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Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
Organizational structure for differentiation focus strategy
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Organizational structure for differentiation focus strategy

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  • 1. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba TABLE OF CONTENTSAbbreviations ................................................................................................................. 3Introduction .................................................................................................................... 4Chapter 1 Differentiation Focus Strategy ...................................................................... 6 1.1 About Strategy...................................................................................................... 6 1.1.1 Definition ...................................................................................................... 6 1.1.2 Importance .................................................................................................... 7 1.2 Generic Competitive Strategies ............................................................................ 9 1.2.1 Focus Strategies ............................................................................................ 9Chapter 2 Oragnizational Structures ............................................................................ 12 2.1 About Organizational Structures ........................................................................ 12 2.1.1 Definition .................................................................................................... 12 2.1.2 Importance .................................................................................................. 12 2.2 Organizational Structure Types .......................................................................... 13 2.2.1 Entrepreneurial Structure ............................................................................ 13 2.2.2 Functional Structure .................................................................................... 14 2.2.3 Divisional Structure (Product Structure) .................................................... 15 2.2.4 Matrix Structure .......................................................................................... 16 2.2.5 Project-based Structure (Team Structure) ................................................... 18 2.3 Choosing Organizational Structure for Differentiation Focus Strategy ............. 19Chapter 3 Case Study: Organizational Structure in AIESEC Cluj-Napoca ................. 21 3.1 About AIESEC ................................................................................................... 21 3.1.1 What is AIESEC? ....................................................................................... 21 3.1.2 AIESEC in numbers (in 2011) .................................................................... 23 3.1.3 Vision .......................................................................................................... 23 3.1.4 Values ......................................................................................................... 24 1|Page
  • 2. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba 3.1.5 Product ........................................................................................................ 25 3.2 About AIESEC Cluj Napoca .............................................................................. 29 3.2.1 Objectives ................................................................................................... 29 3.2.2 Business Model ........................................................................................... 30 3.3 Strategies ............................................................................................................ 33 3.3.1 Global Strategy ........................................................................................... 33 3.3.2 Local Strategy ............................................................................................. 35 3.4 Organizational Structure .................................................................................... 39Conclusion ................................................................................................................... 45Bibliography ................................................................................................................ 47ANNEXES ................................................................................................................... 49 2|Page
  • 3. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba ABBREVIATIONSDBA = Doctor of Business AdministrationR&D = Research and DevelopmentTN = trainee nomineeLCP = local committee presidentVP = vice-presidentICX = incoming exchangeOGX = outgoing exchangeER = external relationsTM = talent managementHR = human resourceGIP = Global Internship ProgramGCDP = Global Community Development ProgramTL = Team Leader 3|Page
  • 4. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba INTRODUCTIONStrategic management theories are available to everyone. Since the creation of genericstrategies of Michael Porter, there were several companies that put his theories inpractice. Some of them had success and some of them failed.There are companies that operate without following a certain or clear strategy andthey are (or were) doing well, because there was a high demand for what they wereoffering and there was a low supply and weak competition.With the technological advances and globalization, information businesses and theirofferings (commodities, products, services or experiences) became available toeveryone. We are experiencing the globalization of markets, transforming the worldinto one single market with the help of the internet and social media. This increasescompetition and makes it harder for companies to gain a competitive advantage andmaintain it sustainably.Another important change happening is regarding the complexity of organizations.Operations, competencies and activities tend to be more complex and people need tospecialize even more in their jobs, and they need interaction in order to meetcustomers‘ needs. This is more accentuated because of the increasing competition onglobal markets and the need to attract and maintain customers even in economiccrisis.This raises a series of questions. What to do now? What strategies to adopt? How toconstruct and maintain a sustainable competitive advantage in our fast changingenvironment? And more importantly, how to organize our operations, processes andactivities in order to deliver our activities of creating value in the most efficient way? 4|Page
  • 5. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaIn the following pages I will examine and present Michael Porter‘s focusdifferentiations strategy.In chapter 2 I will present different models of organizational structures. Theirfunctioning rules and the way they suit for different types of organizations.In chapter 3 I will present a case study about AIESEC. I will demonstrate how aproject based organizational structure can work and drive growth in an NGO usingfocus differentiation strategy. The methods, models used and implemented byAIESEC are coming from the corporate sector, through the knowledge of partnercompanies and the experience of 63 years of its existence. This demonstrates a projectbased structure can work for the corporate sector as well when using focusdifferentiation strategy.My purpose with this work is to raise awareness on the changing rules in our economyand on the need of outside the box thinking in implementing organizational structuresthat give power to our members in the organization and drive our focus differentiationstrategies. My motive is to present new concepts in organizational structure re-engineering and to provide a proof that a project based organizational structure canwell suit for focus differentiation strategy implementation.To present you this, I used a qualitative analysis. I started researching on differentorganizational structure models, and then I started analyzing each option available.After that I researched the concepts about project based organizational structure andits relation to focus differentiation strategy. In the end I presented a good case practicefrom the non-governmental sector, regarding its change from a matrix structure to aproject based structure and how this helped it in driving performance through a focusdifferentiation strategy. 5|Page
