Direction: Read the questions case and answer in a short paragraph or bullet points.

General Motors (GM), from its inception through the early nineties, operated as if it was a closed system. Management decided on the products it wanted to sell, produced those products and offered them to customers. GM assumed that whatever it made would sell, and four decades he was right. GM virtually ignored its environment for the most part because his executives saw the environment as having almost no impact on the companys performance. While some critics of the GM still attack the firm for being too insulated from the environment, GM has certainly become more open. The action of consumer groups, stockholders, government regulators and foreign competition have forced GM to interact with and be more responsive to its environment.

1. Why did GM feel the need to become open to the environment? Organize your answer.

2. Define a system and compare the closed versus the open systems.