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The break even analysis of Tesla motors has taken a turn to recover from there losses.I work for company that services their leases and due to business needs they have terminated our contract but reading this article looks like Tesla may have turn around.

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Tesla is Very Close to Break-Even Point - Summary

¤ Tesla's Model 3 car production is within a few hundred units per week of achieving a break-even level.

¤ Tesla needs to produce over 3,814 Model 3 cars per week for its automotive segment and operating expenses to break even.

" At this level, it covers its cost of revenue from its automotive segment plus operating expenses.
" Tesla requires $5,736,521,611 per quarter or $441,270,893 every week in car sales to break even.
" This includes revenues from the automotive segment.

¤ Tesla needs to produce 5,575 Model 3 cars per week for its automotive segment, operating expenses, and interest expenses to break even.

" At this level, it covers its cost of revenue from its automotive segment, operating expenses, and interest expenses.
" Tesla requires $6,550,829,974 per quarter or $503,909,998 every week in car sales to break even.
" This includes revenues from the automotive segment.

¤ Tesla needs to produce 4,946 Model 3 cars per week for the automotive segment, the leasing segment, operating expenses, and interest expenses to break even.

" At this level, it covers its cost of revenue from its automotive and leasing segments, operating expenses, and interest expenses.
" Tesla requires $6,100,418,549 per quarter or $469,262,965 every week in car sales to break even.
" This includes revenues from the automotive and the leasing segments.

¤ Tesla needs to produce 8,974 Model 3 cars per week to break even with all expenses.

" At this level, it covers its cost of revenue from all segments, operating expenses, and interest expenses.
" Tesla requires $8,982,805,482 per quarter or $690,985,037 every week in car sales to break even.
" This includes revenues from all segments.

¤ Tesla could temporarily increase its production of Model S, Model X, and battery energy products to contribute revenue for reaching a break even level.

¤ The operating expenses: sales, general, administration, research, and development expenses are covered only partially by the current level of sales. Reaching a break-even level will cover these operating expenses.

¤ In the last quarter, cost of goods sold increased faster than sales which made it more difficult to reach a break-even point. It needs to reduce and bring back in line its costs of goods.

¤ Strategically, reaching any break-even level of sales will allow Tesla the opportunity to turn its attention into building up its battery factory, designing and developing the next vehicle models, and expanding its infrastructure for energy storage.

" Covering its automotive revenue cost and operating expenses is critical, and Tesla is about to achieve this.
" The leasing and energy segments' costs are covered by their revenue.
" The automotive segment and "services and other" costs are not covered by their revenue.
- The size of the automotive segment is so large relative to the other segments that covering its cost of revenue is essential.
" The interest expense is manageable at the moment from available cash.

What is break even? The Financial Times defines break-even point as:

"the point in a company or product's development at which revenue equals cost, and neither a profit nor loss is made. Breakeven analysis attempts to locate the breakeven point in a company's operations and calculate the impact on profit of changes in output, costs and selling price."

Another useful and straightforward definition is provided by Investopedia, which defines it as such:

"BREAKING DOWN 'Break-Even Analysis' -. Break-even analysis is useful in the determination of the level of production or in a targeted desired sales mix. The analysis is for management's use only as the metric and calculations are often not required to be disclosed to external sources such as investors, regulators or financial institutions. Break-even analysis looks at the level of fixed costs relative to the profit earned by each additional unit produced and sold. In general, a company with lower fixed costs will have a lower break-even point of sale. For example, a company with $0 of fixed costs will automatically have broken even upon the sale of the first product assuming variable costs do not exceed sales revenue. However, the accumulation of variable costs will limit the leverage of the company as these expenses are incurred for each item sold."

The following table provides a dollar value of the breakeven point of $5,736,621,611. This is Tesla's required revenue of all cars to reach breakeven, and notice that this narrow definition of breakeven includes covering only the cost of car sales and operating expenses. These by the way are the company wide operating expenses.

The table below shows the latest quarterly income statement for Tesla. As can be seen, using some basic assumptions, the current car sales are less than half of the necessary sales to achieve a break-even point. The revenue includes 8,182 Model 3 cars delivered during the quarter. This is equivalent to delivering about 630 Model 3 cars per calendar week.

However, as will be shown below, the company is currently producing approximately 3,500 Model 3 cars per week. This means that production has increased 4.7 times per week from last quarter. At this rate, it would produce at least 45,500 Model 3 cars per quarter.

This also means that, during the first quarter of 2018, the Model 3 was not really pulling its weight to make up for all the resources committed to its production, but that at a current production rate of 3,500 Models 3 cars per week, it can start making up for this slack, and with a near-term outlook of significantly increasing production each week, this will become even more obvious.

Tesla's income statement (in thousands in the above table) presented a loss of $784,627,000 (highlighted in yellow) at the end of the first quarter of 2018, and this is a larger loss than the one shown above for operating expenses.

Tesla has four main revenue segments or divisions. These are automobile sales, automobile leasing, energy generation and storage sales, and services and other sales. Of these four revenue segments, I have chosen to concentrate only on the first one. That is to say, I will examine in the following discussion only the automotive sales segment.

If I examine only the automotive sales segment, then this raises the question: How many Model 3 cars are needed to cover at a minimum its operating expenses?

Based on the most recent financial data released by Tesla, it appears that the company is quite close to achieving a break-even level. The following analyzes this possibility based on the company's latest financial statements.

Tesla made the following statement:

" Demand for our flagship Model S and Model X vehicles remains very strong. After all-time record orders in Q3 and Q4 2017, we had our highest ever Q1 for orders. With demand exceeding supply, we are making considerable progress with margin improvement. In Q1, we produced 24,728 Model S and X and 9,766 Model 3 vehicles, and delivered 21,815 Model S and Model X vehicles and 8,182 Model 3 vehicles, totaling 29,997 deliveries. Short-term operational and logistical issues led to an increase in the number of Model S and Model X vehicles in transit to customers at the end of Q1. Model 3 net reservations, including configured orders that had not yet been delivered, continued to exceed 450,000 at the end of Q1 even though fewer than 20 stores worldwide had Model 3 on display. We are planning to deploy significantly more Model 3 vehicles in our stores in Q2 this year."

