According to Cleaned and King, “A system is an assemblage or combination of things or parts forming a unitary whole”. The things or parts are known as sub-systems and are so interlinked that a change in one part brings changes in other parts also. The sub-systems are closely interdependent and inter-related to form a coordinated whole. It is the system as an integrated body or organization that has interaction with the external environment. In other words, all the sub-systems of a system operate together while responding to the forces in the external environment.

A business organization may be viewed as a system which is created to satisfy society’s needs and desires by the production and distribution of goods and services with a view to earn profits. As a business system gets various inputs from the environment and transforms them into goods and services, as required by the environment. Thus, it has exchange relation with the environment. A business system is composed of sub-systems such as production, Marketing, Finance, Personnel, Research and Development Legal and Management. These sub-systems are interdependent and inter-related. They must be properly coordinated if the business is to achieve its objective effectively. The business system has external environment consisting of social, political, cultural, economic and other forces which affect business policies plans and practices. Each sub-system of the business is influenced by these forces. To deal effectively with the environment, the various sub-system operable as a coordinated whole or a single entity.

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