1) In a system theory there is an active exchange between internal environment of the organization & external environment
2) All open system are input-throughput-output mechanisms. Systems take inputs from the inputs from environment in the form of energy, information, money, people, raw materials & so on. They do something to the inputs via throughput, conversion or transformation processes that changes the inputs & they export products to the environment in the form of outputs.
3) Each of these three system processes must work well if the system is to be effective & survive.
4) Every system is delineated by a boundary. What is inside a boundary is the system & what is outside is the boundary is the environment. Boundaries of open system are permeable, in that they permit exchange of information, resources & energy between system & environment
5) Open systems have purposes & goals. These purposes must align with purposes or needs in the environment. For example the organization’s purposes will be reflected in the outputs & if the environment does not want these outputs, the organization will cease to exist

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6) The law of entropy states that al systems “run down” & disintegrates integrate unless they reverse the entropic process by importing more energy than they use. Organizations achieve negative entropy when they are able to exchange their outputs for enough inputs to keep the system from running down.
7) Information is important to systems in several ways. Feedback is information from the environment about system performance. System requires two types of feedback: positive & negative. Negative feedback is also known as deviation-correcting feedback
8) An open system achieves a steady state of against a disruptive force, either internal or external. The basic principle is the preservation of the character of the system.
9) Also a system tend to get more elaborated, differentiated, specialised & complex over time.; this process is called as “differentiation”. With increased differentiation, increased integration & coordination are necessary.
10) Another characteristic of the open system is equinfinality, the principle that there are multiple ways to arrive at a particular outcome or state.
11) Subsystems exist within larger systems. These subsystems can be arranged into a hierarchy of systems moving from less important to more important.

12) The characteristics of open systems explain many phenomena, we observe in organizations.
a. Why do organizations resist change?
i. A desire to preserve the character of the system: the steady state.
b. Why does plan “A” fail & fail again then succeed?
i. Equifinality
c. Why do organizations become increasingly bureaucratic & complex?
i. Differentiation, with its attendant integration & coordination.
d. Why does business go bankrupt?
i. Inability to create negative entropy.

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