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If we
want different results, we must change the way we do things." - Tom Northup
The success ratio of any organization depends on the management approach taken.
The company should function as a unit to achieve the set goals. One of the important
theories related to management is the systems theory.
What is Systems Approach?
The systems approach to management is a concept which views a company as an
interconnected purposive system that consists of several business sections. The entire
system can be broken into three parts namely - input, process and output.
For example: In a supermarket, the various subsystems are the marketing and
advertising, sales, admin and finance department. These are the internal subsystems
that lie within the boundary. The external subsystem here are the buyers or the
customers who visit the store. Only when all these subsystems work together, the
system is said to function effectively.
Open and Closed System
The organization can act as an open or a closed system. An open system is the one
where the elements of the system can interact with the environment. This interaction
can involve the transfer of material, information or manpower. The purchase
department in any organization can be an example of open system. The buyers have to
interact with suppliers (environment) and other internal departments to carry out the
purchasing activity.
On the contrary, a closed system is the one which does not interact with the
environment at all. There is no exchange of information, material or manpower
between the system and environment. It is sometimes referred as an 'isolated system'.
An assembly line can be treated as a closed system if it does not interact for supply of
raw materials. A research department can also be an example of closed system.
The 7S Model
This is a rough illustration of the 7S model that is developed by McKinsey &
Company consulting firm. It exclusively concentrates on the seven key factors that are
responsible for enabling organizations to reach their desired goals. Only when all
these seven key areas work in a coordinated manner, will the company progress.
The key factors include:
♠ Organizational Strategy: The plan to maintain the competitive edge.
♠ Business Structure: The hierarchy of the organization.
♠ Efficient Systems: The day-to-day procedures and activities related to staff and
processes.
♠ Style: The management style that is adopted.
♠ Skills: The competence of the employees.
♠ Staff: The employees of the organization.
♠ Corporate Shared Values: The core values on which the company is built. It also
refers to the organization's working culture.
All individual elements are highly dependent on each other, so a change in any one of
them may disturb other sections. The company can analyze its current position and
then look for areas where improvement is needed. For this, the organization can frame
a set of questions based on the seven areas and look for answers for the same. Once,
the lacking areas are identified, the right action can be taken.
The systems approach to management is the key to coordinate all the processes in a
large company, and define the importance of individual procedures in the firm.