Systems theory fundamentals and applications

Management Theory

Systems Theory

Systems Theory is a disciplinary study that transcends the theoretical organization of phenomenon, independent of their essence, kind, or spatial or temporal level of being. It examines both the principles universal to all multifaceted entities, and the molds which can be utilized to clarify them. Rather than reducing a thing to the property of its elements or fundamentals, systems theory centers on the arrangement of and relations between the parts which bond them into a whole. This particular association determines a system, which is independent of the real material of the elements. Therefore, the same concepts and principles of organization motivate the different areas, providing a basis for their association. "Systems concepts include: system-environment boundary, input, output, process, state, hierarchy, goal-directedness, and information" (Charlton & Andras, 2003).

Using systems theory in management can be very beneficial to an organization. For starters it recognizes the interdependence of personnel and the impact of environment on organizational structures and functions. It also acknowledges the affects of outside stakeholders on the organization. It tends to focus on environment and how changes can affect the organization. It seeks to explain synergy and interdependence and broadens the theoretical view for looking at organizational performance (Systems Theory, n.d.).

Organizations frequently strive to attain positive synergy or strategic fit by combing numerous products, business lines, or markets. One way to attain positive synergy is by acquiring related goods. Mergers and acquisitions are corporate-level strategies intended to attain this positive synergy. Negative synergy is also likely at the corporate level.

Scaling back and the divestiture of businesses is in part the outcome of negative synergy. The planned result of many business decisions is positive synergy. Managers anticipate that merging staff into teams or increasing the firm's good or market mix will consequence in a higher level of performance. Nonetheless, the mere union of people or business basics does not automatically lead to better outcomes, and the ensuing lack of accord or harmonization can result in negative synergy (Synergy, 2012).

Systems theory sees the individual person, group, business, and the organization's bigger set of mutually dependent organizations as a lively, unified whole. Changes in one or more parts of this multifaceted system involve changes for the others. "All system parts are in a state of more or less steady and active adaptation, and how well adjustment occurs becomes the serious question from a success perspective" (McCann, 2004).

Change was once believed to be intermittent and characterized by periods of comparatively low-level, managed disturbance, such as a new product introduction for interior operating needs, or a cautiously designed merger. "The growth of conglomerate forms of organization by way of acquisitions has been a way for many to diversify financial risk and smooth uncertainty. An organization's primary goal is to control change to protect the core business" (McCann, 2004).