This document discusses the systems theory of management. It defines a system as a collection of interrelated parts working together to achieve goals. A management system includes inputs, transformation processes, outputs, feedback, and the environment. It views an organization as made up of subsystems that work together holistically and synergistically. The systems approach helps study complex organizations and identify interrelations between functions. However, it is abstract and does not provide specific tools for managers. Primary contributors to systems theory include Bernard, Simon, von Bertalanffy.

1. System
Theory of
Management
Jeffrey M. Projo
Biliran Province State University
School of Graduate Studies

2. System Theory of Management
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• It is a collection of interrelated parts acting together to achieve
some goal which exists in the environment. Also, system is
defined as a set of objects working together with relationships
between the objects and their attributes related to each other and
to the environment.
• Therefore, system in simple terms with respect to management, it
is a set of different independent parts working together in
interrelated manner to accomplish a set of objectives.

3. System Approach to Management
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4. The system approach envisions the organization as made
up of 5 components:
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➢ INPUTS - Raw Materials, Human Resources, Capital, Information,
Technology.
➢ A TRANSFORMATIONAL PROCESS- Employee Work Activities,
Management Activities, Operations, Methods
➢ OUTPUTS- Products or Services, Financial Results, Information,
Human Results.
➢ FEEDBACK- Results from outputs influence inputs.
➢ THE ENVIRONMENT- These components make up internal and
external factors that affect the system.

5. Elements of Systems Approach
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• Sub-Systems – Each organization is a system made up of a
combination of many sub-systems. These subsystems are interrelated.
• Holism – Each sub-system works together to make up a single whole
system. Decisions made in any subsystem affect the entire system.
• Synergy- The collective output of the whole system is greater than the
sum of the output of its sub-systems.
• Closed and Open Systems- The whole organization is an open system
made up of a combination of open and closed sub-systems.
• System Boundary- The organization is separate from the external
environment made up of other systems.

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The advantages of the systems
approach include:
Disadvantages of the system
approach include:
It assists in studying the functions of
complex organizations.
This approach is somewhat abstract
and vague.
It is probabilistic rather than
deterministic.
It can be difficult to apply to large and
complex organizations.
It has been utilized as the base for the
new kinds of organizations like project
management organization.
It does not provide any tool and
technique for managers.
It is possible to bring out the inter-
relations in various functions like
planning, organizing, directing and
controlling
It is not a prescriptive management
theory, as it does not specify tools and
techniques for practicing managers.
Advantages and Disadvantages of a Systems Approach

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Primary Contributors of Systems Theory
•Chester Bernard introduced the concept of Cooperative Systems in his
book, Functions of an Executive (1938).
•Economist, Herbert Simon, introduced in his book, Administrative
Behavior (1947), the concept of systems process in decision-making
within organizations. Notably, he introduced concepts of bounded
rationality and satisfying.
•Biologist, Ludwig von Bertalanffy, introduced principles of General
Systems theory in 1950.
•Other contributors include: Lawrence J. Henderson, W.G. Scott, Deniel
Katz, Robert L. Kahn, W. Buckley and J.D. Thompson.

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Reference:
.
Systems Theory of Management - Explained. The Business Professor, LLC. (2022).
Retrieved 22 January 2022, from
https://thebusinessprofessor.com/en_US/management-leadership-organizational-
behavior/systems-theory-of-management.

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“ Management of a system requires
knowledge of the interrelationships
between all of the components within the
system and of everybody that works in it.”
- W. Edwards Deming-