This statement is actually quite helpful. If I concentrate only on actual production, I know that Tesla produced about 12,364 Model S as well as 12,365 Model X. In addition, it produced 9,766 Model 3. I also know that based on other statements, Tesla does not intend to produce higher numbers of Model S or Model X this year compared to last year.

" Consequently, Model S and X deliveries in Q2 will likely be similar to Q1 but should pick up considerably in Q3 to achieve our goal of 100,000 deliveries for the full year."

Therefore, the combined number of Model S and Model X vehicles will be about 25,000 cars per quarter, which is quite close to what they produced this last quarter.

From the previous revenue break-even analysis and these two statements from Tesla, it is quite obvious that revenue will have to increase to break even, and the increase in revenue will be dependent on Model 3 production. Moreover, the Model 3 itself will only be available at price points above $35,000 since the standard model is not for sale until late in 2018 or early 2019.

" It appears that an hour after Tesla's Q4 2017 earnings call ended, the company began notifying Model 3 reservation holders that the entry level version of the car - the one with the 'standard battery' and rear wheel drive - won't be ready for delivery until late this year or early next year."

To figure out the number of Model 3 cars necessary to break even, this too is helpful since it provides a floor on pricing. The portion referring to production volume,also has a floor of 9,766 Model 3 cars.

The task at hand is to figure out how many Model 3s and at what average sales price will Tesla break even. What is the range of possible prices for a Model 3? The basic model is $35,000, and the most option model is the performance package with Autopilot and full self-driving options for $86,000. However, since the base model is not available, the next lowest available price option is the long range (310 miles) battery trim with the premium package. This is available for $49,000 if you don't choose a color other than black or the larger tires and rims.

What are the production constraints for the Model 3? Currently, the Model 3 is being produced at a rate of about 500 units per day or 3,500 units per week. However, in about one month, it will be produced at a rate of 5,000 per week, and eventually, 10,000 will be produced per week.

" Once we hit the 5,000 per week milestone, we intend to incorporate our learnings to continue to increase output on our existing manufacturing lines beyond 5,000 units per week, and then in a capital efficient manner to add incremental capacity to ultimately get to a 10,000 unit weekly rate."

At the current level of production, Tesla can almost (difference between 3,814 and 3,500 - see below) produce enough cars if it can get demand at the required prices. At the expected average sales prices (shown below), Tesla could also temporarily benefit by increasing production (not shown) of Models S & X.

Why is this relevant? Depending on actual delivered volumes and average selling prices, Tesla might be either slightly positive or slightly negative at the end of next quarter (the 2nd quarter). Keep in mind that the scenarios contemplated here mean that revenue is equal to cost. Assuming that the following quarter (the 3rd quarter) Tesla increases production of Model 3 cars to 5,100 cars per week, the average selling prices could be slightly lowered and still break even (covering only operating expenses):

Between the end of the year and next year expected production will expand even further:

Note that at these higher volumes, the price constraint on Model 3 becomes less relevant. In fact, all three models could be sold at the lowest permissible prices, or looked at from another perspective, higher prices will bring in profits.

The Model 3 is a vehicle using more automation than other manufactured cars. This lowers the cost of labor when implemented well. Tesla has a high degree of vertical integration, such as building its own car seats, battery chargers, electric motors, batteries, and battery modules. In addition, it produces the major components of the chassis through stamping processes, it assembles all major car components, it welds major car sections together, and it paints. In addition, it designs and writes most of its own car software.

" Tesla's vehicles are produced at its factory in Fremont, California, where the vast majority of the vehicle's components are also made."

In addition, electric cars in general have about 98% fewer moving parts than cars with an internal combustion engine. This lowers the cost to manufacture them. As economies of scale take place, the average sales price of an electric car will come down by 71% by the year 2021 compared to 2016 to around $20,000 per car, some analysts predict.

This can already be seen at Tesla. The previous car sedan had a labor cost of $4,000 per car; whereas the latest model, the Model 3, has a labor cost of $1,000. This is one of the reasons that achieving a 25% profit margin on the Model 3 car is probable.

Tesla also sells directly to the public. Most manufacturers discount the MSRP by about 15%. This in the long run will benefit Tesla's cost structure. In addition, Tesla does not buy advertising. This further lowers its cost structure.

Automation, vertical manufacturing integration, software design, a lower number of moving parts, direct sales, a policy of no paid advertising, and economies of scale are some of the reasons that the break-even level can be achieved sooner rather than later, and once reached, it allows for profits to accumulate in a rather short period of time.

Tesla's goal is to reach a weekly production level of 10,000 by the end of 2018 or sometime in 2019. At this level of production, if the average sales price of the Model 3 is reduced to somewhere between $35,000 and $48,000, then the company is producing more than the necessary weekly production to break even, and it is then making profits.

All of this effort will slowly result in competitive economies of scale. This allows selling a product at lower prices while at the same time permitting a company to produce them profitably.

Further down the line, this could open up a new realm of possibilities for Tesla. Namely, given a robust enough level of production, it might allow Tesla at some point in the future to lower the ASP under $35,000 and still maintain an adequate level of profit.

This would allow Tesla to expand its market share by reaching out to customers unable to purchase its more expensive models. It will maintain its market share by creating a barrier to entry for other manufacturers too timid to invest the necessary resources for marketing quality electrical vehicles.

The above discussion should be of interest to different stakeholders. To Tesla's employees, it should provide confidence in the future of their place of work; to investors, it should provide confidence in holding bonds or shares in the company; to customers, it should provide confidence in obtaining future support for their car; and to local governments, it should provide peace of mind that the local economies where Tesla is based will prosper.

I hope this discussion on Tesla's break-even level has been of help in providing an evaluation of the current financial situation for Tesla.

