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Management

The systems approach views an organization as an open system comprised of interconnected sub-systems that work together towards common goals. It emphasizes that changes in one part of the system can affect other parts. An organizational system has five key components: inputs, transformational processes, outputs, feedback, and the environment. This approach provides managers with a holistic view of the organization and how internal and external factors interact and influence the system as a whole.
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0% found this document useful (0 votes)
364 views19 pages

Management

The systems approach views an organization as an open system comprised of interconnected sub-systems that work together towards common goals. It emphasizes that changes in one part of the system can affect other parts. An organizational system has five key components: inputs, transformational processes, outputs, feedback, and the environment. This approach provides managers with a holistic view of the organization and how internal and external factors interact and influence the system as a whole.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

THE INSTITUTE OF ADMINISTRATION AND COMMERCE

Name of Institute : Institute of Administration and commerce


Student Name : Tinotenda Musambasi

National ID : 77-094010-L66

Student Number : 220051

Subject : Management

Answered questions :
QUESTION 1 ✓

QUESTION 2 ✓

1
Your presentation should include
• Table of Contents
• Introduction
• Definition of Important Terms ( 3 to 5 )
• Discussions with headings and sub-headings and diagrams as necessary.
• Conclusion(s)
• Recommendations
• References

2
QUESTION 1
With the aid of a diagram, explain the Systems approach to management of organizations
[50 Marks]
Introduction
Systems approach to management developed after 1950. Many pioneers during as E.L Trist, AK
Ria, F.E. Kast, and R.A Johnsm have made significant contributions to this approach. This systems
approach looks upon the management as a ‘System’ of as an organized whole make up of sub-
systems integrated into a unity or orderly totality. The attention should be given so overall
effectiveness of the system rather than effectiveness of any sub-system if isolation. It took where
management process school left off in attempting to unify management theory. It emphasizes the
inter-relatedness and inter-dependence of all activities within an organisation. It is based on system
analysis. It attempts to identify the nature of relationships of various parts of the system. A system
is a set of inter-connected elements or component parts to achieve certain goals. An organisation
is viewed by the modern authors as an open system. An organisation as a system has five basic
parts: input, process, output, feedback and environment. Systems approach to management
provides a conceptual basis as well as guidelines for establishing a more efficient system for
planning, organisation, directing and controlling. It forces the manager to look upon his business
as an open adaptive system. Information is an important part of the system because an organisation
must act and interact with its environment.

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.

3
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.

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.

4
Systems approach is a management perspective which advocates that any business problem should
be seen as system as a whole which is made up of an hierarchy of sub-systems. So rather than
seeing the problem in parts it should be seen as whole. Systems approach can be applied to all the
business domains like administration, insurance, banking, hospitality etc. Though it defines system
as a whole but it keeps focus on the subsystems and components as well on their role in the entire
system. It is linked closely to Systems Thinking. A defined system has a clear boundary and is
separate from the environment. This makes it stand apart to look at the problem and its solution.
Each subsystem contributes to making this system as a whole.

Example of Systems Approach


Let us take an example of an organization which is unable to retain employees in the sales
department. So, there are two approaches to solve this. The first one is to focus on the sales
department only as it is sales issue and the other approach is the systems driven in which the overall
picture is seen. It may be the case that due to poor variable pay and low product quality might be
the reason the sales force is reducing. Now the problem was related to the HR subsystem and R&D
subsystem and not pertaining to the sales. By addressing the issues, the sales team would become
motivated and the problem would get resolved.

Dependency

5
Each part of the system derives inputs and information from other system to achieve the business
goal. The parts do not exist in silos but are coupled with one another to work as part of an entire
working system. It considers the impact of both near and distant future on organisational activities.
Organisations constantly respond to changes in the internal and external environmental conditions.
They also act as market leaders in the dynamic, competitive environment. It synthesizes
knowledge of different fields of study such as biology, sociology, psychology, information
systems, economics etc. As business organisation deals with different components of society, it
makes best use of different fields of study to improve interaction with its counterparts.

Responsiveness
The system changes as per the environment and reacts to the changes in the environment. If the
external environment changes then systems responds as well by making changes in its parameters
to stay relevant and work as per expectations.

