Systems Approach

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Systems Approach

Define System

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, it is a set of different independent
parts working together in interrelated manner to
accomplish a set of objectives
Main Elements of Systems
Approach
 An organization is a unified and purposeful system consisting of
several interconnected, interacting and interdependent parts.
 The parts of a system are called sub-systems. Each sub-system
influences the other sub-systems and the system as a whole.
 The position and function of each sub-system can be analyzed and
understood only in relation to other sub-systems and to organization
as a whole.
 Each sub-system derives its strength by its 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.
 Each system has a boundary that separates 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.
 The reaction or response of the environment to the output is known as
feedback. Feedback is useful in evaluating and improving the
functioning of the system.
 Organizations operate on the principle that they have several
alternative ways of doing the same thing or achieving the same goal.
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 managers to avoid analyzing problems in isolation and
to develop an integrated approach.

Disadvantages of this theory :


Over-conceptual
The approach does not recognize the differences in systems
Systems philosophy does not specify the nature of interactions
and inter-dependencies.
Unpractical: It cannot be easily and directly applied to practical
problems.
Classification of systems
 Open systems - An open system actively
interacts with its environment. By interacting
with other systems, it tries to establish
exchange relationships.
 Closed systems - A closed system is self
contained and isolated from the environment.
It is a non-adaptive system. It does not
receive inputs often from other systems and
does not trade with the outside world.
Example: An automatic wrist watch
McKinsey 7-S
Model
The 7-S model was
originally used to
analyze both large and
small firms by looking at
their structure, offering a
wider explanation
thorough seven
elements: strategy,
structure, systems, style,
staff, skills, and shared
values.
The Seven Elements
 Strategy. Actions a company plans in response to or anticipation
of changes in its external environment. It may also be seen as
plans for allocation of resources to enable the company’s identified
goals.
 Structure. Basis for specialization and coordination influenced
primarily by strategy and by organizational size and diversity. This
is also the way that different units in the firm relate to each other.
 Systems. Formal and informal procedures that support the
strategy and structure. Often internal systems are more powerful
than they are given credit for. They are also the procedures and
processes that characterize how the work should be done and
internal systems used to accomplish the needed performance.
 Style. The culture of the organization, which consists of two
components. One is organizational culture, the dominant values,
beliefs, and norms which develop over time and become relatively
enduring features of organizational life. The other is management
style, how key managers behave and what they do rather than
what they say. It answers the questions: How do they spend their
time? What are they focusing their attention on?
The Seven Elements
 Staff. Human resource management, the processes and efforts
used to develop managers, socialization, and the shaping of
basic management values, It also includes ways of introducing
young recruits to the company, and the support given to manage
employees’ careers.
 Skills. These are the distinctive and core competencies of the
company, They include the ways competencies are expanded or
shifted. This can also be determined from the perspective of core
competencies that exist and are developed in the firm.
 Shared values. Also called super ordinate goals, these are the
central believes and attitudes, guiding concepts, and
fundamental ideas around which a business is built. Usually
stated at the abstract level, they have great meaning inside the
organization even though outsiders may not see or understand
them. They can be summarized as what extent the company
stands for and what it believes in.
The Seven Elements

These seven elements also help estimate the


effectiveness of a firm. They are interrelated -- if one
element changes, it will affect all the others. For
example, a change in human resource systems
such as internal career plans and management
training has an impact on organizational culture and
thus will affect structures, processes, and finally the
characteristic competences of the organization.
Another example is changes in the structure such as
merging sales and marketing that affect the number
and quality of new products that the company can
launch.

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