Case Study Assignment - Coursework Example

? Case Study Assignment Introduction The ‘Open Systems’ approach of management, as opposed to the ‘Closed Systems’, takes into account external environment factors such as political, legal, social, macro economical, technological and other competitive forces. Several decades before, simply efficient running of the organisation was considered enough for success; however, things have changed enormously since then. The ‘open systems’ approach of management raises organisational effectiveness to combat external environmental changes that emerge time to time. ‘Open Systems’ Approach and Icy Foods Open system approach is fundamental to the survival based on external stimuli (Kreitner, 2009). Open systems approach came into effect after World War II when management began thinking that organisations are no more a self-contained unit – free from external influences. The company under discussion namely Icy Foods began its operations in 1999 and continued to grow exponentially at least until 2005. The Smiths adopted a very flexible policy approach for organisational management as that suited to them most for meeting market needs. The informal way of working in Icy Foods encouraged workers to learn varied skills passing through different departments as per the needs. Even the company operated night shifts and weekend working when order book forced them to do so. In fact, the Smiths’ approach was quite flexible in people management. It can be gauged from the fact that employees were trained in several areas of company operations providing them enough liberty to move where they find themselves more suitable. The Smiths were always keen to invite employee view points on operational aspects to bring efficiency in the operations. The fact remains that employees enjoyed considerable freedom in their overall working including their freedom related to leave. Icy Foods paid them above industry average apart from paying bonuses to high performing workers. The Smiths also motivated workers by declaring monthly awards for performers. The management motivated their workforce to deliver their best in many ways and that is reflected in low rates of employee turnover. Thus, Smiths’ were largely following open systems approach responding well to environmental influences; however, things changed when Icy Foods became a subsidiary of one of the large super market chains namely Megastar Plc. Megastar Lacked Open Systems Approach in Managing Human Resources Brown and Grundy (2012) emphasise that human resource (HR) "strategy is very much a part of an open system with many interdependencies" (p 34). Management of the Megastar not only streamlined the operations but also rationalized the product portfolio keeping only four products while discarding remaining. It is true that the company did a commendable job on operational aspects improving efficiency by 35 percent; however, the company fared badly on human resource development aspects. Employee turnover and absenteeism increased significantly. Employees remained grossly unsatisfied with the management because they were not involved in the decision making. They felt that decisions are thrust upon them by managers and headquarter. It is quite clear that in the process to improve operational efficiency of the firm, the management moved away from the ‘open systems’ approach of management. Trained Workers and employees are not only an important but scarce resource for any organisation and ‘open systems’ approach dictates that they must be not only preserved or retained but also allowed to develop within the organisation. It is a fact that new management improved the efficiency of the organisation without making it effective to external influences. Environmental Influences Play Critical Role Cole (2005) argues that several environment factors such as economical, social, technological, or political along with competitive forces keep on exerting influence on any organisation. Most of these external environmental factors are not in control of the firm – so as to say, they cannot be altered by the organisation. Instead, the organisation needs to adapt to the new situation making changes within so that their adverse effect is nullified (Cole, 2005). Legal Environment – an Important Influential Element Longenecker et.al (2006) emphasise that legal and regulatory environment is highly crucial for all business organizations whether small or big and may pose a threat for its survival if not complied with. Icy Foods were following informal ways of management that created troubles for them because they could not streamline many of the processes that were necessary in any food industry for maintaining certain minimum hygiene standards. Being in food catering business, it was obvious that they were subjected to food regulations. Non compliance to governmental regulation related to food industries, due to their informal way of working, resulted into significant fines affecting their profitability and day-to- day operations. It was not surprising that many negative reports surfaced against them due to noncompliance. However, unfortunately, compliance adds to the cost of product affecting competitive edge in the industry. Competitive Forces – Significant External Influence Morden (2004) argues that increasing market competition is a formidable external environmental cause of business instability. It is pertinent to note that Icy foods were catering to independent super markets and not to any reputed chain of supermarkets. Independent super markets themselves were facing heat of competition from the established branded super market chains in their business; their own survival came into jeopardy causing many of them to close operations. Icy Foods was mainly serving to independent super markets and therefore, demands for their products plummeted significantly. Thus, this external change of competitive forces among independent supermarkets and large super market chains took toll of Icy Foods and made their survival more difficult. Advances in Technology – a Formidable Environmental Influence Technological advances, as one of the external environment, also play a pivotal role in survival of an organisation. Usually, small firms such as Icy Foods fail to keep pace with changing technology that eventually helps reduce the cost of product and improves the quality. Automation is preferred by large firms keeping minimal manpower reducing their variable cost in the process. Automation also helps to deliver consistent quality goods without stringent quality control processes. Resource-short companies such as Icy Foods cannot invest or upgrade their technological leverage frequently. Over time, such companies cannot compete with those who gain advantage using latest technology in production processes (Cole, 2005). Macroeconomic Environment – a Key Factor Cole (2005) argues that economic variables too play a critical role. Some of the macroeconomic factor such as high unemployment rate, stagnant or low GDP growth, or high inflation rate can cause large upheavals in business outcomes of any organisation. Macroeconomic factors affect everyone in lesser or higher proportion and forces all organisations – small or large to make note of these changes while making any decisions Conclusion There is no doubt that in the fiercely competitive and ever changing world, the open systems approach is the most suitable way of management to face environmental influences that emerge time to time. Along with making the organisation efficient, open systems approach makes organisation effective enough to take cognisance of such changes in environment and find solutions to it so that organisational development process is not hampered. References Brown, L.; Grundy, T. (2012). Value-based Human Resource Strategy. Elsevier Butterwroth- Heinema. Oxford. Print. Cole, G.A. (2005). Strategic Management: Theory and Practice 2nd ed. Thomson. London. Kreitner, R. (2009). Management. 11th ed. Cengage Learning. Hampshire. Print Longenecker, J. G; Moore, C. W.; Petty, J. W.; Palich, L. E. (2006). Small Business Management: An Entrepreneurial Emphasis. 13th ed. South-Western. Thomson Corp. Ohio. Morden, T. (2004). Principles of Management. 2nd ed. Ashgate Publishing. Aldershot. UK. Schuler, R.S; Jackson, S. E.; Luo, Y. (2004). Managing Human Resources in Cross-Border Alliances. Routledge. London. Print. Read More