Systems View of Globalization Management

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  • 0:04 Systems View
  • 1:09 Why Use Systems View
  • 1:53 Systems View Example
  • 4:08 Lesson Summary
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Lesson Transcript
Instructor: Allison Tanner

Allison has a Masters of Arts in Political Science

Should you fix your company from the inside or the outside? Can you do both? This lesson will discuss how viewing your organization through a systems view is beneficial for your organization's success.

Systems View

If you go to your doctor complaining about chest pain, chances are he or she will ask where you have been lately, what you have been eating, and if you have any past medical problems. Your doctor is considering both the internal and external causes of your chest pain. Systems view, or the process of considering both internal and external influences, is becoming a prominent way to evaluate not only personal health, but also the health of your global business.

Imagine that you are the CEO of an American clothing and textiles company with offices in Russia. Last month's profits fell. At first glance, it appears that labor costs have increased. In an effort to reduce the cost of labor, you increase quotas, or the number of products that should be produced each week. However, despite increasing quotas, the profits are still falling.

In systems view, you would look at more than just the cost of labor, like the cost of transporting the products, the currency exchange rate, and the political environment, all of which are interacting and influencing the company's profits.

Why Use Systems View

Using this diagram, think back to the example about your heart.

All inputs from from A to B, and the interactions, influence the outputs.
Systems View

In business, the organization receiving the inputs, signified by the + sign, is your heart, and your veins are the organization's structure, staff, and production processes, which is the 'A' in our diagram. Your air and food are the interactions between your organization and the politics of the region you're working in, the country's level of development, and any external factors that influence the success of your company, which are all part of the 'B' in our diagram. Thus, the interactions between the three produce the outputs.

When you use systems theory, you look at all of the internal and external elements that influence how efficiently your company works in the global environment.

Systems View Example

As a global manager for a clothing and textiles company, it's your job to make sure that the entire organization is successful.

Let's say that you notice the number of t-shirts produced at a factory in China have decreased by nearly five percent. You decide to take a trip to China and evaluate the manufacturing process. While there, you find some inconsistencies in the production procedures. Over the next few weeks, you help to create new procedures. Upon return home, you're optimistic that next month, the factory will produce the expected number of t-shirts.

Next month, you see a slight increase, but not enough to convince you that the problem has been resolved. Instead of going back to China, you decide to take a look at the amount of cotton their factory has received to make the t-shirts. The import documents show you that the Chinese factory isn't receiving enough cotton to meet their production targets.

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