Goldman Sachs Open System Theory

1. What is open systems theory
In essence, open systems theory, in the words of Chance and Chance (2002), posits/suggests “that organizations are dynamic systems involving constant interactions among the various formal and informal systems within the organization as well as exchanges (feedback and input) between the organization and systems outside the organization” (p. 7). It therefore follows that an organization’s structure as well as behavior is impacted upon by the permeating or surrounding environment.
2. How can open systems theory be used to understand an organization?
As per the open systems theory, organizations are not autonomous (Daft, Murphy, and Willmott, 2010). Their operations do not take place outside the world we live in. For this reason, their structure ought to be cognizant of the environment in which they do business. This effectively means that deliberate measures ought to be undertaken to embrace opportunities and concerns unique to the organization under consideration.
Week 2
Organization of Choice: Goldman Sachs
In 2011, Goldman Sachs appeared in the list of “Fortune Magazine’s Best 100 Companies to Work for.” The company provides a wide range of financial services including, but not limited to, investment management and investment banking (Yahoo Finance, 2018). As an open system the company has a variety of subsystems operating therein, i.e. fund managers, support staff, compliance heads, etc. Other subsystems operating within the company include the wealth advisory service, underwriting service, strategic advisory services, etc. As Chance and Chance (2002) point out, there is often a complex interaction between subsystems. It is also important to note that apart from receiving input from the external environment, Goldman Sachs also exports some output to the very same environment. In essence, investor expectations, regulatory mandates, and client demands are some of the inputs from the external environment into Goldman’s system. It is this input that is processed by the company, via prudent investment decisions and sound investment advice, and then exported to the external environment in terms of better returns and satisfied clients.
Class Mate Response: Sarah
Sarah’s response, regarding what is open systems theory, is largely accurate and captures one of the key tenets of open systems i.e. the uniqueness of all organizations on the basis of the environment in which they operate. Her assertion that the organization of an entity ought to accommodate its special circumstances (i.e. with regard to opportunities and problems) is also correct. In her response, she cites an online reference for enterprises which is largely reliable. Her response on how the open systems theory can be used to understand an organization, however, falls short. Instead of using open systems theory to expound the nature of organizations, Sarah instead focuses on the relevance of the said theory to businesses and further dissects its meaning. In my opinion, her response in this section, while being correct about the nature and relevance of open systems, fails to adequately address the query. Also, I am of the opinion that Sarah ought to have refrained from entirely relying on online sources. Two or three academic sources (i.e. books or journals) could have come in handy in the further enhancement of the validity and reliability of her sources. In the words of Yagelski (2014), “despite the growing importance of online resources, print materials remain essential for much academic research (p. 185).
References
Chance, P.L. & Chance, E.W. (2002). Introduction to Educational Leadership & Organizational Behavior: Theory into Practice. Larchmont, NY: Eye on Education.
Daft, R.L., Murphy, J. &Willmott, H. (2010). Organization Theory and Design. Belmont, CA: Cengage Learning.
Yahoo Finance (2018). The Goldman Sachs Group, Inc. (GS). Retrieved from https://finance.yahoo.com/quote/GS/profile?p=GS
Yagelski, R.P. (2014). The Essentials of Writing: Ten Core Concepts. Mason, OH: Cengage Learning.