---
title: "Organization as an open system"
subject: "Organization and Management"
chapter: 1
key: "semester_7/organization_and_management:org-open-system"
source: https://www.bctengineer.com/q/semester_7/organization_and_management/org-open-system
site: BCT Engineering
---

# Organization as an open system

Organization and Management · Chapter 1: Organization

- Asked in: 2070 Chaitra, 4+4 marks
- Video: [Organisations as Open Systems](https://www.youtube.com/watch?v=wVMygUTOAME) — Kumaran Rajaram
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/organization_and_management/org-open-system
- Whole chapter: https://www.bctengineer.com/md/semester_7/organization_and_management/chapter-1

## Question

Describe why organization is considered as an open system. Explain the importance of organization.

## Short answer

An organization is an open system because it takes inputs from the environment, transforms them, outputs goods/services, receives feedback, and adapts to survive. Importance: it achieves large goals, enables specialization, uses resources efficiently, creates employment, clarifies authority, provides coordination, stability, innovation, and contributes to society.

## Answer

#### Organization as an open system
An open system is one that continuously interacts with its external environment, taking inputs from it and returning outputs to it. A closed system has no such exchange. Every organization is an open system for these reasons:
1. **Takes inputs from the environment:** raw materials, capital, labour, technology and information come from outside. NEA buys equipment and receives water, finance and manpower from outside.
2. **Transforms them:** through production or service processes.
3. **Gives outputs to the environment:** goods, services, jobs, taxes and profit. NEA supplies electricity to society.
4. **Receives feedback:** customer complaints, sales and government policy guide adjustments.
5. **Depends on the environment for survival:** changes in law (for example, the Companies Act or tax policy), competition, technology and customers affect it. Nepal Telecom had to adapt to private competition (Ncell) and 4G.
6. **Adaptation and equilibrium:** it changes structure and strategy to stay in balance.

```text
Environment (govt, market, technology, society)
   Inputs --> [ Transformation ] --> Outputs
      ^                                 |
      +------------- Feedback ----------+
```

#### Importance of organization
1. Achieves goals beyond individual capacity.
2. Specialization and division of work raise efficiency.
3. Optimum use of resources.
4. Creates employment and income.
5. Clear authority and responsibility reduce confusion and conflict.
6. Coordination of activities.
7. Provides growth, stability and continuity.
8. Encourages innovation and adaptation to change.
9. Provides goods and services to society and contributes to national economy.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. What makes an organization an open system?
   A. It has no rules or structure
   B. It exchanges nothing with outside
   C. It only produces and never buys
   D. It continuously interacts with its environment, taking inputs and returning outputs
   Answer: D. Open systems exchange with the external environment. (Key point: Open system meaning)

2. What role does feedback play in the open system model?
   A. Customer complaints, sales and policy guide adjustments to the organization
   B. It is sent to the environment as a product
   C. It replaces inputs
   D. It is only used by closed systems
   Answer: A. Feedback returns information that guides adjustment. (Key point: Feedback)

3. Which example shows the organization depending on its environment?
   A. NEA ignoring changes in law
   B. Nepal Telecom had to adapt to private competition and 4G
   C. A bank with fixed inputs
   D. A company with no customers
   Answer: B. Changes in competition and technology force adaptation. (Key point: Environmental dependence)

4. Which is a reason organization is important?
   A. It removes the need for coordination
   B. It eliminates specialization
   C. Clear authority and responsibility reduce confusion and conflict
   D. It avoids all change
   Answer: C. Clear authority and responsibility reduce confusion. (Key point: Importance of organization)

## Related in Organization and Management

- [Information support for functional areas](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Ainformation-support-functional-areas) — Organization and Management, chapter 9, asked 5×
- [Personnel management vs HRM](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Apersonnel-motive-hrm) — Organization and Management, chapter 7
- [Types of information systems; decision support](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Amis-types-decision-making) — Organization and Management, chapter 9
- [Define MIS and its types](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Amis-types) — Organization and Management, chapter 9
- [MIS, website and role of computer](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Amis-website-computer) — Organization and Management, chapter 9

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