plan of organization led several executives of Tinkham, Littell, Inc., to conclude that it should be discarded and the original sales organization restored. Company opinion was divided. The old organization had been unsatisfactory because of the costly duplication of sales effort. Yet responsibility could be placed definitely under a system organized according to products; each salesman was responsible for the sale of his line in his territory; straight lines of authority ran directly from the president to the salesmen. It was anticipated, furthermore, that an abandonment of the Jamestown plan might have a bad effect upon the morale of the sales organization. If the company went back to the old plan, it would be necessary in the three largest branches to demote officials who had been appointed for administrative work, unless they could be made branch managers for individual lines of products. Further objection to its discontinuance came from those districts in which a large volume of small orders had been developed. In those fields the company had not been able to develop small order business under the old plan, but the Jamestown plan had been successful in reaching small buyers. It had enabled the company to serve small customers whose annual purchases of one line were not large enough to warrant a salesman's visit under the original plan and to develop new accounts with customers whose purchases in some lines were too small to warrant calls by salesmen of those lines. Although the ratio of selling costs to sales had risen, it was pointed out by the proponents of the Jamestown plan that it had been used during a period of extraordinary fluctuations in business conditions and that as business showed further improvement, the percentage of selling costs might be expected to decline, because the organization would not have to be expanded proportionately to handle the increase in volume of sales. As they stated, the Jamestown plan was instituted at a time when all costs had risen to abnormal heights and were still rising. In 1921, when its discontinuance was suggested, the volume of sales was low, and the costs of labor and supervision were relatively high. In addition, the system had been costly to install; buyers had become familiar with it; and it was feared that another change would suggest to the trade that the company's organization had become unwieldy.

In October, 1921, however, the company decided to go back

to a modification of the original organization, as shown by Chart III.

The third plan concentrated control of manufacture and sale of each line in one individual. It coincided with the original plan in that it decentralized the sales control of all lines and operated the branches and field forces for each line separately, thus doing away with the consolidated offices and consolidated salesmen. It made necessary the reopening of several branches which had been closed after the introduction of the Jamestown plan. Under the third plan each salesman sold only one product in a specified territory for which he was responsible.

A difference of opinion remained among the officials of the company as to the relative advantages of the third plan and the Jamestown plan of organization. Several executives continued to assert that a modification of the Jamestown plan would have given the advantages of the elimination of duplicate sales effort without the disadvantages which caused the change to the third plan, and they were convinced that eventually a modified Jamestown plan would have to be restored.

14. ROARK SAW WORKS- -CONTROL OF SALES BRANCHES The management of the Roark Saw Works decided to establish sales branches at eleven points. For twenty-five years the company had maintained shops for repairing1 and revamp

1 In the normal usage of circular saws it is necessary to rework and rehammer

ing saws in seven cities which were wood and metal working centers. Reworking saws required skillful mechanics, and the company believed that the service of Roark saws would be bettered if this work were done by trained employees of the company rather than by the small repair shops. The new plan provided for stocks to be carried in each shop and for the establishment of four new branches. The decision to establish sales branches was caused by the inattention of agents and wholesalers, the activity of competitors' branches, and the demand for service in estimating mill requirements on special orders. Wholesalers did not desire to stock large saws, because orders for them were infrequent, specifications varied, and their cost was high.1 Four of the repair shops in reality had become branches before the management was cognizant of the transition. The managers of those shops from time to time had requested that small saws, such as hand saws or keyhole saws, be sent to the shops in order to solicit specific orders for which competition was keen, and in this way small inventories had been built up at those shops. The intensity of competition with two other large saw makers caused frequent demands for special concessions by the managers of these shops.

The Roark line consisted of a large number of saws. In small sizes there were over 3,600 models, including hand saws, coping saws, keyhole saws, hack saws, and floor saws, which varied in size and number of teeth to the inch. Many combinations were made in fitting the saws with handles. Although the most common woods were apple and mahogany, rosewood also was used. Large saws were made in circular and band models. The major portion of the large saw business was special orders for specific factory requirements. The Roark line also contained a large number of saw tools, floor scrapers, and small woodworking devices which were made in order to utilize steel remnants.

