System Approach Theory of Management


Ludwig von Bertalanffy introduced General System Theory of Management in 1968 in a publication “General System Theory: Foundations, Development, Applications”. The basic idea of this theory is that a system is better than the parts which mean, multiple parts/departments/subsystems/components work harmoniously to yield the optimal benefit to a larger system.
To understand this approach/theory, we must understand what a system is.

A system is an interacting or interdependent group of items/individuals forming a unified whole. We all are in a system. If we say so, we can see systems almost everywhere. For instance our family works as a system ,our body works as a system, a school is a system also. So all the parts , family members, elements in the school, departments etc. are interrelated and interdependent and work in that manner to form a body, a family, a school or an organization. All elements need to work together for a common purpose.

System Approach Theory of Management

System Approach/Theory of Management is a new approach to management. “Everything is interdependent” is the general idea of this theory.

This theory suggests and advocates that any association or organization needs to be seen as a system as a whole rather than working in subsystems and units. This theory stays as the foundation of organizational development. This approach considers an organization as an open system consisting of various small interrelated and interdependent units or sub-systems.

Another important consideration of this theory of management is that it considers the overall effectiveness of the system rather than the effectiveness of all its sub-systems individually.

In this theory, for the larger system to work effectively and efficiently and attain its goals there should be continuous and effective interaction between its sub-system. Sub-systems can be the internal and external factors or stockholders. Organizations (any larger system) need to constantly respond to changing dynamics of internal and external environments in order to sustain by managing and syncing its goals with goals of the both internal and external factors where it is operating.

Components of System Approach Theory of Management

A complete system comprises basically five components. They are:

  1. Input
  2. Process
  3. Output
  4. Feedback
  5. Environment
Fig: Components of System Approach Theory of Management

Types of System

There are 2 types of systems:

  1. Open System
  2. Close System.

Open System interacts with its environment dynamically and also gets influenced by the external environment. All the organizations are open systems.

A Closed System is the opposite of an open system and doesn’t get influenced by external environments and doesn’t interact with them. These types of systems  rarely do exist.

Merits of System Approach Theory of Management

  • System approach helps in studying the organization as a whole and not in bits of its parts. 
  • System approach provides a framework for effective interaction with subsystems in the organization in a specific way to attain its goals. It does not focus on a particular subsystem.
  • This approach provides a whole nature or description of the organization and emphasizes on whether it’s adaptive or not. It assists in organization’s adaptability with environmental changes and needs.
  • System approach helps in making decisions and policies in organizational context
  • In order to solve managerial problems within the whole organization or in any part of it, the System approach uses various theories like  the behavioral, cultural and classical theories on a broader perspective.
  • This approach interacts between the external and the internal environment of the organization.

Demerits of System Approach Theory of Management

  • System Approach does not add anything new to the study of management. Without this approach, managerial decisions were taking care of  the changes in the environment. This theory does not provide any specific decisions in any situations. 
  • The relationship between its subsystems and the extent of relationship between the internal and external environment is not defined by this theory.
  • This theory provides only a theoretical approach to management.
  • This theory assumed most of the organizations as open systems, big, and
  • complex in nature. Hence fails to provide a unified and universal theory.
  •  It fails to provide universal concepts that apply to all types of organizations.:







Leave a Comment