  • 6. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba CHAPTER 1 DIFFERENTIATION FOCUS STRATEGY1.1 ABOUT STRATEGYIn order to discuss differentiation focus strategy and organizational structures for thisstrategy, we have to have a common understanding on the meaning of ―strategy‖,―strategic management‖ and ―business level strategy‖.1.1.1 DefinitionOxford English Dictionary defines strategy as ―a plan of action designed to achieve aparticular goal. The word is of military origin, deriving from the Greek wordστρατηγός (stratēgos), which roughly translates as general‖1. Michael Porter definesstrategy as ―the creation of a unique and valuable position, involving a different set ofactivities‖2.Strategic management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization to achieve its long-termobjectives3. Another approach is the process of managing in a way that is consistentwith the corporate strategy or in such a way as to capitalize on the opportunities thatpresent themselves4.Strategies can be formulated at three different levels:  Corporate level: these strategies describe and formulate actions taken by the firm (or corporation) in order to gain a competitive advantage by selecting and managing different businesses that operate and compete in different markets with different products and/or services (or staging experiences);1 Oxford English Dictionary (2 ed.), Oxford, England: Oxford University Press, 19892 Michael Porter, What is Strategy, Harvard Business Review November-December, 19963 David F., Strategic Management, Columbus: Merrill Publishing Company, 19894 http://www.hainescentre.com/strategic-management, accessed at 06.04.2010 6|Page
  • 7. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba  Business level: these are actions taken by the firm in order to gain competitive advantage in a specific market, with delivering products and/or services (or staging experiences) based on its core competencies  Functional level: these are specific actions taken by each functional area/department in the firmBusiness-level strategy is an integrated and coordinated set of commitments andactions the firm uses to gain a competitive advantage by exploiting core competenciesin specific product markets5.1.1.2 ImportanceNow that we understand the terms, we may discuss the importance of strategies atdifferent levels in the organization.Corporate level strategies are essential for a firm (usually large corporation thatoperates on different markets with different businesses) to decide where to invest, onwhich markets to operate, in which type of businesses, what to produce or deliver, etc.Practically at this level has to decide where to invest its resources in order to gaincompetitive advantage and maximize the return on investment. These decisions (as alltypes of decisions) require trade-offs, since we have limited resources. This is why acorporate level strategy is so important in making critical, long term decisions thatwill affect the performance of the firm on the long term. ―Alfred Sloan, formerPresident of General Motors, defined the fundamental strategic problem as positioningthe firm in those markets in which maximum profits could be earned. In his greatbiography, Sloan laid down the classical profit-oriented goal of strategy‖6:5 Robert E. Hoskisson, Michael A. Hitt, R. Duane Ireland, Competing for advantage (2 ed.), Newgen-Austin, 20086 Richard Wittington, What is strategy, and does it matter? (2 ed.), London, Cengage Learning, 2001 7|Page
  • 8. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba―The strategic aim of business is to earn a return on capital, and if in any particularcase the return in the long run is not satisfactory, the deficiency should be corrected orthe activity abandoned‖7.After a firm decides its corporate level strategies, it has to define the strategies foreach business it own. This is called the business level strategy. It is essential for everymanagement to know where the business is heading, how it will gain competitiveadvantage on the market and how it will assure a constant grow for the business.Business level strategies are intended to create differences between the firm‘s positionrelative to those of its rivals. ―Firms have long attempted to build competitiveadvantage through an infinite number of strategies. Competitive strategies aredesigned to help firms deploy their value chains and other strengths to buildcompetitive advantage. Thus, in practice, each company formulates its specificcompetitive strategy according to its own analysis of internal strengths andweaknesses, the value it can provide, the competitive environment, and the needs ofits customers‖8.After a firm has its business level strategy, it is very important to transform thatstrategy in every action. This makes critical to define functional level strategies thatmake sure that the business level strategy is followed by every functional area in thebusiness. These functional level strategies have to support business level strategies, soit is essential that each functional level goes to the ―same direction‖. More than that,―strategic fit among many activities is fundamental not only to competitive advantagebut also to the sustainability of that advantage. It is harder for a rival to match an arrayof interlocked activities than it is merely to imitate a particular sales-force approach,match a process technology, or replicate a set of product features. Positions built onsystems of activities are far more sustainable than those built on individualactivities‖9.7 Alfred Sloan, My years with General Motors, New York, Doubleday, 19638 Jeff Bordes, Strategic Management assignment - building and sustaining competitive advantage,Atlantic International University, Honolulu, 20099 Michael Porter, What is Strategy, Harvard Business Review November-December, 1996 8|Page
  • 9. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba1.2 GENERIC COMPETITIVE STRATEGIESFirms choose business level strategies to establish and defend their desired strategicposition against rivals 10 . According to Michael Porter, there are four potentiallysuccessful generic strategic approaches to outperforming other firms in an industry11:  Overall cost leadership;  Differentiation;  Focus;  Integrated cost leadership/differentiation;These strategies are called generic, because they can be used in any business and inany industry. Each business level strategy helps the firm to establish and exploit acompetitive advantage within a particular competitive scope12.1.2.1 Focus StrategiesThe third generic strategy is focus strategy. Focus strategies are used to help a firmfocus on a specific niche within an industry. Both differentiation and cost leadershipstrategies target a wide range market, strive to get a high market share, but focusstrategies aim at specific and typically small niche of the market. These niches couldbe selected considering different criteria: a particular buyer group, a narrow segmentof a given product line, a geographic or regional market, or a niche with distinctive,special tastes and preference. ―The basic idea behind a focus strategy is to specializethe firm‘s activities in ways that other broader-line (low-cost or differentiation) firmscannot perform as well. Superior values, and thus higher profitability, are generatedwhen other broader-line firms cannot specialize or conduct their activities as well as afocused firm. If a niche or segment has characteristics that are distinctive and lasting,10 Robert E. Hoskisson, Michael A. Hitt, R. Duane Ireland, Competing for Advantage (2 ed.), Newgen-Austin, 200811 Michael Porter, Competitive strategy, The Free Press, New York, 198012 Robert E. Hoskisson, Michael A. Hitt, R. Duane Ireland, Competing for Advantage (2 ed.), Newgen-Austin, 2008 9|Page
