Open & Closed Systems Essay Example

was the main system in the 1960’s and early 1970’s, association learning and research later highlighted the role of the environment.

Throughout the early 1960’s and early 70’s it wasn’t that the managers didn’t notice the outside environment such as other associations, markets, government supervisions and the equivalent, but the strategies and other decision-making procedures of the closed system gave very little thought to the influence that these outside forces could have on the inside running of the association. An open system is an economic model that counts the goods and services exchanged domestically and between nations. The confines of the open system, act together with many other systems or environments.

An open system is much more flexible than a closed system. The open-system hypothesis started in the natural sciences and eventually spread to different fields such as: ecology, computer science, engineering, management, and psychotherapy. The point of view of the open system considers an organization as an individual that takes input from the environment, converts them, and then releases them as output in an arrangement with mutual effects on the organization itself, along with the environment in which the association runs. What this means, is that the association becomes part of the environment in which it is associated with.

Open systems of an organization believe that other organizations are dependent upon their environments and these environments are also dependent upon the organizations. As the open-system strategies expanded among the organizational theorists, managers began to integrate these views into practice. The open-system approach serves as a type of business activity. What this means, is that business is an operation of converting inputs to outputs while also finding out

that inputs are extracted from the outside environment and outputs are put into this exact environment.

The open-system outlook does not pretend that the environment is immobile. Rather, change is the rule instead of the exception. Conversely, an open-system such as the human body and current organizations are more elaborately dependent on their surrounding environments. Leakages are taxes, savings, and import expenditures not spent in the economy. In an open system there are leaks from households to foreign companies, leaks from domestic businesses to foreign owners of factors of production, and leaks from both domestic households and businesses to foreign governments through taxation. In the open system, the leaks are ounted as part of the country’s economic activities. The leakages also put money into the system. When a U. S. consumer buys imports or when an American company hires customer reps in Mexico, money leakages are created. These leaks bring money into the U. S. Economy because the foreign firms and households buy products that are manufactured in the U. S. using domestic labor, capital, and other factors of production. There is another leak that is not stated in the textbook, which is all the money that households save, whether it be through a checking account, savings, and stocks or bonds.

The money they save then goes into the financial section. The financial section then lends this money to other businesses and households for their needs. When this money flows from the households to the financial system, the leakage is called savings. When money from the financial institutions is borrowed for the purpose of getting goods and capital equipment, it is called an investment. The example that

I will use for my leakage, is that my dad has stock in Wal-Mart. The stock ends up in the financial sector.

The financial sector then lends the money to another household or business that needs to borrow money to either buy a house, car, or something big that the family needs. The business will use the money to buy either supplies or equipment to make the business better and to make it grow. The three injections of economics are investments, government purchases, and exports. This injection expenditure, like consumption, is used to buy whole production through the product markets. The most important thing is that injections add to the total volume of the basic circular flow.

They “inject” income into the product markets that is used for factor payments and becomes household income. If injections surpass leakages, the volume of the basic flow flares and the total production increases. The example that I will use for my injection is: My girls inherited some money that they are to use for their college fund. The money that they inherited is invested in CD’s. The CD’s that they have are at a fixed period of one year at a time. If the interest rate is low one year and higher the next, and then the higher interest rate will be added to the CD’s.

The CD’s also have what is called federal deposit insurance for up to $250,000. When the girls cash in their CD’s they will get all of their money, plus what interest is added to it. If they get the money out before it matures, they will have to pay a fee for getting them out

early. REFERENCES: http://www. sec. gov/investor/pubs/certific. htm http://www. amosweb. com/cgi-bin/awb_nav. pl? s=wpd&c=dsp&k=injections-leakages+model http://managementhelp. org/misc/orgs-open-systems. pdf http://www. referenceforbusiness. com/management/Ob-Or/open-and-closed-systems. html