Corporate Management Structure

A corporate management structure defines who is responsible for different areas of a business, which allows the business to take advantage of economies of scale as well as coordinate activities. For instance a clothing company may have separate departments for men’s clothing, women’s wear and children’s wear but one central marketing department. This divisional structure allows each department to focus on its specific product or market, while sharing information redefining marketplaces with peer-to-peer technologies to improve coordination. This type of structure, however, can lead to increased costs for employees and duplication of efforts for example, when purchasing supplies for several divisions.

Corporate entities are legal entities that have shareholders. They require a particular management structure to be in compliance with regulations and to protect the stockholders’ interests. To this end, many corporations have a multi-tiered system of directors officers, shareholders and directors that supervise the company’s activities.

The CEO is at the top of the pyramid. He is accountable for signing contracts and other legally binding acts on behalf of his company. A small company’s CEO could be the sole founder, director, officer, and shareholder in larger corporations they are appointed by the board of directors.

The board of directors consists of elected members from the stockholders, who are responsible for the direction and policy of a business. They select and monitor the performance of the CEO and manage succession planning. They also approve major business transactions and activities such as contracts as well as asset purchases and sales new policies, and other such things.