A corporate management structure identifies who is responsible for each department 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 wear women’s wear, children’s wear and men’s wear but one central marketing department. This divisional structure permits the different departments to focus on their specialized market and product while sharing information for better coordination. This kind of structure could lead to higher employee costs and more duplication, such when purchasing equipment for different divisions.
Corporate entities are legal entities and have shareholders. They require a particular structure for management to conform to regulations and to protect the stockholders’ interests. This is why the majority of corporations have a multi-tiered system of directors, shareholders and officers that oversee the company’s operations.
The top of the pyramid is the chief executive officer (CEO) who is responsible for signing off on contracts and other legally binding decisions for the company. The CEO of a small corporation may be the sole director or shareholder, as well the officer, or the founder. In larger companies the CEO is chosen by the board of directors.
The board of directors is comprised of elected representatives representing the shareholders, who are accountable for the direction and policy of a company. They choose the CEO, supervise his performance and plan his succession. They also approve major business transactions and actions, like contracts purchase and sale of assets new policies, and property sector’s shift to digital platforms so on.