Corporate Management Structure
A corporate management structure defines the person responsible for each department of a business, allowing the company to benefit from economies of scale and coordinate its activities. For example the clothing manufacturer may have separate departments for men’s wear women’s, children’s and men’s wear, but only one central marketing department. This divisional structure allows each department to focus on its specific product or market, while also sharing information in order to improve coordination. This type of structure however, can lead to increased costs for employees and work being duplicated for example, when purchasing supplies for multiple divisions.
Corporations are legal entities that have stockholders and require a specific management structure in order to conform to regulations and safeguard the interests of shareholders. This is why the majority of companies have a multi-tiered structure of directors, shareholders and officers that oversee the company’s activities.
The top of the pyramid is the chief executive officer (CEO) who is responsible for approving on contracts and other legally binding actions for the corporation. The CEO of a small-sized company might be the sole director, shareholder, and officer, or the founder. In larger firms the CEO is appointed by the board.
The board of directors is comprised of elected representatives from stockholders who are accountable for the direction and policy of a company. They choose the CEO, monitor his performance and plan for succession. They also approve major business activities and transactions such as contracts, asset purchases and sales and policies, as well as any new ones.
admin administrator
About the Author