Introduction
Organizations refer to entities or enterprises with distinct goals and aspirations, which operate within strict definitions or boundaries (Senior, 2002). In this perspective, organizational change is a phenomenon that occurs in every organization with a wide operation base. However, the magnitude of change is dependent on the size of the organization or the complexity of operations that the company or an organization engages in, either in products or customers. Moreover, organizational change can also be planned by the organization or unplanned. Unplanned organizational change is a result of external and internal forces that lead to the change of operations in one way or the other. In this accord, the paper entails a detailed analysis of the organizational changes to Tesla automobile organization.
Organizations change in various ways, depending on the major driver of the anticipated change. For instance, a company may change by expanding its target market. The change to adopt a new target market usually calls for the organization to invent a new product, or rebrand a product to suit the customer needs and their preferences. Therefore, expanding the target market causes a considerable change in the organization. Moreover, organizational change can occur when a company seeks to move out of the current market. The current market is what dictates the company’s operations, and its customer reach (Senior, 2002). Withdrawing operations out of a market to venture into another invokes change, and this calls for a complete restructuring of strategic business units (Elsmore, 2001). Apparently, Tesla organization has undergone many organizational changes resulting from the expansion of operations of the company (Diaz, 2016). For example, Tesla has been producing electric cars for the American middle and upper-class markets, but due to demand for a longer lasting car battery, this company sought to expand its operations, to produce hybrid cars. In this regard, the creation of new departments, and the merger of operations is an example of change that Tesla organization has adopted.
For instance, the Tesla automotive group has undergone considerable organization change that has seen full its transformation to fit the requirements of customers and product market. Currently, Tesla organization has invented electric vehicles to meet the consumer tastes and preferences in the current technological era (Diaz, 2016). Organizational change usually affects the operations of the company, either on its operations, customers or sometimes the organizational structure is subject to organizational change (Schein, 1985). Triggers of change in organizations are both external and internal factors, which prompt events of organizational change. External factors triggering organizational change include growth patterns, changes in demand and supply of input material, and market imperfections (Senior, 2002). Thus, the organizational change affects all structures and operations of the organization, as it doesn’t occur in individual business units.
Tesla Company has experienced vast organization changes, and adopted distinct approaches to organizational change, given its long prevalence in the automotive industry (Diaz, 2016). For instance, the historical approach to organizational change entails the complete or partial transformation of products of an organization, both in its core operations and subsidiary operations. Since the industrial revolution, companies and organizations were both concentrating on mercantilist approach to economic integration and mechanical advancements, which formed the main core of their operations. Therefore, the main aim of the organization was to produce goods and services for the target market, conforming its operations to the mercantilist standards. However, in the mid-20th century, operations of companies get more complex, and practices such as bookkeeping, and principal-agent relationships become a norm to the operating organizations.
In this regard, the change in the complexity of operations in organizations formed the key pivotal points for organizational change, so that unnecessary loss could be avoided (Scott & Jaffe, 1990). Moreover, the balance between liabilities and distinct assets of the organizations was important in providing a good record keeping method. In this predicament, Tesla organization had to adopt the double record keeping method of accounting that brought new functions within its structures, both in its core operations and the subsidiary companies. Bookkeeping was not part of organizational practices in the mercantilist era, and the introduction of the bookkeeping method to manage assets caused a change of the way organizations operate (Graetz, 2006).
Moreover, the neo-classical age of economic integration brought new practices, operations, and structures in which shaped the operations of Tesla Company and its subsidiaries (Graetz, 2006). Therefore, the market for customers took a new route, and companies had not only to consider the magnitude of operations, but also the service qualities required by customers. Furthermore, organizations started to realize new options as to the operations of companies or product units (Pathak, 2010). For example, Tesla automobile industry discovered the potential of investing in global markets that had a wide variety of customers with different tastes and preferences. Therefore, global markets came into existence, and new organizational structures were needed to hold the operations of such big conglomerates. Approaches to organizational change give light to the significance of change to the structures and adaptability of an organization.