  • 10. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csabathen a firm can develop its own set of barriers to entry in much the same way thatlarge established firms do in broader markets‖13.The focus strategy has two variants: cost focus and differentiation focus. In cost focusstrategy, a firm seeks a cost advantage in its niche market segment, while indifferentiation focus a firm seeks differentiation in its niche market segment. In bothcases, the focus strategy is based on differences between a firms niche marketsegment and other segments in the whole industry where is activating. The targetsegments must either have buyers with specific needs or the production and deliverysystem must be different from that of the other industry segments. Cost focus strategyexploits differences in cost behavior in some segments of the market, whiledifferentiation focus exploits the special needs of buyers in certain market segments.Such differences imply that the segments are poorly served and their needs are notsatisfied by broadly targeted competitors who serve them at the same time as theyserve others. The focuser thus can achieve competitive advantage by dedicating itselfto the segments exclusively. The essence of focus is the exploitation of a narrowtarget‘s differences from the balance of the industry14.As is stated above, this strategy rests on the premise that focusing on a niche market.A firm is able to serve its narrow strategic market more efficiently or more effectivelythan its competitors who are competing for a wider range of the market. In this way, afirm may differentiate itself by meeting the needs (more specific needs) of a particularsegment of the market, or by having lower costs by serving a niche market, or byboth. Even though the focus strategy does not achieve low cost or differentiation fromthe perspective of the market as a whole, it does achieve one or both of these positionsvis-à-vis its narrow market target15.13 Jeff Bordes, Strategic Management assignment - building and sustaining competitive advantage,Atlantic International University, Honolulu, 200914 Michael Porter, Competitive advantage, The Free Press, New York, 198515 Michael Porter, Competitive Strategy, The Free Press, New York, 1980 10 | P a g e
  • 11. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaA focuser can take advantage of the incapability of its competitors to serve veryspecific needs of niche segments. Competitors may underperform in meeting theneeds of a particular segment in the market, which opens the possibility for adifferentiation focus strategy. On the other hand, if a competitor is overperforming inmeeting the needs of a specific segment (they deliver things that are not essential for aspecific niche segment), a cost focus strategy can assure the satisfaction of thatspecific niche with lower costs.―Focus may also be used to select targets least vulnerable to substitutes or wherecompetitors are the weakest‖16.―If a firm can achieve sustainable cost leadership (cost focus) or differentiation(differentiation focus) in its segment and the segment is structurally attractive, thenthe focuser will be an above-average performer in the industry. Segment structuralattractiveness is a necessary condition because some segments in an industry aremuch less profitable than others‖17.Generally in an industry there are very different customers and segments that requiredifferent products and services and different delivery and after-sales systems andservices. This makes the focus strategies a very viable and opportune one for mostindustries.16 Michael Porter, Competitive Strategy, The Free Press, New York, 198017 Michael Porter, Competitive advantage, The Free Press, New York, 1985 11 | P a g e
  • 12. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba CHAPTER 2 ORAGNIZATIONAL STRUCTURES2.1 ABOUT ORGANIZATIONAL STRUCTURES2.1.1 DefinitionOrganizational structure is the allocation of responsibilities, tasks and coordinationresponsibilities for the aim of organizing work and achieving objectives.Organizational structure can be defined as ―the framework, typically hierarchical,within which an organization arranges its lines of authority and communications, andallocates rights and duties. Organizational structure determines the manner and extentto which roles, power, and responsibilities are delegated, controlled, and coordinated,and how information flows between levels of management18.2.1.2 ImportanceThe organizational structure has to serve the objectives and the strategies of thecompany. It can help the implementation of a strategy and bring results, or it can be abarrier for strategy implementation and performance. It is very important to have astructure that minimizes confusion and defines who is responsible for which task.―Poor organizational design and structure results in a bewildering morass ofcontradictions: confusion within roles, a lack of co-ordination among functions,failure to share ideas, and slow decision-making bring managers unnecessarycomplexity, stress, and conflict. Often those at the top of an organization are obliviousto these problems or, worse, pass them off as or challenges to overcome oropportunities to develop‖19.The organizational structure also influences how an organization can make decisions,react to changes in the external environment or drive innovation. Our main goal is to18 http://www.businessdictionary.com/definition/organizational-structure.html19 Corkindale, The Importance of Organizational Design and Structure, Harvard Business ReviewFebruary, 2011 12 | P a g e
  • 13. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csabaimplement a structure that can help our organization to maintain its competitiveadvantage (and performance) in the most efficient way.―To survive and thrive, you need to create a work environment that fosters initiative,collaboration, and learning. How? By maximizing three core horizontal processes:frontline entrepreneurship, competence building across internal boundaries, andrenewal of ideas and strategies‖20.2.2 ORGANIZATIONAL STRUCTURE TYPES2.2.1 Entrepreneurial Structure Entrepreneurial structures are most common for small firms and organizations, usually at the beginning of their life cycle.They are characterized by a small number of employees, where the owner makes allmajor decisions and monitors activities for the whole organization. Employees areusually responsible for specific tasks and they report directly to theentrepreneur/business owner. This structure is totally centralized. Communication isdone by one to one conversations.This type of structure is useful for new organizations, because enables the owner tocontrol growth at an efficient way. It enables the organization to deliver services andproducts at lower costs and to be flexible (to make changes and to make quickdecisions).20 Sumantra Ghoshal, Christopher A. Bartlett, Changing the Role of Top Management: BeyondStructure to Processes, Harvard Business Review January, 1995 13 | P a g e
  • 14. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba2.2.2 Functional StructureFunctional structure indicates a more hierarchic organization, where there is a generalmanager or CEO on the top, than there are functional managers or directors (ex: Sales,Marketing, Production, Finance, HR) who report to the general manager. Then in eachfunctional department there are employees who are responsible for different tasks andthey report to the functional manager. In bigger organizations, in functionaldepartments there are different teams with managers (middle managers) who areresponsible for different processes in their specific functional department, and theyhave staff responsible for specific tasks of the process or area of responsibility andthey report to the middle manager.In this way, functional departments perform specific tasks related to their area ofexpertise. Coordination and decision making is centralized in the functional structure,which makes it efficient to plan and produce standardized products or services.Furthermore, employees can become specialists in what they do and become efficientin their specific area of expertise. Because of this way of organization, there could becommunication problems between functional managers and slow down theorganization and make it inflexible.This way of organizing is best suited for mid-sized and large organizations whodeliver standardized products or services at a large volume and low cost. 14 | P a g e