Results
Systems approach is focused on producing right results for the overall system. Each part needs to
work according to the requirement of the overall system and product expected results. All
departments and sub-systems of the overall large system need to product results. Just one or two
parts performing well will not help the system.

Focus
The focus of each part of the system should be clearly and well defined. e.g. All the departments
in the organization should have their clear responsibilities to make the system or organization
work. Overlapping responsibilities can reduce the focus and effectiveness of the entire system.
System approach enables organisations to frame policies that promote business objectives and
social objectives. Business operates in the social system and social values, culture, beliefs and
ethics are important constituents of business operations. System approach integrates goals of
different parts of the organisation (sub-systems or departments) with the organisation as a whole.
It also integrates goals of the organisation with goals of the environment or society in which it
operates. Integration of goals maintains equilibrium or balance and enables organisations to grow
in the dynamic environment.

Evaluation of System Approach:


The system approach has the following merits:
• System approach provides a holistic view of the organisations and emphasises on their adaptive
nature. It increases organisation’s adaptability to environmental changes. The organisation is

6
studied as a whole and not through its parts. This enables it to adapt to the needs of the
environment. Decisions are made keeping in mind organisation-environment interface.
• It analyses the system at different levels and inter-relates and integrates it into a unified set of
direction. Starting from individual goals, it focuses on overall organisational goals, synthesizes
the two and converges them into global economy.
• System approach provides a framework for effective interaction of parts of the organisation in
a specific arrangement for attainment of its goals. It does not focus on one part of the
organisation.
• It considers the impact of environment on the organisation and vice versa. Interaction of
external environment with the internal environment is the most significant contribution of
systems theory. System approach, thus, analyses the organisation as an adaptive and dynamic
entity.
• System approach synthesizes the classical and behavioural theories into a broader framework
to solve managerial problems. It, thus, focuses on organisations as multi-dimensional in nature.

Limitations of System Approach:


• Critics of this theory claim this as a theoretical approach to management. The way an
organisation actually works and solves problems (by applying different techniques and
methods) has no appeal in the theory.
• Relationship amongst parts of the organisation is emphasised upon but the exact nature of inter-
dependence is not defined.
• Exact relationship between internal and external environment of the organisation is also not
defined. For example, it specifies that change in economic policies necessitates change in
internal policies of the organisation but what changes are required to match the changes in
economic environment is not talked about.
• System approach fails to provide uniform approach to management. Management practices
change with changes in environmental variables. No standard set of principles apply to all
types of organisations.
• It has added nothing new to the study of management. Even before this approach was
introduced, managerial decisions were taken keeping in mind the environmental variables. No
specific decision-making techniques are offered to deal with specific problems.
• It fails to provide concepts that apply to all types of organisations. The small organisations are
less adaptive to environmental variables than large organisations. The theory assumes that most
of the organisations are big, complex and open systems. It, thus, fails to provide a unified
theory.

Importance of Systems Approach

7
Systems approach is very important as it provides the bigger picture. It sees all departments and
subsystems as contributing factors for the overall organization. Overall success of organizations is
seen as a whole and not success of one department over the other. Let us take a scenario. If we are
facing an issue in a company related to sales and we only see the problem to be solved with the
sales department rather than all the departments together we may not be able to solve the problem
effectively. Only focusing on sales will lead to more pressure on sales team to increases sales
leading to poor customer experience as the sales department will try hard on upselling or cross
selling. But if we use systems approach and see the problem of sales at whole level then we might
see that the product quality can be an issue or maybe there is not enough marketing done for the
product or may be the after sales service is not provided leading to drop in sales figures. The
company can then focus on overall goals and strategy to make sure that a high-quality product or
service would be produced with great customer experience. That will help not only help the sales
problem but overall uplift the company. Systems approach gives insights into each components'
workings and helps see its contribution to the overall system.

