Introduction
Companies have several denominators that determine the success of their performance. These denominators are a great prerequisite for gaining significant profit margins and a solid reputation. Then, each organization is to choose an approach according to which it will operate – whether the open or closed system one. In this paper, the denominators of firms, as well as open and closed systems, will be discussed.
Main body
It should be claimed that four primary denominators are a characteristic of any organization. First, it is ensuring the labor division, which means that employees do their work by their skills and qualification. An example is the division of a firm into several departments where personnel is working according to their education. Second, it is working for a common objective – all staff should follow a unified business aim so that a company’s performance would be coherent and profitable. If each team member pursues the goal of completing projects substantially earlier than the deadline to enhance the company’s reputation, customers will be satisfied and retained.
Third, it is ensuring hierarchy; employees should realize their place in a firm so that the business process would be consistent. For instance, engineers are accountable to managers, and the latter are accountable to directors. Fourth, it is coordinating efforts; a company is to create a set of rules and act following and in the framework of these provisions. For instance, a firm might issue a unified code of business ethics that can be obligatory to follow for all employees.
It seems rational to claim that within the scope of interaction with an external environment, a system can be whether open or closed. An open system is when a company trades internationally and imports all necessary facilities. A closed system is when a firm does not tend to import any items but rather produce them within its business operations (Kortmann and Piller, 2016). Moreover, departments in such companies do not exchange information on their activities and function independently.
Conclusion
To conclude, four denominators of organizations were identified and analyzed. It might seem that these denominators demonstrate a great extent of interdependence, and the more they are intersected and implemented, the more significant a firm’s performance is. Finally, the primary difference between open and closed systems is that the latter does not seem to cooperate with and gain benefits from an external environment, while the first ones do.
References
Kortmann, S., & Piller, F. (2016). Open business models and closed-loop value chains: Redefining the firm-consumer relationship. California Management Review, 58(3), 88–108.