Corporate Management Structure

A corporate management structure identifies who is responsible for various areas of a business which allows the company to profit from economies of scale as well as coordinate activities. A clothing manufacturer, for example, may have separate transparent interaction within the company 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 own specific product or market, and also share information to improve coordination. This kind of structure could lead to higher employee costs and more duplication in purchasing items for different divisions.

Corporations are legal entities that have stockholders and require a specific structure for management to be in compliance with regulations and protect the interests of shareholders. Most companies have a multi-level system of directors, officers, and shareholders, who oversee the company’s activities.

The top of the pyramid is the chief executive officer (CEO) who is accountable for approving on contracts and other legally binding decisions on behalf of the corporation. The CEO of a small corporation may be the sole director, shareholder, and officer, or the founder. In larger companies the CEO is selected by the board of directors.

The board of directors consists of elected representatives from the stockholders who are accountable for the direction and policies of a company. They select and supervise the performance of the CEO and manage succession planning. They also approve major business transactions and activities, like contracts as well as asset purchases and sales as well as new policies and so on.