8
QUESTION 2
Discuss the internal business environmental factors of organizations and how these can affect the
organizations’ operations. [50 Marks]

Introduction
Business environment is formed not merely on some sense of objective reality, but on its own
perception of reality, business needs to properly taken care of, for profit margin to be accurate. In
consonance with this theory, individuals attempt to determine the probability of a measure of
expectancy of outcome. The personal outcomes are rewarding that organization can provide like
pay increase, promotion, bonus, allowances, level and even relationship with workmates etc, while
the expected to such outcomes refers to expectancy, the measure of importance attached to such
outcomes or reward is known as valence, the value of which are a result of the attractiveness and
the opinion of the beneficiaries about the reward in questions. An organization uses different types
of resources produces synergy or dynergy within an organization which leads to the development
of strengths of weaknesses over a period of time. Organizational capability in the design and
implementation of corporate policy and strategy rests on the organization’s capacity and ability to
use its distinctive competencies to excel in a particular field. There are five major variables within
the organization that management must consider: objectives, structure, tasks, technology and
people.

Definition of terms
Environment - Environment is the totality of the surroundings of the organization for wider
concept, Harrison (1996)
Business Environment - As a concept, business environment is regarded to be a complex and
important consequent, the concept has been addressed in a number of ways by different scholars.
The Internal Environment - This includes situational factors within the organization. These
factors are largely the result of decisions of the management process, most times under
management control.
Organizational performance - Organizational performance involves the using of resources
wisely to avoid wastage
Objectives - These are the specific desired results, the group wishes to attain, by working together.
Technology - This is a management raw material - people, information, or physical;
materials - into desirable goods and services

9
People - When we speak of organization, management, subordinates, workers we are simply
describing groups of people.

Figure 1: Interrelatedness of Internal Variable of Organization

Technology

People Objectives Structure

Tasks

Source: Emerson, J.E (2002), Essential Management: Illinois McGraw-Hills

All of the internal variables are interrelated. A change in one variable invariably affects others to
some degree. If it has a negative effect on one variable it may impede the attainment of
organizational objectives.

Internal Environment of Organization


Forces or conditions or surroundings within the boundary of the organization are the elements of
the internal environment of the organization. The internal environment generally consists of those
elements that exist within or inside the organization such as physical resources, financial
resources, human resources, information resources, technological resources, organization’s
goodwill, corporate culture and the like. The internal environment includes everything within the
boundaries of the organization. Some of these are tangible, such as the physical facilities, the plant
capacity technology, proprietary technology or know-how; some are intangible, such as
information processing and communication capabilities, reward and task structure, performance

10
expectations, power structure management capability and dynamics of the organization’s culture.
Based on those resources, the organization can create and deliver value to the customer. This value
is fundamental to defining the organization’s purpose, and the premise on which it seeks to be
profitable. Are we adding value by research and development or by customer service, or by prompt
delivery or by cutting any intermediary which reduces the customers’ costs? Organizations build
capabilities over a long time. They consistently invest in some areas so that they can build strong
competitive businesses based on the uniqueness they have created. The manager’s response to the
external environment would depend upon the availability and the configuration of resource
deployment within the organization.

The internal factors of a business are often studied in a SWOT analysis. The SWOT matrix is a
structured planning method. You can use SWOT analysis to analyse your company and its
environment. It assesses the strengths, weaknesses, opportunities, and threats. The strengths and
weaknesses of a project or business are internal factors. Opportunities and threats are external
elements. Strengths are the features of your business which allow you to work more effectively
than competitors. Your specialist technical knowledge could be your strength. You will have to
consider your strengths from own point of view. You should also give importance to customers’
and clients’ view. You must be honest and realistic. When you try to find company’s strengths, try
to answer the below questions: what is it that you do well?, what benefits do you have over your
competitors? And what makes you stand out from the competitors?

Weaknesses are the areas which have scope for improvement. Find out if your business is new
products or skills. Also, try to find if you have a lower productivity or higher cost base than your
competitors. You will have to face the unpleasant truths about your firm and be realistic. Ask the
following questions: what are you bad at?, is there anything you could be better at?, what should
you avoid? And what leads to problems or complaints? The greatest thing about internal factors is
that you have control over most of them. Changing internal factors often involves some indirect
costs. Some of the factors are a result of the way you run your business. Example of this includes
reputation, credit worthiness, and image. Other factors depend on your business decisions.
Example of this includes management structure and staffing.

