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Why is a business organization considered an open system?

Question:

Why is a business organization considered an open system?

Analyzing organizations

It is essential to understand how organizations work not just for the people who own it but also for investors, shareholders, and other stakeholders. The proper analysis of organizations would give necessary information to these people and aid them in making appropriate business decisions.

Answer and Explanation:

A business organization is considered an open system if it takes into consideration the environment it belongs to propel its growth and expansion. It interacts with the environment by bringing resources and putting it back again, which in turn results in a more complex organization. An example of an open system is a publicly-traded company.


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Open System in Management: Definition & Example

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Chapter 5 / Lesson 9
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Learn about the open system model. Discover open system examples, and study how good management uses open system theory to make their organizations successful.


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