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ChaPter 2 • underStanding and modeling organizational SyStemS 21

COnsUlting OppORtUnity 2.1

The E in Vitamin E Stands for Ecommerce

“Our retail shops and mail-order division are quite healthy,” Bill Berry read the list and contemplated it for a while. “It
says Bill Berry, one of the owners of Marathon Vitamin Shops, is obvious that ecommerce is more complex than I thought,”
“but to be competitive, we must establish an ecommerce website.” he says. You can help the owners of Marathon Vitamin Shops
His father, a co-owner, exclaims, “I agree, but where do we start?” in the following ways:
The elder Berry knew, of course, that it wasn’t a case of setting up
a website and asking customers to order off the website. He identi- 1. Make a list of the elements that are interrelated or inter-
fied eight different parts to ecommerce and realized that they were dependent. Then write a paragraph stating why it is criti-
all part of a larger system. In other words, all the parts had to work cal to monitor these elements closely.
together to create a strong package. His list of elements essential to 2. Decide on the boundaries and ultimate scope of the sys-
ecommerce included the following: tem. Write a paragraph expressing an opinion on which
elements are critical for Marathon Vitamin Shops and
1. Attracting customers to an ecommerce website which elements can be explored at a later date.
2. Informing customers about products and services offered 3. Suggest which elements should be handled in-house and
3. Allowing customers to customize products online which should be outsourced to another company that
4. Completing transactions with customers may be better able to handle the job. Justify your sug-
5. Accepting payment from customers in a variety of forms gestions in two paragraphs, one for the in-house jobs
6. Supporting customers after the sale via the website and one for the outsourced tasks.
7. Arranging for the delivery of goods and services
8. Personalizing the look and feel of the website for different
customers

solution as output. An Italian knitwear manufacturer that markets its clothing in the United States
has just such a system. This company produces most of its sweaters in white, uses its computer-
ized inventory information system to find out what colors are selling best, and then dyes sweaters
in hot-selling colors immediately before shipping them.
Feedback is received from within the organization and from the outside environments
around it. Anything external to an organization’s boundaries is considered to be an environment.
Numerous environments, with varying degrees of stability, constitute the milieu in which orga-
nizations exist.
Among these environments are (1) the environment of the community in which the organi-
zation is physically located, which is shaped by the size of its population and its demographic
profile, including factors such as education and average income; (2) the economic environ-
ment, influenced by market factors, including competition; (3) the political environment, con-
trolled through state and local governments; and (4) the legal environment, issuing federal,
state, regional, and local laws and guidelines. Although changes in environmental status can be
planned for, they often cannot be directly controlled by the organization.
Related and similar to the concept of external boundary permeability is the concept of inter-
nal openness or closedness of organizations. Openness and closedness also exist on a continuum
because there is no such thing as an absolutely open or completely closed organization.
Openness refers to the free flow of information within the organization. Subsystems such
as creative or art departments often are characterized as open, with a free flow of ideas among
participants and very few restrictions on who gets what information at what time when a creative
project is in its infancy.
At the opposite end of the continuum might be a defense department unit assigned to work
on top-secret defense planning affecting national security. Each person needs to receive clear-
ance, timely information is a necessity, and access to information is on a “need to know” basis.
This sort of unit is constrained by numerous rules.
Using a systems overlay to understand organizations allows us to acknowledge the idea of
systems composed of subsystems; their interrelatedness and their interdependence; the existence