System Approach to Management
Each sub-system derives its strength by its
 It is a collection of interrelated parts
acting together to achieve some goal
which exists in the environment. Also,
system is defined as a set of objects
working together, with relationships
between the objects and their
attributes related to each other and
to the environment.
 Therefore, system in simple terms in
respect to management, is a set of
different independent parts working
together in interrelated manner to
accomplish a set of objectives.
Organization as a System receives Input, transforms it
through a Process for Output in an Environment
(economic, regulatory, and other forces )
Elements of Systems Approach
1. An organization is a unified and purposeful
system consisting of several interconnected,
interacting and independent parts.
2. The parts of a system are called sub-
systems. Each sub-system influences the
other sub-systems and the system as a
whole.
3. The position and function of each sub-
system can be analysed and understood only
in relation to other sub-system and to
organization as a whole.
3.
association and interaction with the other
sub-systems, As a result the collective
contribution of the organization is greater
than the aggregate of individual
contributions of its sub-systems. This is
known as synergy.
4. Each system has a boundary that
separated it from its environment. The
boundary determines which parts are
internal to the organization and which are
external. For example, employees are within
the boundary and creditors, customers are
external to a firm.
5. The reaction or response of the
environment the output is known as
feedback. Feedback is useful in evaluating
and improving the functioning of the system.
6. Organization on the principle that they
have several alternative ways of doing the
same thing or achieving the same goal.
Classification of Systems
Open System
An open system actively interacts with its
environment. By interacting with other
systems, it tries to establish exchange
relationships.
Closed Systems  It is unpractical because it cannot be
directly applied to practical problems.
A closed system is self-contained and isolated
 May not be applicable to smaller
from the environment. It is a non-adaptive
organizations. The theory assumes
systems. It does not receive inputs from
that most organizations are large.
other systems and does not trade with the
outside world (e.g An automatic wrist watch).

Advantages of this Theory

 It aims at meaningful analysis of

organizations and their management.
 It facilitates the interaction between
organization and its environment
 It guides mangers to avoid analyzing
problems in isolation and to develop
an integrated approach.
 It increases the organization’s
adaptability to environment changes.
The organization is studied as a whole
and not through its parts. This
enables it to adapt to the needs of the
environment.
 The focus is on achieving the
individual as well as overall goals of
the organization.
 Focuses on multiple dimensions of
management.
Disadvantages of this Theory

 Over conceptual
 The approach does not recognizes
difference in systems.
 System philosophy does not specify
the nature of interactions and
interdependence.
 Classification of the inter-
relationships has to be done properly
otherwise it could be counter
productive.