Corporate Management Structure
A corporate management structure defines the individuals responsible for different areas of a business which allows the business to profit from economies of scale and coordinate their activities. A clothing manufacturer, for example has separate departments for men’s, women’s and children’s clothing however, it has a central marketing department. This divisional structure allows each department to concentrate on its specific product or market, while also sharing information in order to improve coordination. This type of structure can lead to higher employee costs and more duplication, such when purchasing equipment for different divisions.
Corporations are legal companies that have stockholders. They require a specific structure for management in order to conform to laws and protect the interests of stockholders. Most companies have a multi-level system of officers, directors and shareholders, who oversee the company’s operations.
The CEO is at the top of the pyramid. He is accountable for signing contracts and other legally-binding actions for the company. A small company’s CEO could be the sole founder, director, officer, and shareholder in larger corporations, be appointed by the board of directors.
The board of directors consists of elected representatives representing the stockholders, who are responsible for the direction and policies of a company. They select the CEO, monitor his performance, and plan succession. They also approve important business transactions and activities such as contracting, asset purchases, sales and new policies, among others.