Sincerely,
Eric Kosak
Disclaimer: I have, sadly, no positions in the stock of this company. The above is not a recommendation for investment. If you seek investment advice consult with a professional, and if you do invest, then do it wisely and without allowing the loss of any of your investments to injure you financially. Remember that money invested in the stock, bond, option, futures, and real estate markets can and might go to zero.
Appendix I.

There is a useful formula to figure out break-even units. Investopedia's formula for breakeven is:

If I had used this formula, ideally, it could have provided a more exact and more convenient way of calculating the number of car units required to achieve break even.

In practice, not enough information is actually known regarding the variable cost per unit or the fixed cost pertaining to the automobile segment. In addition, there is too much uncertainty regarding the average retail price per car. For instance, which are the more popular options requested by a majority of buyers, and how does this affect the average sales price?

This last point requires an estimate of the percent of sales going with the different options available per each of the three car models. Honestly, I did not have a good source of information for all of this. For this reason, this paper is a compromise based on accessible, readily available information to potentially determine the break-even level.

3 possible cases:
Total cost > Total revenue (incurs losses)
Total cost < Total revenue (makes profit)
Total cost = Total revenue @ break even

Definition:

@ break even:

Total cost = Total revenue Why? No profits are being made; however, there are, also, no losses. Revenue equals costs.
Total revenue − Total cost = 0
Total cost − Total revenue = 0

Therefore:

Total revenue = Total variable costs + Total fixed costs
Total revenue − Total variable costs − Total fixed costs = 0

Allow SG&A + R&D from the income statement to be the fixed costs.

Total fixed costs = SG&A + R&D

The main cost of goods sold is due to the Model S, Model X, and Model 3.

Allow the cost of Model S, Model X, and Model 3 to equal to cost of goods sold (0.75 + y).

75% is due to Model S and Model X. The rest is due to Model 3.

Total variable costs = Cost of goods sold (0.75 + y)

Total variable costs = Cost of goods sold * 0.75 + Cost of goods sold * y

Total cost = Total variable costs + Total fixed costs

Total revenue = Total variable costs + Total fixed costs

Total revenue = (Cost of goods sold * 0.75 + Cost of goods sold * y) + (SG&A + R&D)

Total revenue - SG&A - R&D - (Cost of goods sold * 0.75 + Cost of goods sold * y) = 0

Also,

Total revenue = Model S sales + Model X sales + Model 3 sales

Therefore,

Model S sales + Model X sales + Model 3 sales - SG&A - R&D - (Cost of goods sold * 0.75 + Cost of goods sold * y) = 0

Model S sales = Model S ASP * Model S volume

Model X sales = Model X ASP * Model X volume

Model 3 sales = Model 3 ASP * Model 3 Volume

Where ASP is the average selling price:

Model S ASP * Model S volume + Model X ASP * Model X volume + Model 3 ASP * Model 3 Volume

Model S ASP * Model S volume + Model X ASP * Model X volume + Model 3 ASP * Model 3 Volume - SG&A - R&D - (Cost
of goods sold * 0.75 + Cost of goods sold * y) = 0

Allow the weighted average sales price of Model S and Model X to be $121,627

Allow the following as well:

(Model S ASP + Model X ASP) = $121,627

Model 3 ASP = $55,045

Model S volume + Model X volume = 24,728

Model 3 Volume = X

Model S ASP * Model S volume + Model X ASP * Model X volume + Model 3 ASP * Model 3 Volume - SG&A - R&D - (Cost
of goods sold * 0.75 + Cost of goods sold * y) = 0

(Model S ASP + Model X ASP) * volume + Model 3 ASP * Model 3 Volume - SG&A - R&D - (Cost of goods sold * 0.75 +
Cost of goods sold * y) = 0

($121,627) * 24,728 + $55,045 * Q - SG&A - R&D - (Cost of goods sold * 0.75 + Cost of goods sold * y) = 0

@ breakeven
Total revenue = Cost of goods sold * 0.75 + Cost of goods sold * y + SG&A + R&D
Total revenue − Cost of goods sold * 0.75 − Cost of goods sold * y − SG&A − R&D = 0

Allow the break even revenue as developed before to be $5,736,521,611.
Allow the automotive cost of revenue to be $2,091,397,000.
Allow the operating expenses to be $1,053,500,000.

Solving for y:

$5,736,521,611 − Cost of goods sold * 0.75 − Cost of goods sold * y − SG&A − R&D = 0
$5,736,521,611 − Cost of goods sold * 0.75 − Cost of goods sold * y − SG&A - R&D = 0
$5,736,521,611 − $2,091,397,000×0.75 − $2,091,397,000 * y − $1,053,500,000 = 0
$5,736,521,611 − $1,568,547,750 − $2,091,397,000 * y - $1,053,500,000 = 0
$5,736,521,611 − $2,622,047,750 - $2,091,397,000 * y = 0
$3,114,473,861 - $2,091,397,000 * y = 0
$3,779,236,224 = $2,091,397,000 * y
1.4892 = y

Solving for X:

($121,627) * 24,728 + $55,045 * X - SG&A - R&D - (Cost of goods sold * 0.75 + Cost of goods sold * 1.807) = 0
($121,627) * 24,728 + $55,045 * X - SG&A - R&D - Cost of goods sold * ( 0.75 + 1.4892) = 0
($121,627) * 24,728 + $55,045 * X - SG&A - R&D - Cost of goods sold * ( 2.2392) = 0
$55,045 * X = -$3,007,592,456 + SG&A + R&D + Cost of goods sold * ( 2.2392)
$55,045 * X = -$3,007,592,456 + $1,053,500,000 + $2,091,397,000 * ( 2.2392)
$55,045 * X = -$3,007,592,456 + $5,736,556,162
$55,045 * Q = $2,728,963,706
Q = 49,577

To cover the costs of revenue and the operating expenses of Tesla, 49,577 Model 3 cars need to be manufactured per quarter. This is equivalent to 3,814 Model 3 cars produced every week for 13-weeks. This is the same as shown before.

