18 Abr Corporate Management Structure
A corporate management structure identifies the person accountable for each part of a business, allowing the company to reap the benefits of economies of scale and to coordinate its activities. For instance a clothing company may have separate departments for men’s clothing as well as women’s wear, but a central marketing department. This divisional structure permits the different departments to focus on their particular product and market while sharing information to ensure better coordination. This type of structure however, could result in increased costs for employees and repetition of tasks such as when purchasing supplies for multiple divisions.
Corporate entities are legal entities that have stockholders. They require a particular structure for management to conform to regulations and to protect the shareholders’ interests. The majority of corporations have a multi-level system of officers, directors, and shareholders that oversees the business’s operations.
The CEO is at the top of the pyramid. He is responsible for signing contracts and other legally binding acts on behalf of the corporation. The CEO of a small company may be the sole director or shareholder as well as the chief officer, or even the founder. In larger corporations the CEO is appointed by the board of directors.
The board of directors is comprised of elected representatives representing the shareholders, who are accountable for the direction and policies of a corporation. They select the CEO, oversee his performance and plan his succession. They also approve important business transactions and activities including contracting, asset purchases and sales, new policies, etc.