  • 15. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba2.2.3 Divisional Structure (Product Structure)In this structure, each division has a functional structure. In this way, each divisioncontains all the necessary functions and resources to perform activities. Divisions canbe organized based on products or services (ex: a manufacturing company canorganize divisions for each of their main category products – scanners, printers,laptops, TVs, etc), or based on the geographical presence (ex: Europe, North America,South America, Middle East, etc).This way of organizing is suitable for large international organizations, who want todeliver rapid growth in different industries, markets or regions. It allows each divisionto have all the necessary resources and staff to drive performance on their owndivision.On the other side, there is the risk of lack of communication between divisions, thereis a huge inefficiency in resources (because each division has its own HR, sales,marketing, finance, production, etc, functional department), and a great inflexibilitybecause of the barriers of communication and decision making process. 15 | P a g e
  • 16. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba2.2.4 Matrix StructureMatrix structure groups employees both by function and product. In this way, we cancombine the advantages from both structures. On one hand, there are functionaldepartments with specialists on different areas and processes, but we also havedifferent teams that have a manager and have employees allocated from differentfunctional departments to work for that team. Usually managers are product managersthat work on different development projects or are delivering a personalized productor service to a customer (or groups of customers). In this way, we have functionaldepartments that maintain ongoing processes (such as accounting or branding, orsometimes sales), while we also have project teams where the team exists until theydeliver the project.Project managers report directly to a functional manager or to the general manager.Specialists from functional areas are allocated (or selected) into the project team, andthey will be accountable to the project manager for their work in the project and to thefunctional manager also. 16 | P a g e
  • 17. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaThis form of organizational structure can ensure efficiency in the organizationbecause key resources and competencies are shared between projects and functionalareas, and also because there is a share of authority and responsibility. In this way, itis much easier to innovate, to adapt to new trends of the market and meet customers‘needs for customization.On the other hand, there can be conflicts generated in the organization and teamsbecause of double accountability (project manager and functional manager), and alsolack of continuity or knowledge management (because of constant change of teamsand projects).It is also very important in this type of organization to constantly develop projectmanagers that are capable of driving performance. ―While top managers universallyrecognize their responsibility for developing and allocating a company‘s scarce assetsand resources, their focus on finance and technology often overshadows the task ofdeveloping the scarcest resource of all—capable managers. But if there is one key toregaining control of companies that operate in fast-changing environments, it is theability of top management to turn the perceptions, capabilities, and relationships ofindividual managers into the building blocks of the organization.‖21This type of organizational structure is best suited for companies that offerpersonalized services and products, or that drive constant innovation (because of theirdifferentiation or focus differentiation strategy) and want to do this in an efficientway. This structure can also be suited for companies who offer a large scale ofdifferent products and services.21 Christopher A. Bartlett, Sumantra Ghoshal, Matrix Management: Not a Structure, a Frame of Mind,Harvard Business Review, July, 1990 17 | P a g e
  • 18. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba2.2.5 Project-based Structure (Team Structure)Project-based structure can be seen as a strong or project matrix organization. In thistype of organizational structure there is a general manager or CEO, and also vicepresidents or functional managers, but activities and results are driven by projectteams. Almost every activity and operation of the organization is driven and broughtby project teams who have specific goals. Functional managers (or VPs) make surethat there are employees with functional knowledge, who can perform in projectteams.In this structure type, project managers have a great autonomy in terms of makingdecisions and delivering results. Usually they control everything from the selection ofthe team, task allocation and delegation, to the performance management. Functionalmanagers usually approve some decisions (mostly decisions regarding budgets andother resource allocations and decisions that affect other projects or the entireorganization). Employees can take part in more than one team (if their geographicpresence and responsibilities allow it). Project managers are assigned (or selected) byfunctional managers, who are responsible in front of the CEO for the maindeliverables (and objectives) of a specific project. The focus of the team members isto complete the project and deliver the objectives of the projects, rather than tasks.In some cases, we can have only the CEO and some senior project managers thatcoordinate other project managers. In this case, we have to make sure that our HR (orTalent Management) processes are well in place (or outsourced) in order to make sure 18 | P a g e
  • 19. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csabathat we always have the necessary talents with the necessary competencies in theorganization.Team structures can take a form of a functional organization (with functionalmanagers reporting to the project manager and staff reporting to the functionalmanagers in the project), but only if the project is big and complex. Usually thisorganizational form is used by companies and organizations that use focusdifferentiation strategy and are required to innovate constantly and deliver customizedproducts and services to a niche market.Because teams are constantly changing, there are very diversified networks ofrelationships that employees form across functions. ―These informal networks can cutthrough formal reporting procedures to jump start stalled initiatives and meetextraordinary deadlines‖22.2.3 CHOOSING ORGANIZATIONAL STRUCTURE FORDIFFERENTIATION FOCUS STRATEGYChoosing the model of organizational structure is a really important strategic decision.We have to take into consideration the size of the company, number of products andservices provided, the business and marketing strategy that we have and also futureplans. Organizational structure decisions should be made for medium or long termbecause it takes time to adapt processes, procedures and also our employee‘sbehaviors and the organizational culture for certain structures.The mantra in deciding for an organizational structure should be ―structure servicesstrategy‖. So first of all, we have to make clear what our current and future strategy is,and then decide on the structure. ―It seems obvious that organizations should bedesigned to advance business strategies. But many times strategies evolve and change22 David Krackhardt, Jeffrey R. Hanson, Informal Networks: The Company Behind the Chart, HarvardBusiness Review, July, 1993 19 | P a g e
  • 20. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csabawhile seasoned managers clutch tightly to their old ways of structuring their units andorganizing their teams‖23. We can have two approaches to this decision making: 1. Make different models (brainstorm) and then start analyzing them, establish criteria and weight for each criteria and rate each of them (or just simply use pros and cons) 2. Map all the processes of the organization and decide how can they be grouped in the most efficient way (considering also accountability and communication between people and teams)After we make a decision, we should start testing it. If we have a large organization,we can test the new structure only with a smaller group of people and see how itworks and what the feedback of your employees is.23 Ron Ashkenas, Solving the Rubiks Cube of Organizational Structure, Harvard Business Review,March, 2011 20 | P a g e