Appendix II - What are services and other revenue?

II. What are services and other revenue?

"Services and other revenue consists of repair and maintenance services, service plans, merchandise, sales of used Tesla vehicles, sales of electric vehicle components to other manufacturers and sales of non-Tesla vehicle trade-ins. There were no significant changes to the timing or amount of revenue recognition as a result of our adoption of the new revenue standard."

* Repair and maintenance services
* Service plans
* Merchandise, sales of used Tesla vehicles
* Sales of electric vehicle components to other manufacturers
* Sales of non-Tesla vehicle trade-ins.

"Revenues related to repair and maintenance services are recognized over time as services are provided and extended service plans are recognized over the performance period of the service contract as the obligation represents a stand-ready obligation to the customer. We sell used vehicles, services, service plans, vehicle components and merchandise separately and thus use standalone selling prices as the basis for revenue allocation to the extent that these items are sold in transactions with other performance obligations. Payment for used vehicles, services, and merchandise are typically received at the point when control transfers to the customer or in accordance with payment terms customary to the business. Payments received for prepaid plans are refundable upon customer cancellation of the related contracts and are included within customer deposits on the consolidated balance sheet. Deferred revenue related to services and other revenue was immaterial as of March 31, 2018 and December 31, 2017."

Tags: Tesla, Tesla automotive cost of revenue, Tesla automotive profit, Tesla cost of revenue, Tesla financials, Tesla Model 3 cost of revenue, Tesla Model S cost of revenue, Tesla Model X cost of revenue

About the Author

Eric Kosak I live in a magical time of science and technology in which Merlin himself would be amused. I am just learning about it. A goal of mine for many years has been to learn and understand as much as I can about it, and, yet, everyday I find out something new. I hope I can share this. I believe in being independent; therefore, I enjoy reading on a variety of things. For instance, what can I do to improve the energy consumption of my house? How can I reduce the negative impact on my health due to the things I buy and do? Can I improve my life by choosing one type of energy over another? How can I repair a leak in my bathroom? What do I need to do to grow my own vegetables? To improve the world, my mom always says, we start at home. I have learned that to succeed at something I must fail many times, and with each failure I learn something, and I also try to live by the golden rule of doing unto others as I would like them to do unto me.

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Tesla On The Verge Of Costs & Revenues Breaking Even

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Tesla is Very Close to Break-Even Point - Summary ¤ Tesla's Model 3 car production is within a few hundred units per week of achieving a break-even level. ¤ Tesla needs to produce over 3,814 Model 3 cars per week for its automotive segment and operating expenses to break even.

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The just in time process is a great business plan. I thought this video helped under the process of how this system works and the benefits.

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Just in Time by Toyota: The Smartest Production System in The World

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For me, continuous improvement is the practice of periodically reexamining and changing the way you work to reduce three types of wastes: costs, time and mistakes.

Continuous improvement is not just a practice, it's a set of values. To continuously improve, you have to humbly search for your own skills and blind spots.

You have to respect and honor the views and insights of your employees and your partners. Everyone has thoughts or ideas about how to make your work faster, cheaper or better.

You have to devote whatever resources, time or money you can to assessing how you work and figuring out how to do it better.

Here's how to put this model into practice for your business.

Identify an area of your business that has many steps, seems to take too long, or often produces errors. Map out the process of how that thing gets done.

For instance, dentists can study how their hygienists inspect and clean teeth. Restaurant owners can study how a server takes an order and delivers the order to the kitchen. Bakery owners can study how their employees make a cake.

The map you make should be big and visual so that its patterns and its details are clear. Plan how you can alter, shorten or consolidate steps. Execute the plan for adjusting the process. Review how the new process is working and change it again if needed.

And finally, do it all over again for a different part of your business.

Make sure you involve your staff in the continuous improvement process. Not only does it enable you to benefit from their experience, but it also makes them more invested in the success and outcome of your business.

Continuous improvement is a constant, never-ending fight to do things better today than you did yesterday. It's a key ingredient for running a healthy and thriving business.

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Strategies for improving business processes

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For me, continuous improvement is the practice of periodically reexamining and changing the way you work to reduce three types of wastes: costs, time and mistakes. Continuous improvement is not just a practice, it's a set of values. To continuously improve, you have to humbly search for your own skills and blind spots.

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The areas that Wells Fargo is focusing on to increase production in the work place and increase business. The company I am working at is back by Wells Fargo banking I found this article very informative.

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How to Motivate Employees & Employee Training - Wells Fargo

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Learn how employee training and open communication can improve employee retention.

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The IS systems is Management Systems to help with the Organization with different levels regarding management levels to polices and strategic plans to help develop better organization.

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Real-life Example of Maslow's Hierarchy of Needs

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This is study of our human needs.

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Vroom's expectancy theory of motivation it explains people's motivation based on three factors which include expectancy, instrumentality and valence.

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The Fiedler's theory measures the  effective leadership style , identify the situation and determines the leadership style.I loved the study of Fiedler's theory made me look at areas I need improvement in.

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Fiedler's Theory

Have you ever wondered why some managers really get to know their employees and others focus only on getting the job done? Fiedler's contingency theory will help to explain why managers can behave so differently. Fiedler's contingency theory contends that there is no one single leadership style that works for all employees. He recognized that there are situational-contingent factors that affect a leader's ability to lead. The effectiveness of workers depends on how good a match exists between the leadership style of the leader and the demands of the situation. There are two factors that result from this: leadership style and situation favorableness (or situational control).

Leadership Style

Leadership style is determined by rating a leader's least preferred co-worker on the least preferred co-worker (LPC) scale. A leader is asked to rate someone he or she least liked working with (presently or in the past) on a scale of 1-8 in the following areas:

Unfriendly/friendly

Uncooperative/cooperative

Hostile/supportive

Guarded/open

The leader tallies up the score. This test is not about how horrible the least preferred co-worker was to work with. It is about the leader's behavior towards the co-worker. The leader who scores high is most likely relationship oriented. These high LPC leaders like to build relationships with employees. They are more likely to avoid conflict. They also are better equipped to make complex decisions.

