Open Systems Theory Manifestation in Coles Supermarket - Case Study Example

Running Head: Open Systems Theory Manifestation in Coles supermarket Name Instructor’s name Institution of study Date Word Count : 2350 Open Systems Theory Organizations were regarded as closed systems by traditional theories since they were seen to be autonomous as well as isolated from the outside world. The open systems theory came up as a result of the emergence of more holistic and also humanistic ideologies. From the recognition that traditional theory had failed in many aspects that include taking into account the many environmental influences that had an impact on the efficiency of the organizations, the theorists together with researchers embraced the open systems view. The termed was coiled to reflect the new found belief of organizations being unique due to the unique environment they operate in as well as the unique problems as well as opportunities. Introduction It is of importance to note how this theory came about. The open system theory was developed initially by Ludwig von Bertanlanffy (1956), he was a biologist but it was interestingly applicable across all disciplines. This is a theory that defines the concepts of a system where the systems are characterized by assemblage or the putting together of parts whose relations make them dependent of each other (Scottp.77). As one moves from mechanical to organic and social systems, the interactions between parts in the system become more complex and variable. Open systems like organizations are "multi-cephalous: many heads are present to receive information, make decisions, direct action" (Scott p. 92). Individual and subgroups form and leave coalitions. Boundaries are amorphous, permeable, and ever changing. But the system must exchange resources with the environment to survive. For a system which continuously interacts with its environment, Open System is one of those that do that. According to the theory, this interaction can take the form of energy, information, or even material transfer in or out of the boundary of the system. This system is contrasted with the isolated system where we find that the exchanges that exist in the open systems do not take place. This concept was formalized within the framework of interrelations. It was further expanded with the advent of information theory then to systems theory. For this assignment, I intend to look into ways by which the Coles supermarket show a manifestation of the open systems theory in their operations as well as in their various areas of organizational management. The open systems theory is termed as a way of thinking in the line of dynamic systems i.e. the systems that interact with the environment. For this reason, businesses can be classified as dynamic systems that keep evolving as a way of responding to the feedbacks. One of the importance’s of the open systems theory to a business is that it provides a framework for thinking about the various processes such as change which is a regular part of running a business. For Cole’s group to have a turnaround to trolley full of performance indicators for the last three years, they must have invested heavily to the open systems theory. They put change in various structures as well as the method of doing things so as to achieve the profitably they have seen up-to-date. From a company whose strategic direction was confused to one that sees two million more customers come through its doors each week, open systems can really be said to be part of the strategy for the turnaround. The realization that the interaction between the environment is an important aspect Coles had to undergo a real shake-up in the way it deals with customers, suppliers, not forgetting the way it communicates with the staff. They increased the remuneration for their staff and in return there was the feeling of being more rejuvenated as well as motivated to offer their best for the company and this has really paid off. This is a show of open system in application. The same thing that the environment interaction where demoralized employees will perform poor and as a result a bad performance of the entire company. Change In the open systems theory, change is the process adapting to the shifting circumstance. This is because it gives the tools for thinking about change. For instance; describing and then explaining the general patterns as well as the obstacles. For example in Coles case, the assembling of a world class management team that was headed by Ian McLeod to help in the business turnaround was vital for it to come from the wounds to generating profit. Then Ian was offered a package of remuneration that was based on his performance against what they called extremely challenging stretch targets. Their performance are said to significantly benefit the company in return. Recently, the Boss found out that the top retailers had to make some adjustments on the way of achieving those results. They were forced to undergo several changes to have the company back on its feet and making its trolley back on its wheels. Using the open systems theory, successful dynamic change involves paying attention to feedback as well as an integration of that information instead of proceeding with a rigid plan of how change should occur. This is clearly what happened with the Coles case, they really made use of the information changing their product line while focusing on its successful products and shifting in response to the information regarding their customer demands. Coles Group inherent various characteristics in line with the open systems theory in regards to its management methods and strategies. Within the open systems theory concept, organizations practice division of labor vertically and horizontally. Coles applied this in efforts to turnaround their status. The vertical division of labour has three levels i.e. the top, middle, and the bottom. The top includes of the senior management or the executives whose main function is to typically plan or lay the long-term strategy as well as oversee the middle managers. This is the role that was played by the Coles Group top executive. The middle managers on the other hand are the people responsible for guiding the day to day activities of the organization. This means that they administer the top level strategy. The bottom which includes the low level managers as well as laborers are the people who put the laid strategies in action and thereby perform the specific tasks necessary to keep the organization operating. This is one organizational management characteristic that Coles seem to have applied in their turn around period. The Coles also applied the horizontal division of labor by the way they defined tasks to groups, departments, as well as through assigning the various workers with sills applicable to those groups. For instance, the line groups at the Coles Supermarket performed the basic functions of the chain store while they had the staff units to support them with the services as well as expertise. The line units had their main function being on the supply , production land the distribution of the goods while the staff units generally dealt with the internal operations as well as controls that is the image; public relations efforts. This bore fruits at Coles Groups since over time, things