Chapter 2. Principles of Management in the Dynamic Environment

What Is a System?

A system is a collection of interconnected components acting together toward a common goal. It is a complex and holistic entity. It can be a biological system, an engineering system, or an organizational system (business, goal‐oriented, or not‐for‐profit). A system has a goal that drives its activity. The overall goal generates defined quantitative objectives that must be achieved as well as a set of performance measures that enable management or owners to exercise control and judge whether they are on the right track to achieve the goal. The system has boundaries that partition it from the environment in which it operates. The system consists of subunits with a hierarchy and interactions. The system has a process that converts the inputs it receives from the environment into outputs the environment receives from the system. Some organizational systems have a feedback process by which the system corrects its activity and adjusts itself to environmental changes (see Figure 2-1 ).

W. E. Deming (1986), one of the pioneers of quality management, is responsible for the change in the modern perception of the organizational system. He emphasizes the people in the system and he includes suppliers and customers within the system definition, indicating that they are partners in the effective operation of the system. Hence, without a full dialogue between the organization and its customers on the one hand, and between ...

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