Wal-Mart

Why Wal-Mart is an open system?

An open system is where the business interacts with all of its entities in the environment or the surroundings. The companies that exchange ideas, information, people and materials freely are known as open system organizations. They take into account the changing market environment and understand that the market place is not stable; while it is unpredictable and unstable. Open system businesses allow feedback to flow from internal and external sources. Such systems are good at problem solving, keeping in view the big picture and the continuous feedback allows for improvement in the overall performance of the business (Courtney, et al., 2005).

Wal-Mart is an open system as it is in close contact with its environment. The flow or exchange of information between all the departmental members is done freely, as the organizational structure is flexible and has little or no boundaries between its departments. Wal-Mart lets the environment guide the course of its business and takes into account the vulnerabilities and unpredictability of the macro environment. The inventory management system is a god example to illustrate this as it links all of the suppliers of Wal-Mart to the inventory levels, allowing it to be open system. The demand for the product is automatically updated on the system and the required inventory level is notified to the respective suppliers. Wal-Mart gives preference to the input from its customers, as it has realized that customers prefer to shop at one place where all their needs are met. Taking this preference into account, Wal-Mart has adopted a one - stop shop concept, a supercentre, and offers wide range of products from household items to electronic items (Corporate.walmart.com, 2013).

Therefore, the business of Wal-Mart is an open system as it depends upon the suppliers, customers, competition in the market ...