After reading this article you will learn about:- 1. Features of System Approach 2. Evaluation of System Approach 3. Limitations.

Features of System Approach:

Following are the important features of systems approach to management thought:

1. System approach considers the organisation as a dynamic and inter-related set of parts. Each part represents a department or a sub-system. Each department has its sub-system. Continuous and effective interaction of sub-systems helps to attain goals of the larger system. Thus, every sub-system is a system and has sub-systems which together make an organisation a set of mutually dependent parts and their sub-parts.

2. It considers the impact of both near and distant future on organisational activities. Organisations constantly respond to changes in the internal and external environmental conditions. They also act as market leaders in the dynamic, competitive environment.


3. System approach integrates goals of different parts of the organisation (sub-systems or departments) with the organisation as a whole. It also integrates goals of the organisation with goals of the environment or society in which it operates. Integration of goals maintains equilibrium or balance and enables organisations to grow in the dynamic environment.

4. It synthesizes knowledge of different fields of study such as biology, sociology, psychology, information systems, economics etc. As business organisation deals with different components of society, it makes best use of different fields of study to improve interaction with its counterparts.

5. System approach enables organisations to frame policies that promote business objectives and social objectives. Business operates in the social system and social values, culture, beliefs and ethics are important constituents of business operations.

Evaluation of System Approach:


The system approach has the following merits:

1. System approach provides a holistic view of the organisations and emphasises on their adaptive nature. It increases organisation’s adaptability to environmental changes. The organisation is studied as a whole and not through its parts. This enables it to adapt to the needs of the environment. Decisions are made keeping in mind organisation-environment interface.

2. It analyses the system at different levels and inter-relates and integrates it into a unified set of direction. Starting from individual goals, it focuses on overall organisational goals, synthesizes the two and converges them into global economy.

3. System approach provides a framework for effective interaction of parts of the organisation in a specific arrangement for attainment of its goals. It does not focus on one part of the organisation.


4. It considers the impact of environment on the organisation and vice versa. Interaction of external environment with the internal environment is the most significant contribution of systems theory.

System approach, thus, analyses the organisation as an adaptive and dynamic entity.

5. System approach synthesizes the classical and behavioural theories into a broader framework to solve managerial problems.

It, thus, focuses on organisations as multi-dimensional in nature.

Limitations of System Approach:


1. Critics of this theory claim this as a theoretical approach to management. The way an organisation actually works and solves problems (by applying different techniques and methods) has no appeal in the theory.

2. Relationship amongst parts of the organisation is emphasised upon but the exact nature of inter-dependence is not defined.

3. Exact relationship between internal and external environment of the organisation is also not defined.

For example, it specifies that change in economic policies necessitates change in internal policies of the organisation but what changes are required to match the changes in economic environment is not talked about.


4. System approach fails to provide uniform approach to management. Management practices change with changes in environmental variables. No standard set of principles apply to all types of organisations.

It has added nothing new to the study of management. Even before this approach was introduced, managerial decisions were taken keeping in mind the environmental variables. No specific decision-making techniques are offered to deal with specific problems.

5. It fails to provide concepts that apply to all types of organisations. The small organisations are less adaptive to environmental variables than large organisations. The theory assumes that most of the organisations are big, complex and open systems. It, thus, fails to provide a unified theory.