11
Elements of internal environment are;
1. Owners and Shareholders.
2. Board of Directors.
3. Employees.
4. Organizational Culture.
5. Resources of the Organization.
6. Organization’s image/goodwill.

Objectives
On the dimension of objectives, one must ask questions that must be asked are, Why does an
organization exist? What is its purpose? Answering these fundamental questions describes an
organization's mission. A successful organization has a clear sense of its ultimate purpose and
knows how it intends to fulfil that purpose. Steve Jobs' original mission statement for Apple is a
great example that describes in a few words both the company's ultimate goal, "To contribute to
the world," and how it intends to reach that goal, "by making tools for the mind that advance
humankind."

People
Great leaders inspire and direct and they fall under the people category of the internal environment.
Often the way they do that most persuasively is by example. After 30 years of brutal and isolating
imprisonment, Nelson Mandela returned to South Africa to lead the country. It would have been
understandable if upon gaining power Mandela had retaliated for the brutality of South Africa's
Apartheid regime. Instead, he advocated communication, understanding and forgiveness.
Consequently, South Africa achieved independence with a minimum of violence and retained and
utilized the skills of the majority of its citizens. The deployment of resources is a key managerial
responsibility. Top management is vested with the responsibility of allocating resources between
the ongoing operations/activities and also with future operations which are of strategic nature, that
is they might yield returns in some future time which require resources now to be nurtured and
have some associated risks. The top management has to balance the conflicting demands of both
as resources are always finite. For example, General Electric is an aggressive innovator and
marketer who has been ruthless in its approach to changing proactively as well as reactively to
sustain its competitive positions in the respective industries. This implies that over the years
General Electric has invested in developing those capabilities, systems, and processes that enable
it to respond.

12
The people in an organisation interact with each other through communication. Successful
organizations thrive on robust communication practices, where teams and team leaders
communicate freely and often to improve results. This two-way communication up and down the
hierarchical structure extends from top to bottom. Organizations with communication deficiencies
often have rigid leadership structures that destroy trust.

Owners and Shareholders, Owners are people who invested in the company and have property
rights and claims on the organization. Owners can be an individual or group of persons who started
the company; or who bought a share of the company in the share market. They have the right to
change the company’s policy at any time. Owners of an organization may be an individual in the
case of sole proprietorship business, partners in a partnership firm, shareholders or stockholders in
a limited company or members in a cooperative society. In public enterprises, the government of
the country is the owner. Whoever the owners, they are an integral part of the organization’s
internal environment. Owners play an important role in influencing the affairs of the business. This
is the reason why managers should take more care of the owners of their organizations.

Board of Directors, the board of directors is the governing body of the company who is elected
by stockholders, and they are given the responsibility for overseeing a firm’s top managers such
as the general manager. Employees, or the workforce, the most important element of an
organization’s internal environment, which performs the tasks of the administration. Individual
employees and also the labor unions they join are important parts of the internal environment. If
managed properly they can positively change the organization’s policy. But ill-management of the
workforce could lead to a catastrophic situation for the company. The strength of employees is
also an essential internal business factor. Check if employees are motivated, hard-working and
talented. They will produce better results compared to an unmotivated and less talented workforce.
The processes and relationships between and within departments can also improve effectiveness
and efficiency. In a high performing workplace, the workers not only have talent, but they also
work better together. The employees and departments collaborate on ideas and resolutions.
employees are vital to business success. But, there are risks associated with them. For an industry,
strike action could lead to a lot of problems.

Learning is one of the most fundamental human activities and accounts directly or indirectly for
the success of any organization. As technological advances lead to faster rates of change,
successful organizations need to find a way to respond that encourages innovation and builds into
every employee's experience the opportunity to learn and explore. Today's most successful
organizations, like Google, Apple, Amazon and the cluster of companies led by Elon Musk, are
essentially learning organizations. Musk's willingness to explore areas where he's not already an
expert has given him a tremendous advantage because what he's learning in one field often has an
immediate application in another.

