Transcript TESLA (Gr. Yellow).pptx

Tesla Motors Risk Management
Outline
• Background information
• Risk management system
• Types or risk : market and sector risks
: firm specific risks
: financial risks
: legal risks
• Solutions to risks
• Conclusion
Back ground information
• Founded in 2003 by Martin Eberhard
• First car was released in 2006
• Current CEO of tesla is Elon mask
General information
• Share price is currently trading at $225.26
• They took a loan in 2009 of $465million and
paid it back in 2013, 9 years early
• They made their first IPO IN 2010 and raised
$226million
General information
• Growth sales have increased by over 100% in the past 9 years
• The are producing an average of 50000 cars a year with an
average of 1000 per week and over 200 power service
stations around the world.
Risk Management
• A risk management plan is a document that a
project manager prepares to foresee risks,
estimate impacts, and define responses to
issues
• This is a process of identifying , managing and
monitoring as to reduce all possible losses.
• The main risks tesla faces are firm specific risk,
financial risk and legal risk.
•
Identifying Firm Specific Risks
 Production Risks
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Product Launch e.g cars, batteries
Expenditure
Failure of Manufacturing Plant
Production Stalls (Bottlenecks )
 Warranty and Goodwill
Claims
 Claims associated with guarantees on
goods and all other contingent liabilities
Managing Firm Specific Risks
Continued…
 Technological Risks
 Creating taskforces to work on diversifying
technical risks associated with Tesla
Motors
 Personnel Risks
 Creating Personal Training Workshops for
our workers
 Providing incentives through awards,
bonuses and the likes
What is Financial Risk?
• The probability of loss inherent in financing methods which impair
the ability to provide adequate returns'.-BusinessDictionary.com
• Firms have Financial Risk management contingencies in place to
help reduce its exposure to losses.
• Financial Risk Management is therefore the practise of the firms
economic value by using instruments to manage its exposure. These
include:
1. Credit Risk
2. Market Risk
3. Foreign Exchange Risk
4. Interest Rate Risk
5. Currency Risk
6. Liquidity Risk
Market and Sector Risks
Supplier Related Risks
Sales Risks
Supplier Related Risks
• Dependency and Price Fluctuations of raw
materials
• Failure of suppliers to deliver goods on time
Sales Risks
• Declining market condition
• Increased competition and price pressure
Identify legal risk
Step one-find sources of legal risks(contracts,
regulations , litigation and structural changes.
Second step-recognize potential and actual risk.
Third step-record risk in risk register.
Analyze legal risk
Risk analysis is about understanding the risk in
the risk register .To analyze risk begin with an
assessment of controls. Risk controls can take
several forms depending on the risk, industry
and organization.
Managing the risks
Tesla faces
Identifying Firm Specific Risks
continued…
 Technology Risks
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Technological Demands of the modern day
Carbon Emissions from vehicles
Fuel Consumptions
Scandals
Safety Requirements
 Personnel Risks
 Personnel risk that is separate from those
associated with our legal risks
Managing Firm Specific Risks
 Production Risks
 Servicing our production equipment
regularly
 Producing only A-Grade products
 Keeping back up equipment
 Warranty and Goodwill
Claims
 Improving Customer Relationships to
boost loyalty .
 Providing a platform for customers to
voice their opinions
 Creating an allowance for all these
unexpected contingencies
Tesla's Financial Risk Management
Plan
• Main Focus... Financial Risks:
1. Exchange Rate Risk
2. Interest Rate Risk
3. Liquidity Risk
1. Exchange Rate Risk- Hedged with the use of Derivative
Instruments like: Options, Currency Futures, and Swaps
2. Interest Rate Risk- Hedged Using Treasury Futures
contracts or Interest Rate Swaps
3. Liquidity Risk is risk of not having enough cash assets
to run the business.
Six steps to legal management
• Select framework
• Legal framework should meet four main
objectives
1.Simple but not simplistic
2.Scalable but not overbearing
3.Adaptable but with clear guidance
4.Practical but not regimented
Evaluate legal risks
To evaluate a legal risk is to prioritize the
response to the risk . At the core of risk
evaluation is your organization's risk tolerance
. Legal risk that are above the line are
intolerable and need risk treatment . The idea
behind risk treatment is simple modify the risk
to make it tolerable.
Once legal risks are inventoried and analyzed
in the risk register , it is important to
communicate the results to the broader
enterprise.
Conclusion
• Tesla continues to monitor its operations and
alters its risk management tools to the changing
world
• Tesla is seemingly a blooming company and
shows a good investment platform as it is based
on futuristic trends and is playing a key role in the
car manufacturing industry.
• The risk they face seem to be out weighed and
manageable as and this is proven by their
continues growth in the market.
Questions