WITH THE AID OF DIAGRAM EXPLAIN THE SYSTEM APPROACH TO

ORGANIZATIONAL ANALYSIS
 WHAT ARE OPEN AND CLOSE SYSTEM OF ORGANIZATION
A system is commonly defined as a group of interacting units or elements that have a common
purpose. The units or elements of a system can be cogs, wires, people, computers, and so on.
Systems are generally classified as open systems and closed systems and they can take the form
of mechanical, biological, or social systems. Open systems refer to systems that interact with
other systems or the outside environment, whereas closed systems refer to systems having
relatively little interaction with other systems or the outside environment. For example, living
organisms are considered open systems because they take in substances from their environment
such as food and air and return other substances to their environment. Humans, for example,
inhale oxygen out of the environment and exhale carbon dioxide into the environment. Similarly,
some organizations consume raw materials in the production of products and emit finished goods
and pollution as a result. In contrast, a watch is an example of a closed system in that it is a
relatively self-contained, self-maintaining unit that has little interacts or exchange with its
environment.
All systems have boundaries, a fact that is immediately apparent in mechanical systems such as
the watch, but much less apparent in social systems such as organizations. The boundaries of
open systems, because they interact with other systems or environments, are more flexible than
those of closed systems, which are rigid and largely impenetrable. A closed-system perspective
views organizations as relatively independent of environmental influences. The closed-system
approach conceives of the organization as a system of management, technology, personnel,
equipment, and materials, but tends to exclude competitors, suppliers, distributors, and
governmental regulators. This approach allows managers and organizational theorists to analyze
problems by examining the internal structure of a business with little consideration of the
external environment. The closed-system perspective basically views an organization much as a
thermostat; limited environmental input outside of changes in temperature is required for
effective operation. Once set, thermostats require little maintenance in their ongoing, self-
reinforcing function. While the closed-system perspective was dominant through the 1960s,
organization scholarship and research subsequently emphasized the role of the environment. Up
through the 1960s, it was not that managers ignored the outside environment such as other
organizations, markets, government regulations and the like, but that their strategies and other
decision-making processes gave relatively little consideration to the impact these external forces
might have on the internal operations of the organization.
Open-systems theory originated in the natural sciences and subsequently spread to fields as
diverse as computer science, ecology, engineering, management, and psychotherapy. In contrast
to closed-systems, the open-system perspective views an organization as an entity that takes
inputs from the environment, transforms them, and releases them as outputs in tandem with
reciprocal effects on the organization itself along with the environment in which the organization
operates. That is, the organization becomes part and parcel of the environment in which it is
situated. Returning for a moment to the example of biological systems as open-systems, billions
of individual cells in the human body, themselves composed of thousands of individual parts and
processes, are essential for the viability of the larger body in which they are a part. In turn,
"macro-level" processes such as eating and breathing make the survival of individual cells
contingent on these larger processes. In much the same way, open-systems of organizations
accept that organizations are contingent on their environments and these environments are also
contingent on organizations.
As an open-systems approach spread among organizational theorists, managers began
incorporating these views into practice. Two early pioneers in this effort, Daniel Katz and Robert
Kahn, began viewing organizations as open social systems with specialized and interdependent
subsystems and processes of communication, feedback, and management linking the subsystems.
Katz and Kahn argued that the closed-system approach fails to take into account how
organizations are reciprocally dependent on external environments. For example, environmental
forces such as customers and competitors exert considerable influence on corporations,
highlighting the essential relationship between an organization and its environment as well as the
importance of maintaining external inputs to achieve a stable organization.
Furthermore, the open-system approach serves as a model of business activity; that is, business
as a process of transforming inputs to outputs while realizing that inputs are taken from the
external environment and outputs are placed into this same environment. Companies use inputs
such as labor, funds, equipment, and materials to produce goods or to provide services and they
design their subsystems to attain these goals. These subsystems are thus analogous to cells in the
body, the organization itself is analogous to the body, and external market and regulatory
conditions are analogous to environmental factors such as the quality of housing, drinking water,
air and availability of nourishment.
The production subsystem, for example, focuses on converting inputs into marketable outputs
and often constitutes a primary purpose of a company. The boundary subsystem's goal is to
obtain inputs or resources, such as employees, materials, equipment, and so forth, from the
environment outside of the company, which are necessary for the production subsystem. This
subsystem also is responsible for providing an organization with information about the
environment. This adaptive subsystem collects and processes information about a company's
operations with the goal of aiding the company's adaptation to external conditions in its
environment. Another subsystem, management, supervises and coordinates the other subsystems
to ensure that each subsystem functions efficiently. The management subsystem must resolve
conflicts, solve problems, allocate resources, and so on.
To simplify the process of evaluating environmental influences, some organizational theorists
use the term "task environment" to refer to aspects of the environment that are immediately
relevant to management decisions related to goal setting and goal realization. The task
environment includes customers, suppliers, competitors, employees, and regulatory bodies.
Furthermore, in contrast to closed-systems, the open-system perspective does not assume that the
environment is static. Instead, change is the rule rather than the exception. Consequently,
investigation of environmental stability and propensity to change is a key task of a company,
making the activities of an organization contingent on various environmental forces. As an open
system, an organization maintains its stability through feedback, which refers to information
about outputs that a system obtains as an input from its task environment. The feedback can be
positive or negative and can lead to changes in the way an organization transforms inputs to
outputs. Here, the organization acts as a thermostat, identified previously as an example of a
relatively closed-system. The difference between closed-systems and open-systems, then, is in
the complexity of environmental interactions. Closed-systems assume relatively little
complexity; a thermostat is a simple device dependent mainly on temperature fluctuations.
Conversely, open-system such as the human body and modern organizations are more intricately
dependent on their environments. The point is that closed-systems versus open-systems do not
represent a dichotomy, but rather a continuum along which organizations are more open or less
open to their environments. The key defining variable governing this degree of openness is the
complexity of the environment in which the organization is situated.
Managers must take into consideration their organization's position along the open-closed
continuum. The Linux computer operating system, for instance, is "open-source" and Red Hat,
Inc., the corporation selling the bundled revisions-the multiple inputs from geographically
dispersed users-represents an organization that would cease to exist if it were not for an open-
systems perspective. Thus, stable environments with low complexity are more consistent with a
relatively closed-system or mechanistic management style, while rapidly-changing environments
are more consistent with flexible, decentralized, or "organic" management styles.
The Systems Approach to management theory, commonly viewed as the foundation of
organizational development, views the organization as an open system made up of interrelated
and inter-dependent parts that interact as sub-systems. 
Thus the organization comprises a unified singular system made up of these subsystems. For
example, a firm is a system that may be composed of sub-systems such as production, marketing,
finance, accounting and so on. As such, the various sub-systems should be studied in their inter-
relationships rather, than in isolation from each other. 