13
Organizational Structure
At one time, most organizations had highly hierarchical structures, with many layers of leadership
and management defining the organization from top to bottom. More recently, there is a growing
understanding that organizations with flat structures – few hierarchical layers from top to bottom
– outperform organizations with hierarchical structures. W. L. Gore, a highly successful global
materials science company that is focused on discovery and product innovation, has more than
10,000 employees, but only three hierarchical levels: a democratically elected CEO, a few group
heads and everyone else. Organizational culture is the collective behavior of members of an
organization and the values, visions, beliefs, habits that they attach to their actions.
An organization’s culture plays a major role in shaping its success because the culture is an
important determinant of how well their organization will perform. As the foundation of the
organization’s internal environment, it plays a major role in shaping managerial behavior. An
organization’s culture is viewed as the foundation of its internal environment. Organizational
culture (or corporate culture) significantly influences employee behavior. Culture is important to
every employee including managers who work in the organization. A strong culture helps a firm
achieve its goals better than a firm having a weak culture. Culture in an organization develops and
‘blossoms’ over many years, starting from the practices of the founder(s). Since culture is an
important internal environmental concern for an organization, managers need to understand its
influence on organizational activities.

Resources of the Organization, An organization s resources can be discussed under five broad
heads: physical resources, human resources; financial resources, informational resources, and
technological resources. Physical resources include land and buildings, warehouses, all kinds of
materials, equipment and machinery. Examples are office buildings, computers, furniture, fans,
and air conditioners. Human resources include all employees of the organization from the top level
to the lowest level of the organization. Examples are teachers in a university, marketing executives
in a manufacturing company, and manual workers in a factory. Financial resources include capital
used for financing the operations of the organization including working capital. Examples are
investment by owners, profits, reserve funds, and revenues received out of a sale. Informational
resources encompass ‘usable data needed to make effective decisions. Examples are sales
forecasts, price lists from suppliers, market-related data, employee profile, and production reports.

Organization’s image/goodwill
The reputation of an organization is a very valuable intangible asset. High reputation or goodwill
develops a favorable image of the organization in the minds of the public (so to say, in the minds
of the customers). ‘No- reputation’ cannot create any positive image. A negative image destroys
the organization’s efforts to attract customers in a competitive world. The internal environment of

14
an organization consists of the conditions and forces that exist within the organization. Internal
environment {sometimes called micro-environment) portrays an organization’s ‘in-house’
situations. An organization has full control over these situations. Unlike the external environment,
firms can directly control the internal environment. Internal environment includes various internal
factors of the organization such as resources, owners/shareholders, a board of directors, employees
and trade union, goodwill, and corporate culture. These factors are detailed out below.

Effects of business environment on organizational performance

The business environment and its application to work environment is an outcome of his work as
director of the institute of social research, university of Michigan, USA. In his book “New Pattern
of Management” about high producing supervisors who achieve the highest level of productivity
at the lowest production costs with the highest level of employee motivation. In his research work,
he indicates that high producing managers tend to build their successful achievement around their
interlocking work groups employees whose level of co-operation is sustained through range of
business incentive that extend motives and involves the ego and creativity motives. The research
noted that the high producing manager utilized the tool of the classical management work-study
while recognizing the aspirations of the employees by encouraging participative approaches.
Okunola stressed the important of supportive relationship; management can thus achieve very high
productive performance when the employees see their membership of the work group as
“Supportive”, that is, when the experience a sense of personal worth, importance and recognition
from belonging to the work group. Okunola (1998) is one management philosopher who focused
on the differences between individuals and the class of needs in addition to the market strategy,
which include the need for achievement, power and for affiliation.

Conclusion

An internal environmental analysis is an extensive review of all aspects of a company's operations,


internal guidance and mission. Aspects of operations typically reviewed are marketing strategy,
production capacity, and the company's vision and leadership. All of these things are examined
with a critical eye to uncover those aspects that may be problematic, yet go unnoticed in daily
operations. Nonprofit organizations may also conduct a similar analysis. Company management

15
typically initiates this internal analysis in an effort to identify areas of risk and opportunity. Top-
level management conducts an inventory to assess strengths and weaknesses in the overall
functioning of the organization. It is usually an exhaustive review with a goal of identifying and
rectifying those internal factors that are limiting the company's growth. The internal environmental
analysis is in contrast to an external analysis, which would be concerned with the macro business
environment.

16
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