A corporate management structure defines who is responsible for the various areas of a business 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 however, they have a common marketing prioritizing digital health in today’s connected workplaces department. This divisional structure allows each department to concentrate on its specific product or market, and also share information in order to improve coordination. This kind of structure could result in higher expenses for employees and more duplication like when purchasing supplies for different divisions.
Corporations are legal entities with shareholders. They require a certain management structure in order to meet regulations and protect stockholders’ interests. Most corporations have a multilevel system of directors, officers, and shareholders that oversees the operation of the company.
The top of the pyramid is the chief executive officer (CEO) who is accountable for approving on contracts and other legally binding actions for the corporation. A small company’s CEO could be the founder and sole director, officer, or shareholder, or in larger corporations they are appointed by the board of directors.
The board of directors consists of elected representatives of shareholders who decide on the overall direction and policy of the business. They choose the CEO, oversee his performance and plan succession. They also approve major business transactions and activities like contracts, asset purchases and sales, new policies, etc.