  • 21. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba CHAPTER 3 CASE STUDY: ORGANIZATIONAL STRUCTURE IN AIESEC CLUJ-NAPOCA3.1 ABOUT AIESEC3.1.1 What is AIESEC?AIESEC (originally ―association internationale des étudiants en sciences économiqueset commerciales‖, but now it is a proper name) is the world‘s largest student-runorganization. It is a global, non-political, independent, not-for-profit organization runby students and recent graduates of institutions of higher education. Its members areinterested in world issues, leadership and management. AIESEC does not discriminateon the basis of race, color, gender, sexual orientation, creed, religion, national, ethnicor social origin.AIESEC‘s innovative development process consists of unmatched leadershipexperiences, international opportunities and a global learning environment.Global – AIESEC has a global scope and is represented in all continents of the world.One of the most valuable and unique aspects that our organization has is its globalnetwork. AIESEC should make the best use of this global network to enhance theunderstanding between cultures by running activities that foster participation and co-operation among different countries in the network. Without any doubt our exchangeprograms create the best conditions for this.Non-political - AIESEC does not have a pre-defined or officially accepted politicaltendency or subscription.Independent - AIESEC is not a subsidiary or dependent entity of any other bodies inits work, sustainability or decisions. 21 | P a g e
  • 22. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaNot-for-profit - AIESEC is not an organization that exists to generate profit forshareholders. The bottom-line for AIESEC is not money but people that aredeveloping themselves as leaders. It is important of course to have enough resourcesand be sustainable to ensure we are having the desired impact in society and invest infurther improvements for the organization. However, we are guided by the ways togenerate more impact and have maximum financial sustainability rather than tosimply generate more money.Run by students and recent graduates of institutions of higher education – Students ofhigher education students and recent graduates manage and run all the activities of theorganization. The members of AIESEC are current (includes the ones who have givena break to their studies to dedicate themselves to AIESEC work) or recently graduatedstudents of institutions of higher education.Its members are interested in world issues, leadership and management – TodayAIESEC has expanded its reach to a wide range of student backgrounds. Ourmembership base has expanded to university students that are interested in more thanjust economics.AIESEC does not discriminate on the basis of race, color, gender, sexual orientation,creed, religion, national, ethnic or social origin - AIESEC is an organization thatenjoys and lives diversity, and will not reject participation or contact with people forany of the reasons mentioned above.Its international platform enables young people to discover and develop their potentialto provide leadership for a positive impact in society. 22 | P a g e
  • 23. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaAIESEC provides its members with an integrated development experience comprisedof leadership opportunities, international internships and participation in a globallearning environment.3.1.2 AIESEC in numbers (in 2011)  Global network run by more than 60 000 students and recent graduates  Active in 1 700 universities across 110 countries and territories  24 700 leadership opportunities annually  18 000 global internships annually in business, technical, education and development sectors  Has more than 4000 partners/sponsors globally  Organizes 470 conferences annually  Has more than 1 million alumni  Has 63 years of existence3.1.3 Vision―Peace and Fulfillment of Humankind‘s Potential‖. In today‘s context, ‗peace‘ shouldnot be interpreted necessarily as absence of a major war. ‗Peace‘ symbolizes a worldthat does not have conflicts that arise from cultural, religious, or other aspects ofdifferences in humanity.AIESEC envisions a world where its inhabitants are working together for commongoals to ensure prosperity for all. AIESEC wishes to see the world as a communitywhere its people respect, enjoy, and understand each other. Through ―Fulfillment ofHumankind‘s potential‖ AIESEC expresses its aim to develop individuals who havethe knowledge, skills and determination to develop their communities. 23 | P a g e
  • 24. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaAIESEC‘s aim is to offer as many opportunities as possible for young people todevelop their potential; people who are responsible, entrepreneurial, culturallysensitive and thirsty for learning more! Furthermore, AIESEC wants young people tolearn and contribute to the learning of others so that it helps the development of theircommunities.3.1.4 Values―Activating Leadership‖: we lead by example and inspire leadership through ouractivities. We take full responsibility for developing the leadership potential of ourmembers.―Demonstrating Integrity‖: we are consistent and transparent in our decisions andactions. We fulfill our commitments and conduct ourselves in a way that is true to ourideals.―Living Diversity‖: we seek to learn from the different ways of life and opinionsrepresented in our multicultural environment. We respect and actively encourage thecontribution of every individual.―Enjoying Participation‖: we create a dynamic environment created by active andenthusiastic participation of individuals. We enjoy being involved in AIESEC.―Striving for Excellence‖: we aim to deliver the highest quality performance ineverything we do. Through creativity and innovation we seek to continuouslyimprove.―Acting Sustainably‖: we act in a way that is sustainable for our organization andsociety. Our decisions take into account the needs of future generations. 24 | P a g e
  • 25. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaThe shareholders of AIESEC are:  Members  Enablers: mentors, TN takers, learning and content partners  Supporters: sponsors (financial and in-kind), boards (advisory and governance), support groups, university, government  Impact: the community, alumni3.1.5 ProductAIESEC Experience is the core product of AIESEC. Different facets of AIESECExperience are sold to different stakeholders who customize their own experience.In order to make The AIESEC Experience this experiencemore qualitative, the concept of learning environment was created. This learningenvironment has 6 elements through which every member can learn about a specificissue or functional area. These elements are: 25 | P a g e
  • 26. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba T Individual discovery and reflection Team Experiences Learning Circles Mentoring Conferences and Virtual Spaces; forums, Seminars blogs, resource sharingThere are the five principles which should guide people through the AIESECExperience. Everybody who joins should have them in mind before joining AIESECand also during the actual AIESEC experience:1. Take an active role in your learning and the learning of others  What – you are in charge of your own learning and also to help others learn  Why is it important to the outcome of the Learning Process? o Our education system teaches us to be passive towards learning (take what is given) o The world is dynamic and one must always be proactively learning o It is the only way people will be really committed to the process  Where this principle shows up in the process o Become more involved with organization prior to going on the traineeship and you help out with one of the functional areas o People are informed before entering of what it takes to do an exchange and then have time to get needed skills and resources o Encouraging reflection on goals and persional vision 26 | P a g e
  • 27. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba o Joining a learning network2. Challenge your worldview  What – All new information is interpreted through the worldview of the person, including emotions, attitudes, values, passed experiences, and as a result, motivation and action. It affects a lot how and to what we direct our attention and action in different situations. We want to create situations that broaden and challenge how a person thinks and helps them to see the connection between these elements, their actions, and results.  Why is it important to the outcome of Learning Process? o It is not sufficient to be aware of the problems of the world to achieve change, you must also understand the causes and possible solutions and this requires thinking about and understanding many different points of view. It requires skills, confidence and ―shaking‖ experiences to build a worldview oriented towards positive changes.  Where does this principle show up in the process? o Certain experiences, such as doing an exchange, have the intensity to ―shake up‖ the worldview. Other experiences include:  Having a positive impact on a person  Experiences of failure and success  Forming and exchange ideas with people from different backgrounds  Intense teamwork experience3. Meta-cognition and personal reflection skills  What is it? – refers to the capacity to recognize and evaluate your own thoughts, values, emotions, motives, goals and actions.  Why is it important to the process? 27 | P a g e