The lower-scoring LPC leader is task oriented. This leader is more interested in assigning duties and getting the work done. This leader does not care much about building relationships. A high LPC leader is capable of leading a team in a favorable situation, while a low LPC leader can lead a team in both favorable and unfavorable situations because the low LPC leader focuses on tasks rather than on relationships.

The essential element of this theory is that there are different leadership styles for different situations. The style of leadership is contingent upon the particular situation. So, if the situation is fast decision making, the high LPC leader fares well. If the situation is high production, the low LPC leader is better equipped to handle that because that leader does not care much about whether the employees like what he or she is doing. Once a leader determines his or her leadership style, the situational control needed for a particular situation must be determined.

Three Dimensions of Situational Favorableness

Situation favorableness occurs when the three dimensions - leader-member relations, task structure, and leader position power - are high.

Leader-member relationships refer to the degree of trust, respect, and confidence that exists between the leader and the workers. Task structure refers to the degree to which tasks are clearly explained and structured for workers. Leader position power refers to the degree to which the leader possesses inherent power in his or her position.

If employees and the leader have trust, respect, and have confidence in each other, there are clear and structured tasks, and the leader possesses formal authority in his position, the situation is considered favorable. Let's look at a few examples of how each dimension works.

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fiedler's contingency theory & a leader's situational control - video & lesson transcript | study.com

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Fiedler's Contingency Theory & a Leader's Situational Control - Video & Lesson Transcript | Study.com

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Have you ever wondered why some managers really get to know their employees and others focus only on getting the job done? Fiedler's contingency theory will help to explain why managers can behave so differently. Fiedler's contingency theory contends that there is no one single leadership style that works for all employees.

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The process of directing the behavior of other toward accomplishments to lead is a example of a leader.

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In our article, What's the Difference Between Leadership and Management? we outlined the differences between a leader and a manager. To briefly summarize, people follow managers because they must. People follow leaders by choice-and, it's ideal for one person to have both qualities. In this article, we'll discuss the qualities of great leaders and great managers.

Qualities of a Great Manager

#1. Expect excellence

It is important for a manager to set high yet realistic standards, and expect employees to meet them. Ultimately, the best managers are not those who are the nicest or the toughest, but those who get things done and demonstrate tangible results. Once employees understand that a manager expects excellence-not only their own, but that of others-they will likely begin to up their game and perform better.

#2. Communicate regularly by providing meaningful feedback in real time

At first, communicating effectively may sound a bit trite, but it is fundamental to sound management. The best and strongest managers are those who are excellent communicators. The ability to provide both positive and negative feedback is a core skill and competency for managers.

#3. Don't avoid conflict, but deal with it directly and fairly

Every professional knows that the workplace is a breeding ground for conflict. Issues like compensation, interpersonal problems, cost-cutting, recognition, management-employee relations, layoffs, and many other points of conflict are bound to arise. There is never a shortage of molehills to create mountains out of.

Though it is tempting to turn a deaf ear, the best managers do not avoid conflict and instead address any issues that arise fairly. Employees observe takes responsibility and who doesn't.

They are likely to show more respect to those managers who resolve issues immediately than those who ignore the problem or don't act quickly.

#4. Be open to new ways of looking at things

Adaptability, flexibility, and being attuned to their environment are some of the qualities of a good manager. They always look for new opportunities by listening to what others have to say. It is important to be a good listener, no matter your role. That said, it's quite common for, the best process improvement ideas come from employees who are relatively low in the organizational hierarchy. A good manager is never afraid to shift from the usual "This is the way we've always done it here."

#5. Accept that you still have a lot to learn

Once they have attained a management position, managers sometimes forget that they are in the process of learning, too. You may have expertise in their field with years of experience, but keeping your mind open to new ideas is important. Professional advancement is fueled by a constant learning process-and once a manager accepts this and sets continuous improvement as a standard, they become a better manager than before.

#6. Set a good example

If a manager has an insular mentality, they may struggle to understand subordinates and face difficulty in making them abide by the rules. The same professionalism, commitment, and dedication that the manager demands from his juniors need to be upheld by him, as well.

#7. Be decisive

It is important for a manager to make decisions and stick to them. Employees are generally not comfortable with someone who constantly changes their mind on issues. A confident manager is one who does not fear being wrong. The best managers use bad situations as learning curves and as examples of what not to do. Employees are generally repelled by those employers who are in denial of the repercussions of the decisions that have been made by them.

#8. Be patient with yourself

Being able to develop strong skills leading and managing takes time. Keep in mind all of the above tips. Talk to more people who have been in the role, and learn from them. This will improve your skills as a manager.

Tips To Be A Good Leader

#1. Be humble

There is a huge difference between being a leader and being a boss. A leader is someone who usually shares the spotlight and credits followers for the work that they have done as a team. It takes more confidence to be humble than in basking in the glory of accomplishment. Clients and employees appreciate humility, and leaders who give credit where credit's due!

#2. Lead by example

It is important for leaders to lead by example. They cannot be hypocrites. If a leader wants subordinates to be punctual, they themselves will need to establish the habit of being punctual. Leaders need to set the tone and the followers will be inspired to follow, automatically.

#3. Communicate effectively

As with managers, leaders need to be able to effectively communicate as well-both on and off the job. Along with being heard and understood, great leaders also know the importance of listening. Leaders understand that communication is a two-way street.

#4. Know your limits

It is important for leaders to set limits for themselves. Leaders need to know what and how much they can tolerate, saving the entire office bucket loads of frustration. Keeping clear boundaries helps prevent any sort of confusion.

#5. Keep meetings productive

Time is money! Avoid tangential discussions and other sources of unproductivity during meetings. Leaders need to trust their team to do their job right-with no need for micromanagement.

