Sustainable development, strategy and costs at Tesla

30/12/2014 Sustainabledevelopment,strategyandcostsatTeslaManagementAccounting data:text/html;charset=utf8,%3Cdiv%20id%3D%22header%22%20style%3D%22display%3A%20block%3B%20height%3A%20100px%3B%20color%3A… 1/1 ManagementAccounting Somefreeinsightsonmanagementaccountingandbusiness. RSS Search... » Privacy TheLearningCompany:AS… MikePedler,JohnBurgoyne,Tom… £18.99 OneReport:IntegratedRe… RobertG.Eccles,MichaelP.Krzus… £22.85 Searchblog Translate Seleccionaridioma Tecnologiado Tradutor SomeadsfromGoogle Searchamazon.co.uk Search Amazon.… Next›‹Prev Sustainabledevelopment,strategyandcostsat Tesla ByJoãoonJune23,2014at8:00am PostedIn:Ch13RelevantCosts&Revenues,Ch19CostManagement,ValueCreationAnd SustainableDevelopment Buyourbookhere. Teslahasrecentlysurprisedhalftheworld(probablymorethana half…)bymakingthecompany’spatentsavailabletocompetitors –to“anyonewho,ingoodfaith,wantstouseourtechnology”,as Teslaputit. That’saboldmove. Thecompanymostlyjustifieditsmovebasedonitssustainable developmentconcerns,through“theadvancementofelectric vehicletechnology”““inthespiritoftheopensourcemovement”.Tesla’s argumentisthatitssmallsizemakesit“impossibleforTeslatobuildelectriccars fastenoughtoaddressthecarboncrisis”. CriticsarguethatTesla’smovemaybe“GoodforHumanity,ButBadfor Business”andlabelitas“foolhardy”.WhileTeslanowrejectsitsinitialconcern thatlargecompetitorswould“copy[Tesla’s]technologyandthenusetheir massivemanufacturing,salesandmarketingpowertooverwhelmTesla”,critics believetheirinitialconcernisstillveryvalid. ApartoftheissueisthehugeResearchandDevelopmenteffortrequiredfor electriccars,inparticularwithregardtobatteries.Teslahasalreadyincurredinto massiveR&Dcosts,particularlyasapercentageofrevenues,whencomparedto theirlargecompetitors. You’velearnedthatpast,sunkcostsareirrelevantfordecisionmaking.Youknow thatResearchandDevelopmentcostsalreadyincurredareirrelevantfor decisionstobetakennow.However,theanalysisforTeslahastobestrategic andinvolvetheircompetitors.CompetitorslaggingbehindinR&Ddevelopment stillhadveryhighR&Dtobeincurredinthefuture(definitelynotsunkcostsfor them!),makinginvestmentinthistechnologylessattractive–andmoreuncertain andlesstimely.Teslareleasingtheirpatentsallowstheirlargecompetitorsto immediatelyaccesstoarguablysuperiortechnologywithoutincurringinsohigh R&Dcosts. Buttheremaybeotherpositivestrategicrepercussions,beyondcostandlegal issues.Thismovemay,forexample,increasethedevelopmentoftheelectriccar industry(hencealsobenefitingTesla)andmakeTesla’stechnologytheindustry standard.Itmayevenpromotetherecruitmentofbetterhumanresources, attractedbyworkinginacompanypromotingthe“opensource”philosophy. Definitely,acomplexstrategicandfinancialpuzzle,theoneplayedbyacompany stronglycommittedtowardssustainabledevelopment. Sharethis: LinkedIn Twitter 2Facebook More Home»Ch13RelevantCosts&Revenues»Sustainabledevelopment,strategyandcostsatTesla HOME FREEONLINEBOOKRESOURCES OURDAILYPAPER BUYTHEBOOK CONTACT