What Is a System and How It Applies to Strategic Managment

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Describe what a system is and why it is important to understand systems in order to manage organizations strategically. | A system is a group of items that are inter-related to each other in a way that cannot be individually isolated outside the system and be expected to act the same way as it does while inside the system. In a systems approach the sum for the components is greater than the individual parts. A system, which is integrated to accomplish an overall goal is divided into subsystems (parts) all working for the betterment of the whole, and if one were to remove one subsystem the nature of the whole would change as well. Therefore when making a change to the any of the parts, a strategic leader must be thinking through all the possible “systemic” effects of that change and at the same time it is important that he subsystems all have consistent goal alignment. The boundary of the system defines what becomes the internal as well as external factors of the overall system and how it might impact the behavior of the overall system. Every system is made up of inputs and outputs, processes and outcomes. The system is continuously making adjustments based on the feedback from these various parts to achieve a specific outcome. Inputs are broken down into three general categories: Primary resources (what we have at our disposal), external (what pressures do we have from vendors, materials and value streams), markets (competition, economics and social/culture). Our Process is being driven by element like labor, equipment, plant locations, logistics, warehousing and energy. The outputs drive final outcomes which in turn develop the next set of inputs and process improvements. The key to remember when it comes to a system is that there is no beginning or end. It is on-going process where there are many elements that can be integrated into the whole and with each

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