Systems Approach to Management: Theory and Concepts

A system is a mechanism with a set of things working together. A boundary is perceived around a system in order to differentiate internal and external components and to recognize inputs and outputs. A systems theory is a theoretical perspective that analyses an organization as a whole phenomenon and focuses on the interactions between parts in order to understand an entity’s structure, functioning, and outcomes. The Systems theory views an organization as an organic and open system which interacts with its environment by way of inputs, throughputs, and outputs; so the various sub-systems of an organization should be studied in their inter-relationships rather than in isolation from each other.  The systems theory of management was developed based on General Systems theory  ( Von Bertalaffy, 1956) and Open system theory (Katz and Kahn, 1978). 

Features of Systems Approach:

1. A system contains interrelating elements. It is a set of inter-related and inter-dependent parts arranged in a manner that produces a unified whole.
2. The focus should be on understanding the interrelationships of the subsystems, than studying in isolation from each other.
3. There is a boundary in the organizational system which differentiates are internal and external elements.
4. A system is not a closed entity, but it is an open entity which receives information, material, and energy from other systems as inputs. These inputs are transformed in the form of outputs which are inputs for other systems.  
5. An organization is dynamic and vulnerable to changes in its environment.  

Environmental Influences on Organization:

1. Internal Environment:

Mission and Goals of the organization

Organizational Structure

Group Dynamics

Leadership Style

Organizational Culture.

2. External Environment

Economic Environment

Technological Environment

Social and Cultural Environment

The political and legal environment