Assignment on MIS : Module 2

Organization : BASF(System Thinking & Cybernetics)

Submitted By

Harshal Gadge (x01012); Mukul Kumar(x01017)

System Thinking Approach:

System thinking application in an organizations aims to improve the process, structure and performances
across the organization. The areas in which System thinking can be applied for BASF are Complex
problems, Recurring problems and the problems which do not have obvious solutions. These problems
arise in the system regularly and sometimes the problems help them to understand and explore the new
approaches to deal with such situations. Through system thinking approach we also focus on
understanding “Cause-Effect” relationships, focus on stakeholders and enduring strategies. BASF, as an
organization, works as a system as a whole with various subsystems viz. Seeds, Crop Protections,
Chemicals etc. and all these subsystems have various functional departments. These departments interacts
with each other’s to form a subsystem.

For treating an organization as a system there are two approaches: Traditional (Mechanistic and Organic)
and Functional (Tasks organized according to the functional need of the organization)

Traditional Approach:

As a Multi-National Company, BASF has changed its organizational structure from simple to divisional.
Because of this power is decentralized as each division act as an individual unit and has separate
functional system as well. Each divisions in turn act together BASF as a company.

Functional Approach:

BASF organizes tasks of the company according to the needs generated over the period of time. At
various subsystems expertise are appointed for each division in the form of department like Operations,
Development, Sales, and Marketing etc. Each division has specific roles and have different decision
making power. These subsystems are part of a whole system i.e. BASF as an organization. There is
representative member of each subsystems in Strategic, Tactical and Operational layers in the form of
Chairman, Vice President, CFO, Head (R&D), Head (Marketing) etc.

Strategic Layer: Board of Directors, Chairman, Vice Chairman

Tactical Layer: CFO, Head (R&D, Marketing, Sales, Legal, IT), GM (HR)

Operational Layer: Finance Manager, Legal Manager, RSM etc.

 Strategic Layer

Tactical Layer

Operational Layer

Behavior over Time (BoT) to Estimate Incremental Wage Uplift from Training:
Applications of System Thinking:

1. Diversity Challenges:
The biggest challenge at BASF is to get senior leadership involved and invested in the process.
Without involvement of senior leadership there is no possibility for the major transformations in
the company. The proactive approach will help in this area in order to align Organizational
structure, maintenance of organizational culture and formalization of organizational
performances.
2. Risks of Competitive and Customer Landscape:
The risk of increasing value chain by the producers of raw materials are increasing day-by-day.
Asia and Middle East are among these competitors who are gaining significance every year.
Regular process improvement is a challenge for BASF in order to sustain in the market. For
everlasting profitable growth they need to explore new areas for business, new customer base
regularly along with strategic cooperative partnerships. This problem can be dealt with tactical
approach mechanism through process modelling.
3. Technological Challenges:
The technological challenge is another important factor for BASF in order to sustain in the
competitive market. To deal with this situation BASF is constantly looking for intelligent
technologies that can stay on top of the corrosion, creep and other material changes in the
equipment. They are finding means to revolutionize the ways of monitoring, predicting and
preventing potential risks with intelligent systems.

Entropy:

Entropy shows the flaw or disorder of the system. BASF as a chemical industry has suffered loss in year
2018 due to negative entropy. This has occurred due to following reasons:

a) Integration of acquired business and restructuring measures lead to sale of shareholdings.

b) Loss of investors lead to currency crisis for the company.
c) Agriculture output was flat overall in Western Europe and fell significantly in Eastern Europe.
d) Production decline of company in the financial year over the previous year.

Cybernetics:

BASF is a complex organization and it always maintains an inherent dynamics to maintain relation with
environment and internal processes. The feedback mechanism from Employees, Customers, Suppliers,
Stakeholders and Competitors provides the status of the environment. This provides BASF an opportunity
to give a better overview of the offers like competitive compensation, comprehensive benefit and
development opportunities and safe work environment. They constantly analyze and optimize the total
offer through their feedback system. Among customers, through feedback, transparency increases which
in turn enhances the customer services and joint growth potential. For employees they are able to provide
a better work environment through the feedback system. Supplier’s feedback helps them to strengthen the
supply process mechanism around the globe. This also helps in order to build a strong relationship with
them to improve the competitive advantage. The market and stakeholders also provides consistent
feedback to the company. This helps in bringing innovation to the products of the company and to keep
the company of the constant growth track.