were taking shape. What Matters in the open systems The open systems theory uphold that organizations are collectivities where the participations are based on common interests for the survival. Just as the shareholders at Coles Group had to agree on various aspects of business management to ensure that the chain survived the hard times and give returns to the shareholders. The survival of the system is defendant on the engagement in the collective activities; they may be structured informally to be able to secure the end. This theory is also concerned with structure. Its perspective has its emphasis on processes a little more than the structure. The open systems theory posits that a number of factors affect the organizations. These effects come about by a number of factors occurring in the external environment and these effects have an effect on the internal environment too. Looking at this in regards to the problems that Cole went through in the hard times can be explained through the above statement where we see the lack of connection between the two environments resulting to the downfall of the entire system (Burnes 1996). The open systems theory on the other hand has its perspective putting up with the complexity as well as the variability of the various parts that are involved in the whole systems structure this was evident in the recovery process in the Coles Group. It started off with the consideration that any organizations success comes from the organization which comprises of a set of interdependent parts, which may be referred to as sub systems which like mentioned earlier interact with each other to form the unified whole which is the system. This unified whole gives the organization its unique identity. As the Coles group made changes to their sub systems, they seem to have followed with great interest the Open systems theory fact that with its application the organization is capable of making changes to their sub systems although not a simple process but it is one assured of success if applied appropriately; which was the case with the Coles Group. The creation of various interdependent parts in Coles meant that the Group was able to develop configuration as well as structure which are somehow arranged in a hierarchy of systems. Like mentioned earlier, these sub systems form a hierarchy of systems which usually emanate from the existence of different individuals way down from the micro level. These individuals work within the context of groups at a different level. This is seen in the way Coles Group sub divided its work function giving different units its function with various roles to play. Open System Theory in Organizational management Coles Group has a good manifestation of the open system theory in an organizational management scenario in its supply chain. Coles manages its inbound freight and therefore is able to manage the entire supply chain actively from its suppliers to the Cole’s Distribution Centers as well as the vice versa which is from the Distribution centers to the Coles Supermarket Shelves. The responsibility of transporting the freight under the Coles Collect into the Distribution Centers of Coles therefore shifts from the supplier to Coles. This means that a supplier is not required whatsoever to foresee the transport logistics of having any freight delivered into the Distribution Centers of the Coles Supermarket[Col12]. The work of the supplier in this process remains that of packaging, labeling, documentation, labeling, data integrity, and order fill. The supplier should conform to the processes and procedures that are laid down by the Coles Supermarket Supply chain. Their supply system has been able to highlight the preservation, protective, a brand communication, logistical and environmental functions. It cannot be forgotten that they have been able to bring in design and technology and used it for a competitive advantage. It meets the needs of the people as well as the wants of the end users through their packaging innovation and design and also opening distribution channels that make the system work more efficiently[Ric11]. The Coles Collect has an aim which is that of ensuring that through the better planning, capacity management, vehicle utilization at the Distribution centers as well as the consistency of this inbound service levels the end to end cost of the supply chain; the costs are minimized and ensures that the supplier who uses Coles Collect has a competitive advantage in trying to put the products on the Coles Supermarket shelf[Col12]. Advantages This system moreover has several advantages which are worth noting as can be seen to have had advantages to Coles Group after its application. To kick start this, we see it evidently in Coles Group that the open systems provided the entire organization with a practical view. For instance, it gives life in interdependence suggesting that all parts of; departments that make up the organization as well as the external environment function with each other hand in hand. This gives two pieces of practical information. First it stipulates that a member of each member of the organizations is important. On the other hand, if this is successful, the company cannot ignore the external environment. This goes well with the social saying that of you spend a large part, you should remain the smallest part of your body health, giving the same care the same way. This is because a business organization may have to see clients as well as competitors to see the external environment continue competitively. Just as Coles Group did and achieved a milestone turnaround from its wounds. Conclusion Open systems have been found to be subject to differentiation a process where the system is divided up into more specialized sub systems which crop up as a way of dealing with the complexities. This comes up as a result of the organization’s growth where they become more complex as well as complicated. One challenge that might face the Coles Group is surviving the differentiation so that the whole organ remains connected across all of its sub-systems so that it does not lose its corporate identity as well as the culture thereby being able to maintain it throughout its entire system. References Argyris C. & Schon, D. 1978, Organizational Learning: A Theory of Action Perspective, Addison-Wesley, Reading, Mass. Burnes, B. 1996, Managing Change: A Strategic Approach to Organisational Dynamics, Pitman Publishing, London. GLUYAS, R. (2012, April 12). Business With Wall Street Journal: Coles is on top. Retrieved December 23, 2012, from The Australian: http://www.theaustralian.com.au/business/opinion/coles-is-on-top-but-goyder-far-from-happy/story-e6frg9wx-1226334771047 Harvey, D.F., Brown, D R. 1992, An Experiential Approach to Organization Development, Prentice-Hall, Englewood-Cliffs, NJ. Miller, D. 1990, The Icarus Paradox: How Excellent Organisations Can Bring About Their Own Downfall, Harper Business, New York. Stacey, R. 1996b, Complexity and Creativity in Organisations, Berrett-Koehler, San Francisco, CA. Scott, W.R. 1992, Organisations: Rational, Natural and Open Systems Prentice Hall, Inglewood Cliffs, N.J. Supply chain analysis. (2011). Coles Group. Retrieved December 23, 2012, from Supply Chain Anlysis: http://supplychainanalysis.igd.com/Hub.aspx?id=11&tid=1&rid=41 Read More