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In: Operations Management

Does TESLA seem most focused on account­ing profitability, shareholder value creation, or economic value creation? Give...

Does TESLA seem most focused on account­ing profitability, shareholder value creation, or economic value creation? Give quotes or information from these sources to support your view.

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Solution:

Tesla is a manufacturer of electric vehicles and has been a pioneer in its efforts to bring the style of a four-wheeled vehicle in an electric vehicle that was deemed not so possible in the past. Hence the way TESLA functions we can infer that this is an organization that focuses more on innovations to power their products and brings out the best in class electric vehicles at affordable prices because of their vision which believes that the future is electric. This is the business philosophy of TESLA.

TESLA has not been known to focus much on its accounting profitability given the way they have conducted their business so far. They have been involved in multiple projects that have failed and they have had years without profitability but still, they kept on investing in their projects and worked towards their belief of producing the best in class electric vehicles. Hence, we can definitely state that TESLA has not been involved in focusing very much on its accounting profitability.

TESLA has been creating value for the stakeholders by investing their wealth into creating new projects that have the potential to change the future. The shareholder wealth creation in terms of monetary value is not a big focus of the company rather they focus on investing in important and crucial projects that have the potential to change the future technologies. Hence, the value creation for the stakeholders is through innovation.

TESLA has been mostly involved in creating economic values by developing its work in the electric vehicle segment which helps in making the electric vehicle segment grow around the world by using the parents filed by TESLA that are open for any company to use. This is an example of the creation of economic value because it helps in developing a new industry of electric vehicles which is potentially the future and hence this is definitely the creation of economic value.

Hence, this is why I believe that TESLA is more involved in creating economic value.


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