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A corporate management structure is a way to identify who is accountable for each part of a company, allowing the company to benefit from economies of scale and coordinate its activities. For instance an apparel manufacturer might have separate departments for men’s as well as women’s wear, but only one central marketing department. This divisional structure allows different departments to focus on their particular product and market while sharing information for better coordination. This kind of structure could result in higher expenses for employees as well as more duplication, such when purchasing items for different divisions.
Corporations are legal entities with shareholders. They require a particular structure for management to conform to regulations and protect stockholders’ interests. To this end, many companies have a system of multi-tiers of directors officers, shareholders, and directors who oversee the company’s operations.
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 company could be the sole founder and chief director, officer or shareholder, or, in larger companies be appointed by the board of directors.
The board of directors is comprised of elected representatives from shareholders, who are accountable for the direction and policy of a company. They select the CEO, supervise his performance and plan his succession. They also approve important business transactions and activities like contracting, asset purchases and sales and policies, as well as any new ones.