  • 28. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba o These skills allow someone to really take advantage of the AIESEC experience, since it allows them to analize their actions and those of others. o Facilitates the creation and completion of goals o Facilitates the creation of values and the will to follow them  Where does this principle show up in the process? o Giving space to reflect on what one has learned or wants to learn o Giving space to share visions and learning experiences with others o Through the role of a mentor4. Increasing Practical and Theoretical Knowledge  What is it? – the opportunity to gain professional and personal skills and to apply them  Why is it important to the outcome of the learning process? o With more skills, one increases the capacity to have an impact in the world o Fills a flaw in our education system in which most students to know have the opportunity to gain practical experience o Learning increases when there is an opportunity to apply and put into practice what you have learned in theory  Where does this principle show up in the learning process? o Experience working as a member in the area of public-speaking, sales, planning, marketing, team management, leadership, budgeting, etc. o During the traineeship o On a theoretical level during conferences or learning activities5. Creating a network of contacts 28 | P a g e
  • 29. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba  What is it – a group of like-minded people who are interested in seeing you make the change you want to see in the world  Why is it important to the outcome of the AIESEC Learning Process? o Because it helps to have contacts and support from all of the world when trying to change it  Where does this principle show up in the AIESEC Learning Process? o Through running the exchange program and attending conferences you are put into contact with people from all over the world o The ability to be in contact with people of similar interest through learning networks3.2 ABOUT AIESEC CLUJ NAPOCAAIESEC Cluj Napoca was established as an initiative of 5 students in 1994. It wasrecognized as a legal entity in 1997. Since then it developed, reaching more than 150members in present, offering more than 70 leadership and 90 internationalopportunities a year.AIESEC Cluj Napoca has its own set of values also (SIGPE DACIM):  Sharing Development  Inspiring Action  Getting Connected  Performing Intelligence  Exploring the Mind3.2.1 ObjectivesAIESEC measures its performance by the following organizational objectives:  Number of experiences in Team Member Program (TMP)  Number of experiences in Team Leader Program (TLP) 29 | P a g e
  • 30. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba  Number of experiences in Global Community Development Program (GCDP)  Number of experiences in Global Internship Program (GIP)The Executive Board (the top management) established objectives for their 1 yearterm (from 01.04.2011 to 31.03.2012):Objective Name Number - TargetInternational Experiences 197GIP - outgoing 52GCDP - outgoing 47GIP – incoming 20GCDP – incoming 78TLP 70Nr of Members 200Financial Reserve 4000 euro3.2.2 Business ModelAIESEC has a business model, for each of its main 4 programs, which describe therationale of how the organization creates, delivers, and captures value. These businesscanvases describe this value generation process for each program, and for eachstakeholder. 30 | P a g e
  • 31. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba 31 | P a g e
  • 32. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba 32 | P a g e
  • 33. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba3.3 STRATEGIES3.3.1 Global StrategyIn order to achieve its goals, AIESECadopted Product Leadership Strategy(focus differentiation strategy). Thisstrategy usually implies: strong innovationand marketing, to operate on dynamicmarkets, focus on development,innovation and design, high margins,educating the market and risk taking.For AIESEC, product leadership means the following: 33 | P a g e
  • 34. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaThe visual representation of the strategy (how is going the organization to achieve itsvision), is presented in the strategy map:The logical flow of all these is that through product leadership, AIESEC will growand attract more customers to consume the AIESEC Experience, more companies andstudents will join the organization, who will experience different stages of theAIESEC Experience.In ―Engagement‖ phase students get knowledge about the organization, about itsvision, values and how it works and also get some preparation on soft skills.At the ―Team Member Program‖ they participate actively in projects, so they takesome responsibilities. At this stage they can try themselves and develop on personal 34 | P a g e
  • 35. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csabaand professional sides, which contribute to the ―fulfillment of humankind‘s potential‖part of the vision.Then they have the possibility to take a ―Leadership‖ opportunity and to becomeProject Managers or Executive Board members (top management). At this stage theywill learn about leadership, management and will have the possibility to coordinatedifferent teams which have specific task and objectives. They can try themselves onhow to be a leader and develop their leadership skills, which also contributes to the―fulfillment of humankind‘s potential‖ part of the vision.Another option is to participate in the international program (Global CommunityDevelopment – volunteering, or Global Internship – professional internship) and goabroad to do an internship. This will take participants away from their comfort zone,and offer them multicultural experiences, the possibility to learn about other culturesand civilizations, to live cultural shocks and also to gain professional experience. Thisstage contributes to ―peace‖ because participants become more tolerant towardsdifferent cultures, religions or ways of thinking, and to ―fulfillment on humankind‘spotential‖ through their professional experience.After completing all the stages, members will become change agents, who will make apositive impact in society, contributing to the vision of the organization.3.3.2 Local StrategyBecause every Local Committee has the freedom to adapt this general global strategy,in the case of AIESEC Cluj-Napoca we can talk about a focus differentiation strategy.One aspect of this strategy is that AIESEC Cluj Napoca needs to be always sure aboutits product portfolio and the value that products offer. This implies constant evolutionand development of the portfolio and training its members on marketing and sales. 35 | P a g e
  • 36. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaBecause of its focus differentiation strategy, AIESEC is aware that the product(experience) it offers is not desired by everyone.Another important aspect is the brand. AIESEC needs to have an extremely strongand reputed brand which transmits the core of AIESEC and the quality of experiencesthat offers. This is very important because a strong brand attract talented people andother organizations towards consuming the AIESEC experience. In order to support the implementation of strategy, AIESEC structured its activities in subsystems. The AIESEC sub-systems model outlines the core activity & process structure of the organization. Each of the sub-system is separate but they are all interdependent on each other.The heart of the organization is the vision, nature, role, core-work and values, whichform the organizational identity. The identity gives the organization reason to existand defines the unique role that it is playing – ―creating impact on society throughdevelopment of Change Agents‖. The strategy puts the vision into practice.AIESEC Experience is a unique leadership development experience, which enablesthe development of individuals into Change Agents. It is the core-work, the coredeliverable of the organization and defines what happens in the sub-systems.The 5 sub-systems of AIESEC create a logical internal system, which is themechanism to deliver core-work – The AIESEC Experience. All the 5 sub-systems arerequired for AIESEC to be able to respond to the needs of our environment and createmore & more of AIESEC Experiences. 36 | P a g e