#6. Be emotionally aware

It's a common piece of advice to keep all kinds of emotions out of the office. However, it is forgotten that business is more about the relationships between people. And to build and nurture lasting relationships a good leader has to be emotionally intelligent.

#7. Never stop improving

Great leaders are constantly learning and updating their knowledge. They never stop. They continually work to improve themselves and be better. There is always a new skill to master or a new project to work on. Great leaders keep their mind open for new possibilities and fresh ideas.

Differences Between Leadership and Management

Managers and leaders are both important-and you can hit a professional jackpot by being great at both. You'll learn management and leadership techniques in Simplilearn's Project Management Certification Training.
Simplilearn

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Qualities of Great Leaders and Great Managers

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In our article, What's the Difference Between Leadership and Management? we outlined the differences between a leader and a manager. To briefly summarize, people follow managers because they must. People follow leaders by choice-and, it's ideal for one person to have both qualities. In this article, we'll discuss the qualities of great leaders and great managers.

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This is a test that measures self awareness, self motivation, self-regulation and empathy for others.I have taken this course and it was a great assessment of areas to focus on in management field.

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For decades, a lot of emphasis has been put on certain aspects of intelligence such as logical reasoning, math skills, spatial skills, understanding analogies, verbal skills etc. Researchers were puzzled by the fact that while IQ could predict to a significant degree academic performance and, to some degree, professional and personal success, there was something missing in the equation. Some of those with fabulous IQ scores were doing poorly in life; one could say that they were wasting their potential by thinking, behaving and communicating in a way that hindered their chances to succeed.

One of the major missing parts in the success equation is emotional intelligence, a concept made popular by the groundbreaking book by Daniel Goleman, which is based on years of research by numerous scientists such as Peter Salovey, John Meyer, Howard Gardner, Robert Sternberg and Jack Block, just to name a few. For various reasons and thanks to a wide range of abilities, people with high emotional intelligence tend to be more successful in life than those with lower EIQ even if their classical IQ is average.

This emotional intelligence test will evaluate several aspects of your emotional intelligence and will suggest ways to improve it. Please be honest and answer according to what you really do, feel or think, rather than what you think is considered right in this test. Nobody is there to judge you, just yourself...and besides, there are many trick questions.

Read every statement carefully and indicate which option applies best to you. There may be some questions describing situations that you may feel are not relevant to your life. In such cases, select the answer which you would most likely choose if you ever found yourself in such a situation.

After finishing this test you will receive a FREE snapshot report with a summary evaluation and graph. You will then have the option to purchase the full results for $9.95

This test is intended for informational and entertainment purposes only. It is not a substitute for professional diagnosis or for the treatment of any health condition. If you would like to seek the advice of a licensed mental health professional you can search Psychology Today's directory here.

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For decades, a lot of emphasis has been put on certain aspects of intelligence such as logical reasoning, math skills, spatial skills, understanding analogies, verbal skills etc. Researchers were puzzled by the fact that while IQ could predict to a significant degree academic performance and, to some degree, professional and personal success, there was something missing in the equation.

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The subsystems are a group employees who work together to complete a project.

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What Are Organizational Subsystems?

An organizational subsystem is a group of employees who come together for a single work-related purpose that functions within the larger organizational system. There are many types of familiar organizational subsystems. These may include programs, projects, departments, teams and so on. They could also be informal collections of workers who decide to work together in certain activities in the company.

It's important to identify these groups so you can establish a better organizational structure that is capable of managing activities down to the lowest level.

How Subsystems Are Structured

These subsystems have their own formal and informal rules, communication flow and structure. They also include certain processes, which may or may not be well defined, as well as the people behind them. The business's efficiency as a whole is a reflection of the efficiency of its subsystems. With the proper flow of communication, workplace structure and office culture, a system can easily distinguish itself from others and lead in performance.

Ultimately, this is determined by the subsystems within that system, which have their own structures and cultures.

Types of Organizational Subsystems

There are many types of subsystems, going by different names. Two of the most common are departments and divisions. These are typically built into the organizational chart of the company. Retailers usually have departments for the different products they sell or the different regions where they operate.

Manufacturers, on the other hand, have divisions representing the different facilities and production processes at their factories. Another common subsystem is a project or a work team, which is a group of people working on project or activity in a specific area related to their work.

There are also informal subsystems. These aren't defined by the company's organizational chart and aren't always permanent. They could just be a short interaction between employees from different projects or departments that are trying to solve a common problem. Even social interactions can be considered subsystems if they directly affect the workflow of the organization.

How Organizational Subsystems Can be Planned

The first step is to create an organizational chart and locate the particular subsystem within that chart, even it means giving it a new branch of its own. You can then define its objectives, processes, strategies and workflow. These should align with the overall objectives, strategies and workflow of the larger organization. Allocate resources to this subsystem based on its objectives and its importance within the greater organizational system.

How to Get Organizational Subsystems to Function Effectively

Remember that the success or failure of the entire organization depends on its culture, strategies, objectives and processes. This, however, depends on the culture, strategies, objectives and processes of the organizational system's subsystems. These subsystems need to be directed just as much as the overall system and to be granted relevant cultures and objectives that align with those of the company as a whole. Each subsystem will tend to develop its own rules and culture, which contribute to its functioning, but they must also contribute to the overall success of the organization.

The accounting arm, for example, will likely encourage strict accuracy and quality control and have its own unique policies and controls that contribute to the success of the company as a whole.

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Organizational subsystems are groups of employees who work together as teams, temporarily or permanently, to complete a project or projects in an organization. These subsystems could be known as teams, departments, projects or programs. The groups must be identified for organization.

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This is an example of different assessment test given to employees when looking for job.

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Bank of America did not follow Equal Employment Opportunity Commission which  caused negative publicity and a  lawsuit. This article showed the  importance of following EEOC or possible impact om company.

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Deaf Employee Was Denied a Sign Language Interpreter, Federal Agency Charged

Bank of America, N.A. will pay $30,000 and furnish other relief to settle a disability discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today.

