In systems thinking and MIS design, how should a manager subdivide the firm into meaningful subsystems when applying the systems approach? Select the most appropriate principle for defining subsystem boundaries.

Introduction / Context:
A systems approach views an organization as an integrated whole made up of interacting subsystems. When designing MIS (Management Information Systems) or analyzing business processes, the first practical step is to decide how to partition the firm into subsystems. Multiple valid partitioning schemes exist, and a good analyst chooses the one that best fits the problem and decision needs.

Given Data / Assumptions:

• We need a principled way to define subsystem boundaries for analysis and design.
• Common decompositions include functional areas, managerial levels, and resource-flow perspectives.
• The goal is usefulness for decisions, controls, and information reporting, not adherence to a single rigid taxonomy.

Concept / Approach:
Subsystem boundaries should support clarity, controllability, and information relevance. Functional decomposition (marketing, finance, manufacturing) aligns with org charts and responsibility centers. Level-based decomposition (strategic, tactical, operational) aligns with time horizons and data granularity. Resource-flow decomposition (money, manpower, machines, materials) aligns with operations and cost drivers. Each perspective can be correct depending on the analysis objective and the MIS reports required.

Step-by-Step Solution:

Verification / Alternative check:
Systems analysis texts emphasize that the “right” decomposition is context-dependent. MIS blueprints frequently mix perspectives, e.g., financial reporting by level (strategic dashboards) and operations by resource flows (materials and capacity), confirming that several decompositions are acceptable.

Why Other Options Are Wrong:

• (a), (b), (c): Each is useful but incomplete as a universal rule.
• (e) Incorrect because viable decomposition principles do exist.

Common Pitfalls:
Forcing a single decomposition for all use cases; ignoring subsystem interfaces; failing to align decomposition with KPIs and decision rights.

Final Answer:
Any of the above represent acceptable subsystem divisions.