  • 37. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaExchange Management System:  Promotion (Messages & Campaign)  Market Research & Segmentation (& external input)  Product Development  Delivery Process  Marketing/Selling  Internship Preparation  Reception  Adaptation & Integration  Customer Relationship Management (AIESEC involvement & on-going support during the internship)  Quality Measurement  Re-integrationPeople System:  Recruitment & Marketing Messages/Campaign  HR planning & allocation (AIESEC‘s Talent Management System)  Selection Criteria & System  Defined Induction Process  Competency Model – defined profile for each position  Member Education Cycle (training & education)  Individual Goal Setting  Capturing personal learning/experience  Member Performance Appraisal  Mentoring  Individual Reward & Recognition  Alumni – H4TF Opportunities  Transition Tools & SystemsStructure System:  Compendium  Membership Criteria (Local Committee/Members) 37 | P a g e
  • 38. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba  Organizational Structure (Local Committee/National Committee/Support Bodies etc.)  Role & responsibilities of different bodies  Governance – accountability to external bodies  Organizational Planning & Review (Goal setting & planning for the entire organization – all the different sub-systems)  System of review & assessment (all kinds of performance, health & strategic indicators)  Organizational Reward & Recognition  Conference Cycle (fitting the Member Education Cycle & the Planning Process)  Legal Administration  Expansion of the AIESEC networkInformation System:  IS Infrastructure  Online Collaboration & Networking  Communication  Membership Management  Business Intelligence (for business management & review)  Aiding individual experience  Education & competence development (e-learning aspect)  Exchange Management  Relationship Management  External Interfaces  Knowledge Management  Help Desk – user support & education  Revenue GenerationFinancial System:  Budgeting & Review  Cash Flow Management  Book-keeping  Diversification of Revenue 38 | P a g e
  • 39. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba  Financial Reporting Structure – Audits (internal & external)  Fund-raising  ER products  ER Principles – sharing companies, territories  Financial Reserves Management  Restricted Funds Management  Investments Management  InfrastructureYou can also find the destination statement of AIESEC Cluj-Napoca in annex number2.Considering all, we can state that AIESEC differentiates itself from other studentorganizations through having good systems, tools, processes and structuresimplemented in the organization, which makes it more alike to a corporation, ratherthan a student organization. More than that, what differentiates AIESEC from itscompetitors is the experience that it offers: leadership experience, internationalprofessional and personal experiences and a global learning environment, all in oneplace. The AIESEC experience offers a complex frame for development, makingcontacts, and gaining professional experience on different functional areas, all in onewith enjoyment of participation.3.4 ORGANIZATIONAL STRUCTUREThe organizational structure was a matrix structure, where there were differentfunctional departments, and also a lot of projects, through which most of the resultswere delivered. Through 2011 there was an organizational structural change, startingfrom autumn, where the matrix structure was changed into a completely project basedone, where there is the executive board (EB), with vice-presidents responsible fordifferent areas (operations) and project managers and teams who delivered everysingle activity through projects. 39 | P a g e
  • 40. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaTop management: LCP (Local Committee President), Vice-President TalentManagement (HR), Vice-President Finance, Vice-President Corporate Development(Sales), Vice-President Non-Corporate Development (responsible for bringinginternational volunteers to NGOs through the GCDP program), Vice-PresidentInternational Internships (responsible for sending students and recent graduatesabroad through the GIP and GCDP program), Vice-President Alumni Development,Vice-President Communication. Project Project Project Project Manager 1 Manager 2 Manager 3 Manager 4 Organizing Organizing Organizing Organizing Committee 1 Committee 2 Committee 3 Committee 4The executive board functions have the following roles:  Local Committee President: managing and developing the executive board team, organization management, external representation, performance management, defining direction and core strategies  VP Finance: resource management (financial, consumables), defining rules and framework for the usage of resources, diversification of income sources, legal management  VP Talent Management: defining framework for managing HR in the organization (internal systems and rules), tracking HR and their education and development, developing performance management system, talent planning, 40 | P a g e
  • 41. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba R&R system, managing internal programs (team member, team leader), recruitment and selection  VP Corporate Development: managing incoming Global Internship Program, product development for the corporate sector, revenue generation from the corporate sector, attracting development partners for know-how, managing partnerships  VP Non-Corporate Development: managing incoming Global Community Development Program, product development for the non-corporate sector (NGOs, schools, etc), revenue generation from the non-corporate sector, managing partnerships, social projects development  VP International Internships: managing outgoing Global Internship Program and Global Community Development Program, product development for the students and recent graduates sector, revenue generation, managing partnerships  VP Alumni Development: product development for Alumni, revenue generation from Alumni, account management with Alumni, managing Life- Long Connection Phase  VP Communication: account management with the media, managing media partnerships, aligning communication messages, managing communication channels, brand managementThe Accountability system works as follows: 41 | P a g e
  • 42. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaThe vice-presidents are accountable in front of the president for the specific goals ontheir areas. The project managers and team leaders (for initiatives in a specific area)are accountable in front of the vice-president who selected them. They are heldaccountable for the specific objectives of their project/initiative. Then team membersare accountable in front of the project manager/team leader for their specificobjectives and tasks.In order to have more members engaged in the development of new product andproject development, and to have specialists in each functional area that can becomeproject managers (or team leaders) or deliver the projects, there was mapped acategory for specialists. Specialists are not part of the structure (as a position in theorganization), they are more like an accreditation for people who have moreexperience in a specific area or process:In order to ensure that operations are happening and the organization is constantlydriving innovation, a new product development cycle and process was put in place.This was critical, since all operations and activities are happening in projects, so it isimportant that projects are developed and put in place really quick. The projectdevelopment flow happens as follows: 42 | P a g e