According to EEOC's suit, Bank of America unlawfully denied a reasonable accommodation to a more than 12-year, deaf employee, who worked at a Bank of America vault location in Las Vegas. Rather than communicate with the employee using a sign language interpreter, the employee's managers and supervisors used other ineffective communication methods, such as writing notes, which were not understandable to him.

Discriminating against an employee or job applicant due to their disability violates the Americans with Disabilities Act (ADA). The EEOC filed suit in September 2013 ( EEOC v. Bank of America Corporation, et al., Case No. 2:13-cv-01754-GMN-VCF) after first attempting to reach a pre-litigation settlement through its voluntary conciliation process.

In addition to monetary relief, Bank of America also agreed to injunctive relief to ensure a dedicated accommodations team properly engages in the interactive process and effectively provides reasonable accommodations to deaf employees. Bank of America agreed to train its accommodations team on the requirements of the ADA as it pertains to deaf employees. The company also agreed that its training would address issues involving the specific communication needs of deaf employees on the job and that each deaf employee will have different communication abilities and methods available to them.

"Employers must be mindful of the diversity that exists in the deaf community in order to ensure deaf employees are properly accommodated," said Anna Park, regional attorney for EEOC's Los Angeles District. "Rather than take a 'one-size-fits-all' approach, employers need to ensure individualized accommodations are explored and implemented to respond to the specific needs of the requesting employee."

Richard Burgamy, local director for EEOC's Las Vegas Local Office, said, "We continue to see employers fail to properly engage in the interactive process. We encourage employers to provide all employees with disabilities appropriate reasonable accommodations to ensure they enjoy the equal employment opportunities to which they are entitled."

EEOC enforces federal laws prohibiting employment discrimination. Further information about EEOC is available on its website at www.eeoc.gov. You can read the article on the EEOC's website here.

© Copyright U.S. Equal Employment Opportunity Commission

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Bank of America Settles EEOC Disability Discrimination Lawsuit

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Deaf Employee Was Denied a Sign Language Interpreter, Federal Agency Charged Bank of America, N.A. will pay $30,000 and furnish other relief to settle a disability discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today.

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Recruitment Process Timeline | Managing Your Career | J.P. Morgan

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Chase recruiting process for applicants. The process of hiring at bank.

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The human resources process is the appropriate steps.

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Tony Hsieh demonstrates the type of culture he developed running zappos shoes. He focused on holacracy and self organized culture.

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Core Values of Culture - Tony Hsieh (Zappos)

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GE electric is example of market culture.

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Fayol's resources increases the efficiency and effectiveness of organization.

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Structuring Organizations for Today's Challenges - ppt ...

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Management A Practical Introduction Third Edition - ppt ...

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Apples iphones profits are decreasing they are reorganize to more competitive. I am supporter of apple products and to know that they are looking to restructure is great news for consumer.

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Max Weber's management system that includes three primary components detailed procedures and rules of the impersonal relationships.

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SWOT analysis of bringing In-Out Burger to East Coast.My analysis I did to provide a Swot analysis.

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"Citibank has established a regional structure to bring decision-making closer to clients." I felt that this was a good article to provide break down how major backs take steps in the organization functions to make decisions.

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I thought this article was a good example of Walmart business planning to help improve the service they provide to the customers.I learned from this article how Walmart wanted to improve on shopping experience for the customer.

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The whole foods opening in Detroit was an example of decision making situation that provided insights about the steps that was taken by Whole Foods Management.

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The strategic management process that organization made not to expand  to the east coast.I felt this article helped better understand why I-Out Burger expansion was not a good business opportunity.

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Decision Making and the Planning Process.

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The planning in multinational corporation this shows how organizations will achieve its objectives both domestic and international.

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He was founder of the Marriott hotel which is a now considered a global corporation.

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McDonald's is focusing on strategic enablers, driven growth and operating principles.

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The advantages of transnational organizations. The articles explains the expanded business opportunity and growth potential of company.

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Starbuck shut down for diversity Training.

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Starbuck shut down for diversity Training.

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The benefit of diversity training to eliminate any future ethical issues.This was excellent example why diversity training is important in any organization.

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Bank of America the impact on using code of ethics.I like that Bank of America is investing in women in the workplace and took time in putting an effort to recognize importance of our role in the corporate world.

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IBM Philanthrophy Challenge learning to improve human welfare.

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Sprint giving back to the community.I use sprint as provider as my cellular service and I love that sprint is giving back to the community.

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Our mission is to help 1 million high school students who do not have reliable Internet access at home reach their full potential by giving them mobile devices and free high-speed Internet access.

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Home Depot is multi million corporation that is a home improvement retailer that sells building materials for homes.They have provide strategic planning for 2020 which includes human, monetary, raw material and capital.I used this example as how Home Depot uses this resources to help grow there company.

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"Tesla Motor uses operations management best practices to maximize productivity while minimizing costs, based on the 10 strategic decision areas."

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Tesla Motors, Inc.'s operations management (OM) practices address the objectives in the 10 strategic decisions for optimal productivity in all areas of the automotive business. These 10 strategic decision areas require operations managers to maintain best practices to ensure streamlining, effectiveness and high productivity in the organization. Tesla's global expansion plans depend on the success of these practices in optimizing productivity and overall performance. Also, the company's technological innovation goals support and depend on OM performance. As an increasingly popular manufacturer of electric vehicles, Tesla must keep improving these practices for operational competence against other automakers.
Tesla Motors, Inc. uses operations management (OM) best practices to maximize productivity while minimizing costs, based on the 10 strategic decision areas. This optimal operational condition contributes to Tesla's ability to sell its products at reasonable prices, given current market forces and cost of materials.
Tesla Motors, Inc.'s Operations Management, 10 Decision Areas

1. Design of Goods and Services. In this strategic decision area, operations managers focus on how the organization's products influence costs, quality objectives and resources. Tesla addresses this concern through concurrent innovation. For example, to ensure productivity in manufacturing advanced electric vehicles, the company continuously innovates its supply chain systems. In addition, Tesla's operations management maintains its focus on electric automobiles. Such focus optimizes organizational capacity for innovating automotive products.

