A corporate management structure identifies who is responsible for various areas of a company, which allows the business to profit from economies of scale and coordinate its activities. For example a clothing company may have separate departments for men’s, women’s wear and children’s wear, but a central marketing department. This divisional structure faster due diligence in mergers using online data rooms allows the different departments to focus on their specialized product and market, while sharing information to ensure better coordination. This kind of structure could result in higher expenses for employees and more duplication, such when purchasing equipment for different divisions.
Corporations are legal entities with stockholders. They require a particular structure for management to conform to regulations and to protect the stockholders’ interests. For this reason, most companies have a multi-tiered structure of directors officers, shareholders and directors that manage the company’s business.
The CEO is at the top of the pyramid. He is responsible for signing contracts and other legally-binding actions for the company. A small business’s CEO may be the founder and sole director, officer, and shareholder or in larger firms be appointed by the board of directors.
The board of directors is made up of elected representatives of the stockholders who oversee the overall direction and policy of the company. They choose and oversee the performance of the CEO as well as oversee succession planning. They also approve important business transactions and activities including contracting, asset purchases, sales and policies, as well as any new ones.
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