Answer the following statements true (T) or false (F)

Question

1. In a closed system, an organization's outputs are recycled to become inputs. 
2. Netflix's business suffered when it failed to use an open system in its decision to introduce a large price increase while simultaneously splitting its DVD mail service from its streaming one. 
3. One reason for the success of the Tommy Hilfiger clothing brand in the 1990s was maintaining a closed system with respect to young consumers' feedback by conducting research in music clubs. 
4. Continuous learning in an organization is more likely to occur in an open system than in a closed one. 

Answer 1

1. FALSE
A closed system has little interaction with its environment; that is, it receives very little feedback from the outside.
2. TRUE
Netflix used a closed system when, in July 2011, with no consumer feedback, it announced price increases of as much as 60%, a move intended to force subscribers to drop the DVDs by mail in favor of an $8-per-month streaming plan.
3. FALSE
"When Hilfiger's distinctive logo-laden shirts and jackets started showing up on urban rappers in the early ‘90s," says one account, "the company started sending researchers into music clubs to see how this influential group wore the styles." By having constant feedback, an open system, with young consumers, Hilfiger was rewarded: In the late ‘90s, its jeans became the No. 1 brand in this age group.
4. TRUE
The concept of open systems, which stresses feedback from multiple environmental factors, both inside and outside the organization, attempts to ensure a continuous learning process in order to correct old mistakes and avoid new ones.