Corporate Management Structure
A corporate management structure determines who is accountable for each part of a company, allowing the company to benefit from economies of scale and to coordinate its activities. For instance an apparel manufacturer might have departments for men’s wear as well as women’s wear, but a central marketing department. This divisional structure allows the different departments to focus on their specialized product and market while sharing information for better coordination. This type of structure, however, could result in higher costs for employees and work being duplicated like when purchasing supplies for several divisions.
Corporate entities are legal entities and have stockholders. They require a particular management structure in order to meet regulations and to protect the stockholders’ interests. Most companies have a multi-level system website consisting of officers, directors and shareholders that manage the operation of the company.
The CEO is at the top of the pyramid. He is accountable for signing contracts as well as other legally binding legal actions for the company. The CEO of a small corporation might be the sole director or shareholder, as well the officer, or even the founder. In larger organizations the CEO is selected by the board.
The board of directors consists of elected representatives from stockholders, who are responsible for the direction and policy of a corporation. They decide and oversee the performance of the CEO, and also manage succession planning. They also approve major business transactions and activities such as contracts acquisitions and sales of assets new policies, and so on.