dspp wrote:redsturgeon wrote:So just to make sure I understand your point here dspp.
You are happy being invested with a company who feel it is OK to turn down an order for 85 cars on the basis that the customer (who is possibly your biggest single customer in Germany perhaps Europe) is insisting on a process that allows them to identify quality issues pre-delivery and payment so they can be rectified?
If this is correct does this sound to you like a company who seems to lack the will to improve and is chasing short term cash at the expense investments in process improvement in order to make more profit in the future?
John
I am happy being invested in a company that is making difficult decisions in a complex and fast-moving environment, and which is forcing a restructuring of at least one industry as it does so.
- dspp
As an investor, it’s important to recognise that there are different factors which drive success for large and small businesses.
As an MD of a small business, you can probably afford to upset a few customers who demand the highest standards on the basis that you can find business elsewhere. You may not be subject to the scrutiny which affects a large business and you can probably get away with a few service problems.
From my previous experience of running a large operation with hundreds of thousands of customers and potential customers making more than a million phone calls to us a year, one really had to concentrate on getting the highest quality service for all customers. Yes, there were occasional problems but they were quickly communicated to senior staff and solved immediately to the customer’s satisfaction. We tried to excel at service and in that way we generated loyalty, more than 95% of our customers purchased again over the many years I ran the operation. That led to sustainable profits.
It’s vitally important for senior management to “walk around” a large operation and talk to front line staff. They are the people who know immediately if there is a service problem. (And usually have a good idea how to solve it.) And it is not a good idea to “shoot the messenger” if they report a problem.
The reputation of a large business is paramount. We used to pick up valuable customers from competitors who let their standards slip. And they weren’t as slipshod as Tesla!
In the competitive environment that I was used to one had to set a high standard and, indeed every member of staff, was motivated and proud to work for a high quality company. I would never dream of copying Elon Musk’s behaviour in immediately firing employees who didn’t give him the right answer. This behaviour won’t create the success Musk’s investors are hoping for.
Customers ordering millions of dollars of product, especially when they are acting as brand ambassadors for the company, must be handled professionally and any product defects must be rectified immediately. The type of problems identified by the boss of the German rental firm were inexcusable - how could any quality company let that situation develop the way it has?
Tesla aren’t growing fast enough to re-structure an industry. In producing sub-standard cars, they are conceding the quality high ground to their competitors and giving them time to develop superior products. It could be argued that the re-structuring of the car industry is being led by politicians, regulators and, perhaps even a 16 year old girl.
Maybe a better investment is VW? Over the last three years their shareholders must be more satisfied with their performance than Tesla. Time will tell.
regards
Howard