The Business Man's Encyclopedia Vol. 1 Books 1 - IV
A. W. SHAW COMPANY, 1912

BOOK I

MANAGEMENT OF THE VARIOUS DEPARTMENTS OF A BUSINESS.

Business management is getting more and more to be a management of the organized business. When a business has run for some time it is liable to be an unplanned affair. It has no definite organization, as it has grown by a series of additions. Perhaps as good a comparison as can be made between an organized and an unorganized business is to compare a building which has been built by a series of additions with one which has been definitely planned from the start. The ordinary business, not being planned at the start for growth, has its additions crowded on to it. The organized business, being planned for growth, takes care of the various departments which are necessary to it, in a systematic manner.

Any business—no matter of what kind—should be divided into the two broad divisions, the incoming division and the out-going division. The incoming division receives everything and takes care of everything which has to do with receipt. The outgoing division has as its function the supervision and handling of out- go.

There are two methods of obtaining the material which is to make up the product handled in the incoming department. The most common method is that of making the product which is to be sold. A more common term where the product is made in large quantities is that of manufacturing. This term of course is not restricted to manufacture in lots, but is now used to include engineering operations as well. The traditional method of getting a product was to make it in such quantities as would offer a good sale. Later the custom became common of purchasing a product from those who had made it; so getting a stock by means of buying. Sometimes these two methods are combined and a firm will both manufacture a line and purchase a part of it. So the function of the incoming department is that of acquiring a product to be sold.

The outgoing department, now designated the sales department, is that department which concerns itself entirely with sales.

Some authorities give a third and a fourth department, which they do not separate. The bookkeeping or accounting department takes charge of all records. Everything that is done that necessitates a record, is taken care of by the accounting division.

The department of supervision, or the management of a business cannot be localized. Like the accounting department it spreads over all the other departments and is general rather than local. The best way to think of these divisions is to separate a business into the incoming division in which all the production flows toward the business and the outgoing division in which the flow of production is away. Then both of these departments requiring supervision and accounting bring Into being two divisions which spread over both the incoming and outgoing departments.

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