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Study Guide

[MGT 3200] - Final Exam Guide - Everything you need to know! (69 pages long)

Course Code
MGT 3200
Kerry Sauley
Study Guide

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MGT 3200
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Page 1 of 15
MGT 3200
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 (Input transformation output)
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
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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