Enviroment of Management Notes

Enviroment of Management Notes - Page 1 of 16 MGT 3200...

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Page 1 of 16 MGT 3200 ENVIRONMENT OF MANAGEMENT Understanding the relationship between the organization and its environment is the key to fully appreciating the challenge facing management, today. One way to understand this relationship is through the open-systems approach. I. The Organization as an Open System There are many elements in the organization’s environment that affect its input- transformation-output process. A manager’s performance is often contingent upon his knowledge of how his organization influences and is influenced by its external environment. Open systems must interact with the environment to survive; it both consumes resources and exports resources to the environment. It cannot seal itself off. It must continuously change and adapt to its environment. In contrast, a closed system does not have to interact with its environment. To understand the whole organization it should be viewed as an open system. A system is a set of interrelated elements that acquire inputs from the environment, transforms them, and discharges them in the form of outputs to the external environment. The need for inputs and outputs reflect the dependency on the environment. Interrelated elements mean that people and departments must depend upon one another and must work together. Besides its three basic characteristics (input, transformation, and output) the open system has six additional characteristics: 1) Cyclical nature of the transformation process. Transformation activities produce outputs that alternatively will become new sources for inputs. This also provides a feedback loop. 2) Negative entropy. Entropy refers to the tendency for systems to decay over time. Negative entropy is the ability of open systems to bring in new energy to arrest or delay this decaying process. As a result, organizations import more energy that they export. That is, they use up energy in the transformation process and store energy for future needs. 3) Buffering the technical core. Open systems try to maintain, or at least attempt to maintain, their basic character by controlling or neutralizing threatening external forces for change. They want to maintain stability in production so as to increase efficiency. Ideally, we want long runs of products using the same machinery so we can work out the kinks and become more proficient. 4) Role differentiation and specialization. As open systems grow and develop, there is an increasing tendency toward the elaboration of roles and specialization of function. Organizations develop specialized units to deal with particularly troublesome or challenging parts of the environment.
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Page 2 of 16 5) Synergy. 2+2=5. The ability of the whole to equal more than the sum of its parts. This means that an organization ought to be able to achieve its goals more
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This note was uploaded on 10/01/2008 for the course MGT 3200 taught by Professor Sauley during the Spring '06 term at LSU.

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Enviroment of Management Notes - Page 1 of 16 MGT 3200...

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