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CSEET · Business Laws and Management · Principles of Management and Modern Approaches

A Pune manufacturer finds that its purchase department cut costs by buying cheaper raw material, but the production department now faces more defects and the sales department receives more customer complaints. The CEO decides to evaluate decisions by their effect on the whole firm rather than on one department. Which approach is the CEO applying?

The CEO is applying the systems approach. It views the firm as interdependent departments, so a decision in purchasing affects production and sales. Evaluating decisions by their impact on the whole organisation, not one department, is the central feature of this approach.

  1. AScientific management approach
  2. BSystems approachCorrect
  3. CQuantitative approach
  4. DAdministrative approach

Explanation

The problem arises because one subsystem was optimised without regard to others. Judging decisions by their effect on the whole organisation and its interdependent parts is the systems approach. The quantitative approach would rely on mathematical models, which are not mentioned.

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