An open system is one in which the organization is affected by its environment. “Open system theory was developed after World War II in reaction to earlier theories such as the administrative theories of Henri Fayol. Virtually all modern theories of organization utilize the open systems perspective”. In the open system theory, resources are considered inputs. The environment in an open system can be affected by other organizations, such as those that are of a political, economic, or social nature. An organization’s survival is dependent upon its relationship with the environment. An open system consists of three elements:
1. Inputs are resources, such as equipment, natural resources, labor, information, and energy.
2. Throughputs are inputs that are in the process of being transformed.
3. Outputs are what throughputs yield, such as products and services.
As a result, outputs are released into the environment. Environments are defined as the “suppliers, distributors, government agencies, and competitors with which a business enterprise interacts. The general environment encompasses several influences that emanate from the geographic area in which the organization operates”. The cultural values of the areas in which the business operates affects the business environment. The status of the economy and the political environment also affect the success of a business as well as the educational system. A good education system must be in place, so there are enough educated workers to fill available positions.
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