2018). On the Integration of IT System with the Budgetary Control System: Insights from the Case of Wanhua Chemical. Wireless Personal Communications, 102(4), 3687-3697.

Daumoser, C., Hirsch, B., & Sohn, M. (2018). Honesty in budgeting: a review of morality and control aspects in the budgetary slack literature. Journal of Management Control, 29(2), 115-159.

Allain, E., & Laurin, C. (2018). Explaining implementation difficulties associated with activity-based costing through system uses. Journal of Applied Accounting Research, 19(1), 181-198.

Yang, K. M., & Chang, S. H. (2018). Application of Activity-Based Costing to Green Industry for Profitability and Performance Enhancement-Recycling of Blast Furnace Slag as an Example. Advances in Management and Applied Economics, 8(3), 27-59.

Akkermans, H. A., & Van Oorschot, K. E. (2018). Relevance assumed: a case study of balanced scorecard development using system dynamics. In System Dynamics (pp. 107-132). Palgrave Macmillan, London.

Angraini, F. A., Fahmi, I., Heryandri, K., & Suwandi, R. (2019). Perancangan Pengukuran Kinerja Terminal Ferry Sekupang Dengan Metode Balanced Scorecard. Warta Penelitian Perhubungan, 26(9), 509-522.

Muda, I., Roosmawati, F., Siregar, H. S., Manurung, H., & Banuas, T. (2018, January). Performance Measurement Analysis of Palm Cooperative Cooperation with Using Balanced Scorecard. In IOP Conference Series: Materials Science and Engineering (Vol. 288, No. 1, p. 012081). IOP Publishing.

Massingham, R., Massingham, P. R., & Dumay, J. (2019). Improving integrated reporting: a new learning and growth perspective for the balanced scorecard. Journal of Intellectual Capital, 20(1), 60-82.



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