_EPaper Cup Company, a small company engaged in the manu,facture and sale of paper drink-ing cups and soda cups, was organized in I937 and experienced a rather slow growth during the first four years. Increased industrial activity resulting from war conditions brought a large increase in the demand for the product, and the company expanded very rapidly after I94I. Prior to the wartime expansion, the president had been able to maintain direct control over all phases of the company's activities. With the rapid growth of the company, however, he found it increasingly difficult to cope with all problems of management and supervision. The president felt the need of a definite plan of organization for the company that wouldrelieve him of the details of management, take care of existing operations, and provide for future possible expansion. He felt that his previous management experlence was inadequate to enable him to prepare such a plan of organization himself, and besides he had little time to devote to such a project. In May, I943, he decided to engage the services of some management consultants for the purpose of drawing up a functional organization chart for the company. The consultants spent several weeks making a survey of the historical background, the present operations, and the possible future development of the company. They found that the company had been incorporated on April 22, I937, with two principal stockholders. One of these was the man who is still the president of the company; he had been a successful salesman for another paperproducts company for several years. The other man had been a production engineer for the same company; he remained with this new company less than two years, when he sold his interests to the president. After the company was organized, several months were spent in designing machine No. i to make flat-bottomed paper cups. This project was abandoned in July, I937, after an expenditure of about $I5,000, and all efforts were devoted to machine No. 2 to make coneshaped paper drinking cups. Actual production was begun in a small loft building during the latter part of that year. Work was then started on the development of machines Nos. 3 and 4 for cone-shaped cups; but they were not placed into production until the company moved into a leased building at a new location in May, 1938. This building, with io,ooo square feet of floor space, housed the complete operations of the company, including factory, offices, shop, and storage space, until May,
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