It was evident that a complete line of mill supplies would have to be carried at each branch, since it was customary in the lumber and mill business for a customer to make a large portion of his purchases from a single source of supply. Competitors were them. If the speed at which the saw is to be used is increased, the saw must be hammered in order for it to withstand the higher speed.

1 A circular saw of 60-inch size cost $250. The cost of large band saws ranged from $350 to $500 each.

using supply lines of belts and pulleys effectively as leaders for the saw business.

The repair shops had not presented a serious control problem so long as their business was concerned mainly with service, but the new branches would require extensive administration. Although the selection of the stock to suit local needs was to be made by each branch manager who was familiar with territorial needs, there was anxiety among the senior executives that this might lead to overstocking.

The Roark Saw Works carried 25,000 accounts on its books, of which 17,000 were to be turned over to the II branches. In order to lessen the work of the managers, it was proposed to centralize under the general credit manager at the home office all collections except those in the cities in which the branches were located. The general credit manager was to stipulate general rules for the branch managers to follow in the extension of credit to customers. Each branch manager then was to determine the credit terms to be granted to each customer in accordance with these rules.

Advertising was to be handled from the home office. The company planned to continue its advertising in trade papers and direct-mail solicitation. The reductions in the branch managers' duties were made in order to give them more time to develop contacts with mills and to assist the mills in meeting their special requirements; the company believed that it was essential to educate customers as to which saws would best fit their individual needs. Hence each branch manager was to participate aggressively in consummating sales.

In the control of the salesforce it was decided to place all responsibility on the branch managers. The company was to cooperate in hiring the salesmen, except for vacancies which occurred at distant branches. At the distant points the branch managers were to be given authority to hire salesmen in order that there be no risk of delay in maintaining the salesforce constantly at the required strength.

Should the Roark Saw Works have centralized collections at the home office? Should a greater degree of control over credits have been exercised by the home office? Should the quantity and assortment of stock to be carried at each branch have been controlled by the home office?

15. HOLWORTHY SHOE COMPANY-CONTROL OF RETAIL BRANCHES On February 1, 1921, as a result of long-term contracts for raw materials, overestimates of the future demand, and cancellations of orders by customers, the Holworthy Shoe Company had an inventory of 30,000 pairs of shoes. In order to liquidate this inventory, the company proposed to change its methods of distributing its product.

In 1915, Mr. Mathew Holworthy had sold his profitable shoerepairing business which operated three shops in Baltimore; he had withdrawn his accumulated savings from the bank, incorporated the Holworthy Shoe Company, leased the necessary machines from the United Shoe Machinery Corporation, and begun manufacturing shoes in a small Massachusetts town about 20 miles southwest of Boston. The output of the company consisted entirely of men's staple, unbranded street shoes; in 1920, the capacity of the factory was approximately 300 pairs per day. This output was sold to wholesalers in Boston, Providence, New York, Philadelphia, and Baltimore. The shoes were sold to retail at $6 to $10 per pair, 1921 prices. The wholesalers ordinarily received a gross margin of 15 per cent on their selling prices.

During the prosperous years of 1918 and 1919, the Holworthy Shoe Company accumulated a surplus on its financial statement. The output of the factory was sold far in advance, and it became increasingly difficult to secure deliveries of raw materials. Consequently, several long-term contracts were placed for leather and findings. When the period of depression began in 1920, Mr. Holworthy thought that the reaction was of a temporary character and that it would be the best policy in the long run for the factory to continue operations nearly at capacity and make up the large stocks of raw materials on hand into finished goods. When cancellations began to come in from customers, the operations of the factory were put on a half-time basis. Although the inventory of finished shoes had reached the high point of 30,000 pairs on February 1, 1921, the company was still in a fairly secure financial position. In order to store this large number of shoes, it had been found necessary to rent space in several local warehouses.

At that time several shoe manufacturers were cutting down inventories by means of bargain sales to the public in large cities.