The Key to Success




It was recently announced that Tesla Motors will build a Gigafactory in Nevada, but as of a few days ago, the land officially belongs to the company.  The Gigafactory will be completed by 2020, but production will start in 2017 to build lithium battery packs—cutting battery cost by 30%. In addition, Tesla Motors has encountered tremendous success not only with its stocks but growth rate as well. In the article, Tesla Motors Inc’s Secret Growth Weapon — Hint: It’s Not Cars, Adam Galas states, “Tesla has enjoyed a remarkable 158% compound annual growth rate over the past three years. While that growth rate isn’t sustainable, analysts are still expecting sales to increase 55% this year and 62% in 2015”. Tesla Motors success is due to cars, but other factors are included as well.  First, the car company is going to produce 500,000 lithium-ion battery packs a year starting in 2017, and it hopes to cut battery costs by 30%, then up to 50% in 2020.

In addition, Tesla Motors is using energy storage which is projected to be a 50 billion dollar market by the time the Gigafactory will be completed in 2020. Galas also suggests that, the “Gigafactory may be able to manufacture batteries not only for Tesla’s electric cars, but consumer electronics as well. Better yet, there’s a very good chance that Tesla and Panasonic could manufacture these consumer electronic batteries at a cost that makes them ultra-competitive for use in laptops, smartphones, and tablets”.

Not only does Tesla Motors have a great reputation by reducing battery costs, Tesla satisfies its customer needs in several ways. Elon Musk, Tesla’s CEO, has promised to build car Superchargers across the United States so that only Tesla owners can drive around the country without worrying about their car battery. Furthermore, Tesla Motor has partnered with U.S Bank to reduce monthly payments by 25%. The average monthly payment of a customer is anywhere from $780 to over $1,200. Tesla Motors is using this as an incentive to reach their goal of selling at least 17,500 cars this year.

Tesla motors has had success for several reasons. It has proved to have a good reputation, met industry standards, and each car proves to have useful life and be reliable.

Do you agree with these reasons of Tesla’s success? Do you think that the success will last? What do you think makes Tesla different than the other competitors? Also, what do you think of Tesla building the $5 billon Gigafactory?




Olive Garden: Success or Failure?

The restaurant industry has been struggling over the last couple of years and Olive Garden is no exception. Darden Restaurants, which owns Olive Garden, has been accused of bad management and distasteful food (Smith). In chapter one, we have learned in class about ten strategic decisions of operations management. Olive Garden has neglected most of these strategies.

The strategic decisions are as follows:

  •   Design of goods and services
  •  Managing quality
  •   Process and capacity design
  •  Location strategy
  •  Layout strategy
  •  Human resources and job design
  •   Supply-chain management
  •   Inventory management
  •   Scheduling
  •  Maintenance

One article that I read on, proves that Olive Garden has neglected the first two strategic decisions by not defining the requirements of operations and neglecting customer’s expectations. Olive Garden’s food has been deteriorating in quality and critics say that “there are too many preservatives and artificial ingredients”. Olive Garden failed to provide higher quality to customers, hence why the company’s stock decreased by five percent this year.

Furthermore, Olive Garden lacked in its Location Strategy as well. Due to its low sales, Red Lobster was replacing Olive Garden, making the restaurant chain far from its customers. Not to mention that Olive Garden continued to raise its prices. It is evident that Olive Garden has not considered costs and other logistics.

Although I have never worked at Olive Garden, my sister has said that within the last year, the environment, food and service has changed tremendously. When my sister was first hired, they looked for employees that were motivated and had previous customer service experience. Now, many employees have quit because the company was unable to integrate each employees schedule with the demand that was needed on a specific day.  For example, on Saturdays they would be shorthanded, while on a weekday, there would be too many waiters working and shift was not evenly disbursed. This shows that Olive Garden’s Layout and Human Resource and Job Design Strategy was inconsistent because the company was not able to keep their qualified employees nor keep the “flow of personnel and information” steady. Furthermore, as the year continued, their inventory management was organized. My sister told me that there would be a surplus amount of breadsticks available for consumers, but when it came to certain entrees or desserts, the restaurant would be out of that particular product for weeks at a time.

Olive Garden is an example of another company that was successful a few years ago, but by not following the ten strategic decisions, the company’s consumer base, food quality and service decreased. Now, knowing some of the personal experience of working at the restaurant and what critics have written about Olive Garden, do you think that its operations is running smoothly? If so, why? In addition, if not, how do you think the restaurant can improve?