Organizational structures mostly refer to the arrangements of organizations operations, which depict the reporting relationships between employees and employers. Besides, organizational structure also includes the relationship between products, customers, or the target market location (Pathak, 2010). Therefore, organizational structures involve all aspects that cause processes in the organization to operate in a harmonious way. Global structures are the major indicators of the effects or the adaptability of organizational change. This is because organizational structures on a global scale entail complex operations that call for sound operations.
An instance of global structures adopted by Tesla automobile industry includes the matrix structure, which provides flexibility and reduces the burden on core operators of the business (Diaz, 2016). The structure includes the overall cooperate chair, who is aided by line managers responsible for instilling organizational strategies. Therefore, the organizational structure requires an employee to have more than one boss, which was previously not the case (Waddell & Worley, 2011). Tesla automobile organization employs the use of the matrix organizational structure because the production chain of this company has distinct strategic business units. The strategic business units are interrelated in such a way that managers should constantly communicate within departmental linkages (Pathak, 2010).
Thus, the intertwined relationship is a major cause of adverse changes in the organization. Such changes are of a great magnitude to Tesla organization. Principally, organizational change costs the organizations more in the short run, but long run benefits are reputable. Long-run benefits include the achievement of economies of scale, as well as the reduction of operational costs. Moreover, the input- output relationship is equated. Lastly, the organizational change approach that Tesla is ought to have experienced is the contemporary changes approach, which is to date challenging to most organizations, primarily due to the complexity and dynamism of the business environments (Diaz, 2016). Due to the invention of the information technology realm, and the advancement of infrastructure, the business world requires more complex operations than before. Primarily, companies are more concerned about preserving the grown talents within the organization, in a bid to avoid brain drain, and also to stay ahead of the competition. Loss of talent in the current business operation is equitable to loss of assets in the mercantilist era.
Moreover, the rate at which companies are growing is utterly unmanageable, without concrete organizational structures which favor flexibility and easier management. Growth in organizations occurs in three-way basis, which all aim at incorporating strategic business units to form one giant corporation. Among the three methods include mergers and acquisitions, which occur when a business buys out the operations of another. The merger of two companies forms a wide magnitude of organizational change, which causes the adaptation of new technologies (Schein, 1985).
Mergers for companies in the business operations have proven reliable means of growing organizations over the past decade. Moreover, growths of organizations occur through a process of forward integration, which entails an organization taking up the processes of its immediate suppliers. In this way, an organization controls most of the production chain management and dissemination of information (Waddell & Worley, 2011). Forward integration as a strategy for growth is highly adaptable, as the risks of the organizations become widespread. Reduction of risks in the organizations provides a new incentive to grow for the strategic business units. Backward integrations are also popular for organizations with a wide array of operations. Backward integration is a way in which an organization takes over the operations of its producers. Taking up producers operations ensures that the organization controls the quality of its inputs and outputs.
Apart from growth, demand patterns of organizations products also affect the rate of change in the organizational change. Technology has enabled human beings to innovate various products, most of which are substitutes for traditional goods. Consequently, the demand for such products fluctuates depending on current market trends. Therefore, demand patterns force organizations to adopt new methods of remaining competitive, resulting in the occurrence organizational growth. Changes in an organization, emergent, planned and unplanned are all attributable to three theories of organizational change that are experienced by most organizations. Emergent organization change includes all organizational change that is subject to the dynamic business environment that most organizations face. Therefore, most organizational change in modern business is caused by emergent changes. Moreover, unplanned changes in organizations occur in a similar magnitude as the emergent changes. Tesla motors faced emergent changes when the demand for electric cars was rife.
Therefore, the three theories of organizational change apply to almost all organizational changes. For instance, the Lewin’s forces model of organizational change entails action and reaction forces that surround a business entity. Some forces will compel an organization to shift from one state to another, while the forces of resisting change occur to counter any deformations in the normal organizational structure. In this accord, an organization undergoes three stages of change in conformity to the Lewin’s model. For instance, an organization undergoes the unfreezing point here all organizational elements are made aware of the imminent change and are subject to prepare for inertias. After a successful recapture of the stage, the organization redesigns its elements to fit the new organizational requirements. Lastly, the organization undergoes a stage of freezing, where the new changes are made a part and a parcel of the organization. Other models which are associated with organizational change include the action research change model and the positive change model. However, all the theories of organizational change are related to the planned changes. Planned changes are different from un-planned changes, as they give the organization an incentive to plan and budget for the anticipated change.