2. Quality Management. Satisfying customers' quality expectations is the main objective in this strategic decision area of operations management. Tesla addresses this objective through regular research on the automotive market. In addition, the company continues to enhance its products and processes to satisfy high standards for quality and productivity. For example, Tesla's operations managers regularly conduct quality reviews of, and implement enhancements to manufacturing processes.

3. Process and Capacity Design. This operations management decision area focuses on business processes, along with related investments, standards, and resources. Tesla Motors, Inc. integrates automation for this concern. For example, the company has automated manufacturing processes combined with human intervention. This condition helps Tesla achieve high productivity through operational efficiency in the automotive business.

4. Location Strategy. Logistics and nearness to markets, resources and suppliers are considered in this strategic decision area of operations management. In terms of resources, Tesla's operations managers utilize its global reach. For example, suppliers like Panasonic provide materials necessary for manufacturing electric automobiles. Tesla's marketing mix also involves company-owned stores and galleries in malls and other key locations to maximize sales personnel productivity and access to the target market.

5. Layout Design and Strategy. In this strategic decision area, operations management is concerned with achieving optimal flow of resources and information. In Tesla's case, layouts are designed to maximize capacity utilization of facilities, especially buildings used for manufacturing electric vehicles. Also, the company employs advanced computing and networking technologies for internal communications. These approaches increase productivity in Tesla's operations.

6. Job Design and Human Resources. Adequacy of effective human resources is the objective in this strategic decision area of operations management. Tesla Motors, Inc. satisfies this objective through a competitive compensation strategy to attract effective and competent workers. This approach is especially important in the market, where many companies compete for high quality human resources. Also, Tesla's operations management ensures effectiveness and high productivity of personnel through regular training, as well as leadership development programs. For example, leadership development is used to fulfill Tesla's leadership needs to grow its automotive business.

7. Supply Chain Management. In this strategic decision area, operations managers focus on adequate supply and an effective and efficient supply chain. Tesla has a global supply chain aimed at supporting its manufacturing processes. For example, high productivity of the company's manufacturing plants in the U.S. benefits from timely shipment of materials from overseas. As an automaker that focuses on manufacturing in the United States, Tesla's operations management automates the supply chain, while constantly looking for strategic partners in the industry.

8. Inventory Management. Inventory decisions, costs and support for production are considered in this strategic decision area. At Tesla, inventory decisions are based on operations management principles that emphasize quality. For example, managers require that inventory holding does not affect the quality of materials used for the company's electric vehicles. On the other hand, for high productivity and minimized inventory costs, Tesla's operations management approach involves just-in-time inventory for some materials. For instance, some materials for automobile production are used as soon as they arrive at the company's manufacturing facilities. This approach helps minimize Tesla's inventory costs.

9. Scheduling. This strategic decision area focuses on short-term and intermediate schedules for resource utilization. Operations managers at Tesla Motors, Inc. address these concerns through market-based scheduling, combined with automated processes for maximum efficiency. In market-based scheduling, the company monitors actual market demand and uses the resulting data as basis for scheduling automobile production. On the other hand, Tesla's operations management supports scheduling activities with automation to minimize errors and delays, thereby enhancing productivity.

10. Maintenance. Adequacy of resources and production capacity are the objectives in this strategic decision area of operations management. Tesla ensures resource adequacy through regular inventory monitoring that readily responds to shifts in market demand. The company addresses the objective of adequate production capacity through a small but significant degree of redundant processes and production resources. For example, Tesla maintains excess production capacity in some of its facilities. Such redundancy allows the company to rapidly increase its production in response to spikes in market demand for electric vehicles. These operations management approaches create resilience and responsiveness in Tesla's productivity.

Tesla's Measures of Productivity

Tesla Motors, Inc. uses measures of productivity based on automobile production. The company also uses productivity criteria for its corporate office operations management. The following are some of these measures used to determine Tesla's productivity:

1. Powertrain units per day (Auto production plant facility productivity)

2. Automobiles per day (Tesla production plant facility productivity)

3. Inquiries addressed per day (Customer service productivity)

References

Liu, S., & Jiang, M. (2011). Providing Efficient Decision Support for Green Operations Management: An Integrated Perspective. INTECH.

Najdawi, M. K., Chung, Q. B., & Salaheldin, S. I. (2008). Expert systems for strategic planning in operations management: a framework for executive decisions. International Journal of Management and Decision Making, 9(3), 310-327.

Schrunder, C. P., Galletly, J. E., & Bicheno, J. R. (1994). A fuzzy, knowledge‐based decision support tool for production operations management. Expert Systems, 11(1), 3-11.

Tesla Motors, Inc. Form 10-K.

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Tesla Motors, Inc.'s Operations Management: 10 Decisions, Productivity - Panmore Institute

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Tesla Motors, Inc.'s operations management (OM) practices address the objectives in the 10 strategic decisions for optimal productivity in all areas of the automotive business. These 10 strategic decision areas require operations managers to maintain best practices to ensure streamlining, effectiveness and high productivity in the organization.

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These resources composed of all assets available for activation during the production process for Tesla Motors. I currently service Tesla Auto leasing so this article gave me additional information about the company.

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Modern Management

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Management Functions
These are activities that make up a management process.This is process that is used in my current position as team lead with Musa Auto Finance. This lesson helped me better understand the importance of the management process.

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Rodney Adkins he had all the qualities of a authentic leader.

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A few words to describe my hobby: health, fitness, strength training. goals. motivation, and discipline.

Hello my name is Joanne Roberts I am 46 years old I am currently working on my bachelor's degree in Management. I am self motivated individual that learned in life hard work is required to be successful. I believe in setting goals and being disciplined is required to achieve goals.I go the extra mile to obtain results and love to be challenged in all areas whether it is physically or mentally. I am excited about  attending Modern Management class and look forward to working with all of my class mates.