DESIGNING EFFECTIVE ORGANIZATION

1.0 Executive Summary

The purpose of this assignment is about system theory that used by the organization. Besides,
this assignment also state about the type of systems which are closed system and open
system. In addition, there are more information about open system characteristics and some
examples for each open system characteristics. Furthermore, this assignment also discuss
concerning the way to apply the characteristics to the organization.

2.0 Introduction

Principally organization is defined as social entities that are direct people action to achieve a
common goal or set of goals, designed as purposely structured and synchronized activity
system and liked to the external environment. Organization exists to bring together resources
to achieve desired goals and outcomes, produce goods and services efficiently, facilitate
innovation, use modern manufacturing and information technologies, adapt to and influence a
changing environment, to create value for owners, customers and employees and
accommodate ongoing challenges of diversity, ethics and the motivation and coordination of
employees. An organization is responsible to satisfy human needs. If the organization fails to
satisfy human needs, it will lead the organization to decline stage which is called as
bankruptcy. New organization are found when new technologies become available and new
needs are discovered and organization die when the needs they satisfied are no longer vital or
have been replaced by other needs (Daft, 2004 & Jones, 2004).

3.0 System Theory

The authors Robbins and Barnwell defined system as a set of interrelated and interdependent
parts arranged in a manner that produces a unified whole. Basically the system is about using
some inputs, transform the inputs and produce an output. Each organization which is
operating effectively is using system theory to gain effective output. The interrelationship of
parts within the system is the unique characteristic of system. Besides, system is
characterised by two diverse points which are differentiation and integration. The
differentiation is concerning the differentiated of the system into specialised functions. For
differentiation Robbins and Barnwell used a basic example which is the human body, because
in human body the lungs, liver and heart are all distinct functions. In similarly, organizations
have divisions and departments with each performing specialised functions to achieve a
common goal. Another characteristic of system is integration which is achieved through
coordinating device in organizations.

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An effective organization needs these systems to develop their organization. There are two
main types of systems which are closed system and open system. The both systems are
having its own functions and benefits to the organization (Robbins, 2002 & Barnwell, 2002).

4.0 Closed system

Closed system thinking stems primarily from the physical sciences. The physical science
observes the closed system as self contained system. The closed system dominant
characteristic is that it essentially ignores the effect of the environment on the system. In
addition, closed system would be one that received no energy from an outside source and
from which no energy was released into its environment. Moreover, the societies which are
using closed system are functioning together within themselves to gain an objective without
using other environment energy. Further, closed system societies are not sharing their output
to their environments. Basically the closed system is more idealistic than practical; its
perspective has little applicability to the study of organizations (Robbins, 2006 & Barnwell,
2006).
According to the facts, it is not possible for an organization to be a closed system, because
closed system is not assist an organization to gain profit. For an organization, their main
objective or aims is the profit. The organization is produce goods and operating effectively
for the profit. Thus, closed system is more about forces or helping each other within their
society to gain some specific objective. In addition, the people in closed system society are
not working for the wealth. In other hand, closed system is more to people basic needs for a
society and it’s not has any inspiration to gain profits. Through looking at the facts, as an
effective organization, it is not possible to be a closed system. In case, if an organization be a
closed system, it will direct the organization to bankruptcy (Jones, 2004).

Another reason for an organization that is not possible to be a closed system is the
environment. Why is environment? Because basically closed system is ignores or not
responds to its environment. An effective organization should responds to its environments,
because the organization inputs are from the environments and to gain the outputs the
organization has share it with its environment. This declaration state an organization is
depending on its environment. Hence, without the environment an organization cannot be
survived in the market. For an effective organization environment is more needed to achieve
its goals or an objective. Through these information’s, it is impossible to an organization to
be a closed system (Robbins, 2002 & Barnwell, 2002).

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5.0 Open system

Environment
DESIGNING EFFECTIVE ORGANIZATION

Open system means the dynamic interaction of a system with its environment and
surrounding. The basic open system is about using the environment energy as its input, and
the system will do the transformation process to gain the outputs. Furthermore, the open
system societies are sharing their outputs to their environment or surrounding. The simplified
graphic representation of the open system appears in figure 1.1.

Figure 1.1 Basic open systems (Robbins, 2002 & Barnwell, 2002)
Environment

Open system is more applicability to the study of organizations compare to closed system. An
example for open system is the Cadbury chocolate confectionery organization, because
Cadbury uses its environments as its inputs such as peoples, confectionery materials, and
resources as well to produce its outputs. After its produce its outputs, Cadbury organization
distribute its outputs to its environments and earn profit to maintain their organization. Open
system is basically used by the profitable organization, but closed system is used by non
profitable organization. In other hand, organization’s environment is far more complex than
obtaining raw materials and inputs into the productive process and distributing outputs. This
information describes that open system organization face some various risks compare to
closed system organization. One of the risks is community expectations which are change
when the environment changes. As an open system organization, they need to know about

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their current environment status before distribute their outputs. It will lead their organization
to success (Daft, 2004 & Jones, 2004).

