Corporate Management Structure

A corporate management structure defines who is responsible for different areas of a company, which allows the business to benefit from economies of scale as well as coordinate activities. A clothing manufacturer, for example may have separate departments for women’s, men’s and children’s clothing, but a central marketing department. This divisional structure allows each department to focus on its own specific product or market, while also sharing information to enhance coordination. This kind of structure could result in higher employee costs as well as more duplication, such when purchasing supplies for different divisions.

Corporations are legal entities with shareholders. They require a certain management structure in order to meet laws and protect shareholders’ interests. For this reason, most companies have a multi-tiered structure of directors officers, shareholders and directors who supervise 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 for the corporation. A small corporation’s CEO might be the sole founder and chief director, officer, and shareholder, or in larger companies they are appointed by the board of directors.

The board of directors consists of elected representatives representing the shareholders, who are accountable for the direction and policy of a company. They select and supervise the performance navigating digital transformations with agility and foresight of the CEO and handle succession planning. They also approve important business transactions and activities such as contracting, asset purchases, sales and new policies, among others.