Fig. 4. Chart of Working Authorities in a Trading Business
Reduced to its simplest form, we will suppose the business under consideration to be a small retail establishment conducted by two partners. No thought has been given to the principles of organization, yet they are applied in that little store just as surely as in the immense manufacturing plant.
Ask any commercial salesman calling on the firm who is the man to see regarding the introduction of a new line of goods, and he will probably answer, "Mr. Jones is the man to see; he does the buying." With no thought of organization, the owners of this little business realize that it is best for one man to do the buying. Perhaps the other may inspect samples, his opinion may be asked, he may even place an occasional order, but it is not the rule of the establishment. By placing the buying in the hands of one partner, confusion is avoided. He can keep in closer touch with prices, and the results are far more satisfactory.
Advancing to the larger retail business of the department store, whether the general store of the small town or the big store of the city, we find a different problem. Here the buying is further specialized, for one man buys for one, or at most three or four departments. The same men act as sales managers and buyers in the departments for which they are responsible. The manager of a department in a big store is selected as much for his ability as a buyer as for his salesmanship. But we do not get away from fundamental principles, for in buying and selling the manager is performing two entirely separate and distinct functions.
No matter what the business, we find the same two fundamental functions, that is, buying and selling. As illustrations of the application of this principle to different businesses we give the following:
Publishers of newspapers and other periodicals buy editorial work, manuscript, engraving, paper, printing; sell subscriptions, advertising space.
Publishers of books buy editorial work, manuscript, engraving, paper, printing; sell books.
Railroad companies buy equipment, rails, lumber, coal, supplies, labor; sell freight and passenger transportation.
Schools and colleges buy textbooks, supplies, services of instructors; sell instruction.