Corporate Management Structure
A corporate management structure identifies who is responsible for each area of a company, which allows the company to benefit from economies of scale and to coordinate its activities. A clothing manufacturer, for instance may have separate departments for women’s, men’s and children’s clothes but a central marketing department. This divisional structure permits the different departments to focus on their specific market and product while sharing information to ensure better coordination. This type of structure, however, can lead to higher employee costs and more repetition of tasks such as when purchasing supplies for several divisions.
Corporate entities are legal entities and have stockholders. They require a specific management structure to comply with regulations and to protect the stockholders’ interests. To this end, many companies have a multi-tiered structure of directors officers, shareholders, and directors who oversee the company’s operations.
The CEO is at the top of the pyramid. He is accountable for negotiating contracts and other legally binding acts on behalf of his company. A small corporation’s CEO might be the founder and sole director, officer or shareholder in larger firms, be appointed by the board of directors.
The board of directors consists of elected members from the shareholders, who are accountable for the direction and policy of a company. They select the CEO, supervise his performance and plan succession. They also approve important business transactions and activities like contracts, asset purchases and sales and new policies, among others.
