A corporate management structure determines the person responsible for each department of the company, allowing the company to reap the benefits of economies of scale and to coordinate its activities. A clothing manufacturer, for instance has separate departments for women’s, men’s and children’s clothing however, they have a common marketing department. This divisional structure allows the departments to concentrate on their own specific product and market, while also sharing information for better coordination. This kind of structure could result in higher expenses for employees and also more duplication like when purchasing equipment for different divisions.
Corporations are legal entities with stockholders. They require a particular management structure to comply with regulations and protect stockholders’ interests. This is why the majority of corporations have a multi-tiered management system 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 accountable for approving on contracts and other legally binding actions on behalf of the company. The CEO of a small-sized company might be the sole director, shareholder, and officer, or even the founder. In larger firms the CEO is selected by the board.
The board of directors is comprised of the elected representatives of stockholders, who determine the overall what are the benefits of using a virtual data room direction and policy of the business. They choose and oversee the performance of the CEO, and also manage succession planning. They also approve major business transactions and operations, like contracts purchase and sale of assets, new policies, and others.
