A corporate management structure determines the person responsible for each area of the company, allowing the company to reap the benefits of economies of scale and coordinate its activities. A clothing manufacturer, for instance, may have separate departments for women’s, men’s and children’s clothing however, it has a central marketing department. This divisional structure allows each department to concentrate on its specific product or market, and also share information to improve coordination. This type of structure however, can result in higher costs for employees and repetition of tasks, such as when purchasing supplies for several divisions.

Corporations are legal entities that have stockholders and require a specific management structure in order to conform to regulations and protect the interests of shareholders. Most companies have a multi-level system of directors, officers, and shareholders who oversee the operation of the company.

The CEO is at the top of the pyramid. He is responsible for signing contracts and other legally-binding actions on behalf of his corporation. The CEO of a small company could be the founder and sole director, officer, or shareholder, or in larger corporations, be appointed by the board of directors.

The board of directors is comprised of elected representatives of the shareholders who decide on the overall direction and policy of the corporation. They select the CEO, oversee his performance and plan succession. They also approve major business redefining marketplaces with peer-to-peer technologies transactions and actions, like contracts acquisitions and sales of assets policies, new policies, other such things.