Open systems; however, have some characteristics of relevance to those of us studying

organizations. Subsequently, the each characteristic have its own benefits to the organization.
Besides, the characteristics are the core benefits of open system. Environment awareness is
the primary characteristic of open system. This characteristic has a lot of benefits to the
organization that following open system. This characteristic called as obvious characteristic
of open system which recognize of the interdependence between the system and its
environment. This is because; any changes in environment affect the systems or subsystems.
Hence, this characteristic help the organization know their awareness on their environment.
Conversely, the changes appear in the system also affect the environment. Hence, this
information shows that the organization system and the environment have a strong
connection and should be depending on each other (Daft, 2004).

The environment awareness applied to every organization which is selling different kind of
outputs to its environment. If the organization is produce food worldwide means, it should
know the environment awareness of the specific country before start its business there. This
because the environment in specific country could not matched with the food organization.
Accordingly, every organization applied the environment awareness into their organization.
For an example, MacDonald has different kind foods in different kind of country. Macdonald
in India is not provided any beef meals, because of the environment. Environment awareness
to an organization able helps it to achieve its goals and be an effective organization (Livesey,
1999).

Furthermore, feedback is another characteristic of open system. Feedback is about help the
organization to receive some information from its environment to develop its self more
effective. The every message that received by an organization is called as feedback. This
characteristic mostly applied to the customer service industries, such as hotel, resort, food
industries and delivery industries. Basically, feedback is needed by these organizations,
because they need to develop their organizations into their customer expectation. Feedback is
most benefit characteristic of open system. Whenever an organization receives feedback, the
organization knows their weakness and they improve it. Feedback is applied to organization
to motivate them to be more effective (Robbins, 2006 & Barnwell, 2006).

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Hilton Hotel is the good example for feedback, because Hilton hotel has been go through a
process which called as Hilton hotel customer survey program on every month. The hotel
provided feedback form and other relevant materials to their customers. Each customer has to
give feedback about their opinion to maintain the hotel and reach their expectation. As an
open system organization, Hilton hotel used feedback for maintain the hotel into more
effective and achieve its customer expectation (Bennekom, 2008).

The third open system characteristic is the cyclical character. Cyclical character defines as the
system consists of a cycle of event. The system’s outputs furnish the mean for new inputs that
permit the repetition of the cycle. This character is important to an organization, because the
revenue received from the customers of the industrial firm must be sufficient to pay creditors
and wages of employees. Every organization is making revenue, but some of the organization
is failure to pay their creditors and their workers salary. This fact is illustrated that the
organization is not have cyclical character. Cyclical character is important because it show
the organization to organize its profit and losses. Besides, cyclical character help the
organization to use the revenue in proper order way. Thus, it will easy for an organization to
pay their creditors and employees without any problems. This information state that the
organization should have cyclical character to improve their organization (Jones, 2004).

For an instance, potato production industry in Serbia faced problem, because not used
cyclical character. The case is when the potato organization earns good revenue; they are
more willing to purchase seeds of potato and other materials for gardening and also for
production. The main problem was the potato organization had insufficient amount to pay
their workers and also their creditors. As result, the workers are not able work for the
organization and start to leave the organization. Besides, the creditors are not provided any
goods for credit to the potato organization. Hence, the potato organization was almost failure
in the market, but when the organization start to follow the cyclical character, the potato
organization achieve their objective easily which is attract again their employees and
creditors. This fact, describe that cyclical character has good outcome to every organization
(Cobanovic, 1996; Nikolic Doric, 1996 & Mutavdzic, 1996).

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6.0 Conclusion

As result, to be an effective organization, the open system is greater than closed system. This
is because; open system has a lot of benefits to an organization compare to closed system
organization. Besides, open system is not only needed by organizations, but the environment
also needed. Finally, through the facts that state above identify that open system is more
consider by the organization compare to the closed system.

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References

Bennekom, F. V. (2008). Hilton Hotel Survey Program. Retrieved on 24 December 2009.

From: http://www.greatbrook.com/hotel_survey.htm.

Cobanovic, K. Nikolic-Doric, E. & Mutavdzic, B. (1996). The Investigation of Cyclical

Character of the Potato Production in Serbia. Retrieved on 25 December 2009.

From: http://www.actahort.org/books/579/579_118.htm.

Daft, R.L. (2004). Organization Theory and Design. (1 st ed.). United States: Thomson South-
Western.

Jones, G.R. (2004). Organizational Theory, Design, and Change: Text and cases. (4th ed.).
New Jersey: Pearson Prentice Hall.

Livesey, S. M. (1999). McDonald’s and the Environment Defence Fund a Case Study of

A Green Alliance. Retrieved on 26 December 2009.

From: http://www.questia.com/googleScholar.qst?docId=5001245489.

Robbins, S.P. & Barnwell, N.S. (2006). Organization Theory: Concept and cases. (5 th ed.).
Australia: Pearson Education Australia.

Robbins, S.P. & Barnwell, N.S. (2002). Organization Theory: Concept and cases. (4 th ed.).
Australia: Pearson Education Australia.

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