  • 43. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaThe Executive Board (EB) takes all major decisions in the organization and at thestrategic level. For different decisions regarding achieving specific objectives, orsolving different problems, they engage members (specialists) who have experience ina specific area and have project management experience.A vice-president who has a problem or a specific goal for which he/she wants to findand initiative or a project, establishes a task force. The vice-president also invitesexperienced members into this task force from areas that can have a contribution inmaking that specific decision. The task force meets and discusses possible solutions.Than the VP selects the best suitable solution (initiative or project), usually discussingalso with the executive board, or at least other vice-presidents (if it is an initiative orproject that requires support from other vice-presidents also). 43 | P a g e
  • 44. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaAfter selecting the initiative or project, the project manager position is launched and aproject manager is selected. Usually people who participated in the task force areapplying for the project manager positions. After that, the project manager selectsmembers into the project team, who will implement the project and will beaccountable for the objectives of the project.In order to be able to manage all the projects in the organization, a project planning,management and evaluation tool was developed which is used by every team online(in google docs).As a result of the new organizational structure and working method, there was agrowth on the realization of organizational objectives. Overall results growth was%48 compared to the same period on the previous term. Retention rate (calculated 6month after the recruitment) and engagement of members also increased from %82 to%97 compared to the last term.These results war brought by the increased engagement and activity of members, andalso from the simplified accountability brought by the new organizational structure(compared to the past matrix structure where there was double accountability ofproject managers). 44 | P a g e
  • 45. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba CONCLUSIONToday we are facing a lot of challenges. From environmental, through social, toeconomic challenges. These challenges force us to be creative, to generate solutionsand to change things.Classical organizational structures are outdated for most of the organizations. Forfocus differentiation strategy it is critical to be able to be flexible and innovative inorder to maintain our competitive advantages. To drive innovation and to be able toadapt to changes in the market and to our customers‘ needs, we have to implementorganizational structures that support innovation, collaboration and fast decisionmaking in our organizations.The study case demonstrated that a project based structure for a focus differentiationstrategy can work. It can work in an NGO that is constantly changing, evaluating andgrowing for 63 years now. You may think that managing an NGO is different frommanaging a business, and it is much easier. The fact is, that every single concept andmodel that is adopted and used in AIESEC, came from the corporate sector. Partnersof AIESEC helped the development and implementation of those business models,strategies and organizational structures.It makes no difference where we implement organizational structures. It can be anykind of organization. The difference between AIESEC and companies is thatcompanies are working for different kind of objectives and they use differentmotivators.AIESEC measures its performance in number of members, number of leadershippositions and experiences that are realized, number of international experiences that it 45 | P a g e
  • 46. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csabaprovides. AIESEC uses mostly non-financial motivators, because it is a voluntarywork.Companies usually measure their performance in number of clients, number ofproducts or services sold or experiences staged, return on investment and profits thatwere generated. Companies can use all kinds of non-financial motivators and financialmotivators as well.I am not saying that functional structures, matrix structures or divisional structurescan‘t work. There are examples where companies have success. But I truly believethat we have to start thinking strategically, on the long term. We have to maintain ourcompetitive advantages, and for this reason, organizational structure is a key factorthat can drive performance and efficiency in doing so. 46 | P a g e
  • 47. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba BIBLIOGRAPHYBooks  Alfred Sloan, My years with General Motors, New York, Doubleday, 1963  David F., Strategic Management, Columbus: Merrill Publishing Company, 1989  Michael Porter, Competitive Advantage, The Free Press, New York, 1985  Michael Porter, Competitive Strategy, The Free Press, New York, 1980  Oxford English Dictionary (2 ed.), Oxford, England: Oxford University Press, 1989  Richard Wittington, What is strategy, and does it matter? (2 ed.), London, Cengage Learning, 2001  Robert E. Hoskisson, Michael A. Hitt, R. Duane Ireland, Competing for Advantage (2 ed.), Newgen-Austin, 2008  Tom Peters, Re-Imagine! Business Excellence in a Disruptive Age, Dorling Kindersley Limited, London, 2004  Ron Ashkenas, Solving the Rubiks Cube of Organizational Structure, Harvard Business Review, March, 2011Articles and other studies  Jeff Bordes, Strategic Management assignment - building and sustaining competitive advantage, Atlantic International University, Honolulu, 2009  Michael Porter, What is Strategy, Harvard Business Review November- December, 1996  Sumantra Ghoshal, Christopher A. Bartlett, Changing the Role of Top Management: Beyond Structure to Processes, Harvard Business Review January, 1995  David Krackhardt, Jeffrey R. Hanson, Informal Networks: The Company Behind the Chart, Harvard Business Review, July, 1993  Christopher A. Bartlett, Sumantra Ghoshal, Matrix Management: Not a Structure, a Frame of Mind, Harvard Business Review, July, 1990 47 | P a g e
  • 48. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba  Corkindale, The Importance of Organizational Design and Structure, Harvard Business Review February, 2011Videos  Jacek Utko designs to save newspapers (http://www.ted.com/talks/jacek_utko_asks_can_design_save_the_newspaper. html)  Jay Walkers library of human imagination (http://www.ted.com/talks/jay_walker_s_library_of_human_imagination.html)  Malcolm Gladwell on spaghetti sauce (http://www.ted.com/talks/malcolm_gladwell_on_spaghetti_sauce.html)  Seth Godin on standing out (http://www.ted.com/talks/seth_godin_on_sliced_bread.html)  Seth Godin on the tribes we lead (http://www.ted.com/talks/seth_godin_on_the_tribes_we_lead.html)  Simon Sinek: How great leaders inspire action (http://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action.ht ml)  Sir Ken Robinson: Bring on the learning revolution! (http://www.ted.com/talks/sir_ken_robinson_bring_on_the_revolution.html)  Viktor Frankl: Why to believe in others (http://www.ted.com/talks/lang/eng/viktor_frankl_youth_in_search_of_meani ng.html)Internet  http://www.hainescentre.com/strategic-management, accessed at 16.05.2012  http://www.quantifiedmarketing.com/ , accessed at 18.05.2012Online dictionaries and encyclopedias:  http://www.wikiquote.org/  http://www.wikipedia.org/ 48 | P a g e
  • 49. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd Csaba ANNEXESAnnex number 1The exchange flow and duration in AIESEC Optimistic Pesimistic case case Action 1 AIESEC contacts the company START The company agrees to participate in the program and fills in a form and makes the job description for the trainee. 2 3 weeks 8 weeks AIESEC selects possible candidates from its international database, based on the criteria established by the company. 3 1 week 4 weeks AIESEC presents 2-3 candidates for thecompany (CV, other information), based on the profile provided by them. The company selects an intern after finishing the selection process (usually interview). 4 6 weeks 12 weeks AIESEC deals with legal issues (preparing and sending documentation for visa). After arrival, the trainee signs a collaboration contract with the company. - The company assures all living costs for the trainee- The company pays all administrative costs for AIESEC STARTING the internship Total 10 weeks 24 weeks 49 | P a g e
  • 50. Organizational Structure for Differentiation Focus Strategy KACSÓ Szilárd CsabaAnnex number 2 Destinations statement of AIESEC Cluj-Napoca 50 | P a g e

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