System Approach

SYSTEM APPROACH

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Introduction

·       A system is basically a combination of parts (subsystem)

·       Each part may have various sub-parts

·       An organization is a system of mutually dependent parts, each of which may include many subsystems

·       In system approach the business considers the entire organization as a one large system

·       This large system can be open or closed, meaning it is either affected by environmental impacts or not

 

Features of System Approach

·       Management as a Social System

·       Management as Open System

·       Adaptive

·       Dynamic

·       Probabilistic

·       Multilevel

·       Multidimensional

·       Integral Approach

·       Multidisciplinary

 

Steps of System Approach

·       Understand the system

·       Identify realistic alternatives

·       Valuate the qualities of alternatives

·       Pre select an integral solution

·       Elaborate selected alternatives

·       Prepare the solution for implementation

 

Types of System Approach

·       Closed System

o   Are not influenced by the environment

o   Do not interact with the environment

o   All system Input and Output is internal

·       Open System

o   Dynamically interact to their environment

o   Take inputs and transform them into outputs that are distributed into their environments

 

Four Parts of a System

·       Inputs

o   People

o   Money

o   Information

o   Equipments

o   Raw material

·       Outputs

o   Products

o   Services

o   Profits

o   Loses

o   Employee

o   Satisfaction

·       Transformation Process

o   Organization’s capabilities in management and technology that are applied to convert Inputs into Outputs

·       Feedback

o   Information about the reaction of the environment to the outputs that affects the inputs

 

Seven Elements or McKinsey 7s Model of System Approach

·       It is a management model that describes 7 elements that are necessary to organize a company in an holistic and effective way

·       These 7 elements determine the way in which a corporation operates

·       These 7 elements are interdependent

·       These 7 elements are divided into two categories

o   Hard Elements

§  Strategy

§  Structure

§  Systems

o   Soft Elements

§  Shared Values

§  Skills

§  Style

§  Staff

 

Advantages, Limitations & Implications of System Approach

·       Advantages

o   Aims at meaningful analysis

o   Facilitates the interaction between organization & its environment

o   Guides managers to avoid analysing problems in isolation

o   Develop an integrated approach

·       Limitations

o   Over conceptual

o   Does not recognize the differences in systems

o   Does not specify the nature of interactions and interdependencies

o   Cannot be easily and directly applied to the practical problems

o   Lacks of universality

·       Implications

o   Coordination of the organization’s parts is essential for proper functioning of the entire organization

o   Decision and actions taken in one area of the organization will have an effect in other areas of the organization

o   Organizations are not self contained and therefore, must adapt to change in their external environment

o   Encourage us to look at the bigger picture

o   Consider how different parts of the organization interact with each other

o   Encourage us to think about how different problems and solutions are connected

o   Increase the adaptability of an organization to the environmental changes

 

Video Description

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