Corporate Management Structure

Corporate Management Structure

A corporate management structure defines who is responsible for each aspect of a company, which allows the company to reap the benefits of economies of scale and coordinate its activities. For instance a clothing company may have separate departments for men’s as well as women’s wear, but only one central marketing department. This divisional structure allows the different departments to focus on their specific product and market while sharing information to facilitate better coordination. This type of structure, however, can lead to increased employee costs and work being duplicated such as when purchasing supplies for multiple divisions.

Corporations are legal entities that have stockholders and require an established management structure in order to comply with laws and protect the interests of shareholders. Because of this, the majority of corporations have a multi-tiered system of directors officers, shareholders, and directors who oversee the company’s operations.

The top of the pyramid is the chief executive officer (CEO) who is responsible for approving on contracts and other legally binding actions on behalf of the company. A small business’s CEO may be the sole founder and chief director, officer or shareholder in larger firms be appointed by the board of directors.

The board of directors is comprised of elected representatives of the stockholders, who determine the overall direction and policy of the business. They select the CEO, supervise his performance, and plan succession. They also approve major business transactions and operations, like contracts, asset purchases and sale new policies, and other such things.

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