Strategic Management

SIM336

May2007

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UNIT SEVEN:
The Systemic Perspective
LEARNING OUTCOMES:
Following the completion of this unit you should be able to:

 Describe a business organisation as a system

 Apply systems concepts to the consideration of
strategic management, including international and
global business strategy
 Evaluate the implications of the systemic
perspective
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

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Introduction:
 Systemic strategists see an organisation as
a complex, purposeful entity whose survival
and prosperity depends on making
appropriate and productive relationships
with its environment.
 In this unit we will look at:
(1) A business organisation as a system; (2)
implications for strategic decision-making and
structures of communication; and (3)
implications for productive relationships with the
outside world
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

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A Business Organisation as a System
 Beer’s Viable System Model (VSM) is a particular
model of the organisation based on ‘systems
thinking’
 According to Marrington (1982) cited by Figure
7.1 in the Module Guide, p. 180, a business
organisation is a complex system relatively
open to the environment, and dependent upon it
for the throughput of energy that ensures its
survival. It is composed of a hierarchy of
subsystems that are all interrelated in some
way.
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

4
Implication for Strategy Formation
 The ‘systems approach’ to the business organisation suggests
that some level of organisational change will be a constant, as
the organisation adjusts to the interplay of its internal systems
and the pressures of the environment.
 As long as this adjustment is by ‘negative’ feedback – restoring
things to the way they were, or gradually adaptive – then the
change will probably not be designated ‘strategic’, even
though, looking back over time, it can be seen that the
organisation is not really the same as it used to be – this is
what Stacey (1996) would call ‘ordinary management’, and
Whittington (2000) ‘emergent strategy’.
 Systemic strategy formation is ‘deliberate’ in that all those
concerned with making productive relationships with the
environment make choices, and act to ensure the
organisation’s survival and to enhance its opportunities.
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

5
Structures of Communication
 Boisot (1995) in his analysis of ‘information space’,
considers communication in two dimensions: (1)
‘Codification’, the extent to which communications are
made explicit; (2) ‘Diffusion’, the extent to which
communications are spread
 Organisations of the ‘classical perspective’ are
hierarchical in structure. There are many very
explicit communications which are supposed to
direct the organisation, but which are diffused on a
‘need to know’ basis
 Organisations of the ‘systemic perspective’ are both
pluralist and deliberate. Communication is both well-
diffused and made very explicit so that each part of
the organisation can relate very easily to both
internal and external requirements.
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

6
Implications for Productive Relationships
 In the ‘systemic perspective’, an organisation
is seen as ‘embedded’ in its environment.
 To survive, the organisation must have a
productive relationship of exchange with the
community and society.
 Unless the organisation can somehow force
a community to trade with it, which it might
be able to do if it is a monopoly, or has
another source of power, then the
relationship must be a fair one, where each
party is gaining some satisfaction.
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

7
International Strategic Management
 Those in favour of ‘globalisation’ argue that nation
states cannot retain sovereignty in the face of a
‘global marketplace’ oblivious to national borders;
and that the flow of capital around the world has
more effect on lives than the economic designs of
local politicians.
 However, empirical evidence suggests that, most
of the world’s economies operate at national level.
 The international strategic management decisions
of individual organisations are influenced by: (1)
attitude to global trading around the world; (2) policies
of the nation to which the organisation belongs; and
(3) the policies of the nations with which it wishes to
trade.
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

8
Conclusions & Recommendations
 In this unit we examined strategic management
from a ‘systemic perspective’.
 We considered the relevance of systems thinking
and the consequences of a systemic approach to
strategy formation. This led to an understanding of
how the deliberate intentions of individuals could
give rise to emergent strategies.
 We looked at the importance of communication for
the management of relationships with the outside
world.
 Finally, we considered a systemic analysis of
international strategic management.
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

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Bibliography
 Boisot, M. H. (1995) Information Space, Routhledge, London.
 De Wit, B. and Meyer, R. (2004) Strategy Process, Content and
Context, International Perspective, Third Edition, Thomson
 Hofstede, G. (1993) ‘Cultural constraints in management’ in De
Wit, B. and Meyer, R. (1998), Strategy – Process, content,
context, Second Edition, Thomson, London
 Prahalad, C. K. and Dox, Y. (1986) ‘The dynamics of global
competition’ in De Wit, B. and Meyer, R. (1998), Strategy –
Process, content, context, Second Edition), Thomson, London
 Stacey, R. D. (1996) Strategic Management and Organisational
Dynamics, Pitman, London
 Whittington, R. (2000) What is Strategy and does it matter?,
Thomson
Dr. Augustus Osseo-Asare
Sunderland Business School
2007

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