The organizational change affects distinct elements of an organization and is transformed through the subsidiary aspects of the organizations (Schein, 1985). For instance, organizational designs are affected, as some strategies for organizational growth changes the organizational design that was previously used by the company. An organization can decide to adopt a tall structure of organizational design, to prevent wastage of resources. Another aspect affected is organizational culture. The acquisition that Tesla made at its acquisition brought restructuring in the company, by creating new departments and conglomerates. Organizational culture is widely affected by organizational change. Indeed, organizational culture includes the formal and informal institutions that form the daily operations of the organization.
Organizational cultures are meant to form strong employee relationships that are deemed essential for successful harmony among economic actors (Elsmore, 2001). For example, the arrival time of employees and walking styles are part of the organizational culture. Recreational practices and reporting relationships form the greater part of the organizational structure. During an organizational change, organizational culture is widely affected. Principally, organizational culture dictates the rate at which change is incorporated into the organization. Sometimes, culture is resistant to change and thus forms the biggest challenge in instituting organizational change.
In this accord, cultural change in an organization calls for distinct steps, to avoid resistance to change from individuals in the organization. First, making sure that there is a clear strategic vision is the most important step (Graetz, 2006). Some employees will be hostile to change if they don’t have a set goal or vision in mind and it is essential for the management to communicate the vision to the organization at large. The set vision also ensures that the magnitude of change is in a manageable state, and that change instituted conforms to the strategic goals of the organization (Elsmore, 2001). Furthermore, the top management of the organization should portray their utter commitment to the welfare of the organization, in accord to the imminent changes.
Furthermore, managers act as role models to the organizational labor force at its important for employees to feel the commitment to the changes and embrace the improvement of organizational welfare (Ott, 1989). Cultural change in the organization should also be instituted from the highest levels, where the organizational system depicts a reliable network of individuals ready to welcome change. In severe resistance to change, the organization may opt to eliminate figures or individuals within its fold who are resistance to change, and have a wide influence over other employees.
Resistance to change depends on some factors, which fuels the prevalence of resistant individuals. For example, some employees and other players in an organization may have fixed mindset, which prevents them from thinking outside the box, and this is dangerous for development. The existence of individuals with fixed cognition can be achieved through creating awareness of the importance of change. Creation of awareness is done in some ways. For example, education and communication are reliable strategies to reduce the prevalence of preset cognition in the worker. Some individuals are afraid of change, simply because they are not aware of the implications of the changes to be instated (Graetz, 2006). Upon education, researchers have established a reduction of rigidity to change and have thus recommended organizations to adopt the education and combination for organizational change resistance scenarios.
Moreover, the leaders of the organizational change should facilitate organizational change, by manipulating various elements in the organization to facilitate change (Waddell & Worley, 2011). Manipulations can occur in the form of providing funding and acting as role models for the employees. Therefore, the process of creating change in the organization is dependent on the awareness of the change that is instilled in employees of the organization.
Principally, changes are not allowed into an organization if the negative implications surpass the positive implications (Ott, 1989). Therefore, the diagnosis outcomes must be weighed for managers to make a sound decision on the information inferred. After inference, the design and implementation stage takes effect, with the aim of the instituting the actual change. The design and implementation stage is the most uncertain stage, as the full impact of the resistance to change falls under this stage. Planned changes in an organization usually have contingency steps which can help to avert loss in the process of change (Waddell & Worley, 2011).
Conclusion
In conclusion, organizational; change is highly unpredictable, even in the case of planned changes (Ott, 1989). The uncertainty is brought about by the dynamic business environment, which requires sound strategic management. The organizational change affects not only the business entity in subject but also other economic actors who are part of the business chain of the organization. Organizational changes in automotive Tesla company do not only affect the business, but also customers, suppliers, and other market forced implied (Diaz, 2016).
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