The system as a whole is affected by internal elements (aspects of the sub-units) and external
elements. It is responsive to forces from the external environment. 

The system is considered open, as organizations receive varied forms of inputs from other
systems. For example, a company receives supplies, information, raw materials, etc. These inputs
are converted to outputs that affect other systems. 

Generally, the systems approach assesses the overall effectiveness of the system rather than the
effectiveness of the sub-systems. This allows for the application of system concepts, across
organizational levels in the organization - rather than only focusing upon the objectives and
performances of different departments (subsystems). 

Organizational success depends upon interaction and interdependence between the subsystems,
synergy between the sub-systems, and interaction between internal components (closed system)
and external components (internal system). 

The systems approach implies that decisions and actions in one organizational area will affect
other areas. For example, if the purchasing department does not acquire the right quantity and
quality of inputs, the production department wont be able to do its job. 

This approach recognizes that an organization relies on the environment for essential inputs.
Further, the environment serves an outlet for its outputs.

What are the primary Characteristics of an Organizational System?

The following are the chief characteristics of the System Approach to Management:

 Sub-Systems - Each organization is a system made up of a combination of many sub-

systems. These sub-systems are inter-related.
 Holism - Each sub-system works together to make up a single whole system. Decisions
made in any subsystem affect the entire system.
 Synergy - The collective output of the whole system is greater than the sum of output of
its sub-systems.
 Closed and Open Systems - The whole organization is an open system made up of a
combination of open and closed sub-systems.
 System Boundary - The organization is separate from the external environment made up
of other systems.

What are the components of an Organizational System? 

The system approach envisions the organization as made up five components:

 Inputs - Raw Materials, Human Resources, Capital, Information, Technology

 A Transformational Process - Employee Work Activities, Management Activities,
Operations Methods
 Outputs - Products or Services, Financial Results, Information, Human Results
 Feedback - Results from outputs influence inputs.
  The Environment - These components make up internal and external factors that affect
the system.

What are Closed and Open Management Systems?

An organization is made up of closed systems and open systems. 

Closed systems are the internal sub-units of the organization that do not interact with the
external environment. 

Open systems are internal sub-units that interact with other systems (or sub-units within other
systems) that are outside of the organization. In effect, all organizations are open systems.

What are General and Specific Management Systems?

The general systems approach to management is mainly concerned with formal organizations
and the concepts are relating to technique of sociology, psychology and philosophy. 

The specific management system includes the analysis of organizational structure, information,
planning and control mechanism and job design, etc. 

Advantages and Disadvantages of a Systems Approach 

The advantages of the systems approach include:

 It assists in studying the functions of complex organizations

 It is probabilistic rather than deterministic.
 It has been utilized as the base for the new kinds of organizations like project
management organization.
 It is possible to bring out the inter-relations in various functions like planning,
organizing, directing and controlling.

Negative attributes of the systems approach include:

 This approach is somewhat abstract and vague.

 It can be difficult to apply to large and complex organizations.
 It does not provide any tool and technique for managers.
  It is not a prescriptive management theory, as it does not specify tools and techniques for
practicing managers
 It does not address power and social inequalities and their causes.
 It does not specify the nature of interactions and interdependencies.

Who are the Primary Contributors to Systems Theory?

 Chester Bernard introduced the concept of Cooperative Systems in his book, Functions of
an Executive (1938). 
 Economist, Herbert Simon, introduced in his book, Administrative Behavior (1947), the
concept of systems process in decision-making within organizations. Notably, he
introduced concepts of bounded rationality and satisfying. 
 Biologist, Ludwig von Bertalanffy, introduced principles of General Systems theory in
1950. 
 Other contributors include: Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L.
Kahn, W. Buckley and J.D. Thompson.

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knowledge-claims. Religion is not an open system.
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