CORPORATE STRUCTURE

What is Corporate structure?

• Corporate structure refers to the organization of

different departments or business units within a
company.

• Depending on a company’s goals and the industry

in which it operates, corporate structure can differ
significantly between companies.
 TYPES OF ORGANIZATIONAL
STRUCTURE

• FUNCTIONAL STRUCTURE
• DIVISIONAL STRUCTURAL
• MATRIX STRUCTURE
• HYBRID STRUCTURE
 FUNCTIONAL STRUCTURE

• Under this structure, employees are grouped into

the same departments based on similarity in their
skill sets, tasks, and accountabilities. This allows
for effective communications between people
within a department and thus leads to an efficient
decision-making process. Companies with
departments such as IT and Accounting are good
examples of a functional structure.
 DIVISIONAL STRUCTURE
• This structure organizes business activities into
specific market, product, service, or customer
groups. The purpose of the divisional structure is
to create work teams that can produce similar
products matching the needs of individual groups.
A common example of the divisional structure is
geographical structure, where regional divisions
are built to provide products or services to specific
locations.
 MATRIX STRUCTURE

• Matrix Structure is a combination of functional and

divisional structures. This structure allows
decentralized decision making, greater autonomy,
more inter-departmental interactions, and thus
greater productivity and innovation. Despite all the
advantages, this structure incurs higher costs and
may lead to conflicts between the vertical
functions and horizontal product lines.
 HYBRID STRUCTURE
• Like the Matrix Structure, the Hybrid Structure
combines both functional and divisional structure.
Instead of grid organization, Hybrid Structure
divides its activities into departments that can be
either functional or divisional. This structure allows
the utilization of resources and knowledge in each
function, while maintaining product specialization
in different divisions. Hybrid Structure is widely
adopted by many large organizations.
 How is a corporation structure?

In the traditional corporate structure, teams of

employees are managed by team leaders or
managers, who in turn report to their own manager.
Below are some important elements of the
traditional corporate structure:
 Board of Directors
• Shareholders typically select or elect a board of directors
or group of individuals to make certain decisions for the
company. The board of directors is responsible for
developing and implementing company policy, scheduling
annual meetings to discuss the direction and overall goals
of the business, approving projects and budget increases.
They may also oversee the CEO and other C-Level
executives to ensure they're performing their jobs
effectively and may form committees to further the
purpose of the company. There also may be various
positions that may be present within the board of
 Board of Directors
• Most boards have a chairperson, a vice president,
secretary, treasurer and other directors. The directors can
include both people who work for the company (executive
directors) and those brought in from outside (non-
executive directors). Executive directors work inside the
company and are involved with its day-to-day operations,
while non-executive directors are only involved in its more
high-level decisions. The size of the board of directors
depends on the size and needs of the company. For
example, a company that is looking to scale quickly might
have a larger board of directors to help further this goal.
 Corporate officers
• Corporate officers are upper-management
professionals whose main purpose is to supervise
lower-level management in their fulfilment of the
day-to-day needs of the company. Also known as
the C-Suite or C-Level executives, these positions
may include:
 Chief executive officer (CEO)
• The CEO is the most senior executive in a company. They
are responsible for meeting the needs of shareholders
and maximising the value of the company for all
stakeholders, including customers, employees and the
local community. The CEO is usually the final decision-
making authority in the organisation. In smaller
companies, it's common for the CEO to be the founder
and majority shareholder in the company. In larger and
more established organisations, the board of directors
typically appoints the CEO.
 Chief operations officer (COO)
• The COO usually answers to the CEO and supports them
in helping the company to meet its goals and objectives.
They have more of a focus on the day-to-day operations
of the company and work closely with the CEO to develop
policies and procedures that are in line with the
company's vision. A COO usually comes from a
background in management, finance or logistics, and has
a strong understanding of the practical elements of
running a business.
 Chief financial officer (CFO)
• The CFO is responsible for ensuring the financial stability
of the company. They are responsible for formulating and
approving budgets and supervising the preparation of the
company's accounts. They also ensure that all of the
company's financial actions are in line with legal and
regulatory requirements. All major financial undertakings
must gain the approval of the CFO before they can go
ahead.
 Chief marketing officer (CMO)
• The CMO is responsible for overseeing the work of the
company's marketing department to promote the
company and help build brand recognition. They usually
report to the CEO or COO and may supervise high-level
marketing staff, such as marketing managers or the head
of the marketing department. The CMO might be involved
with identifying new market segments where the company
could promote its products or surveying customers to
gauge their response to the company and its services.
 Chief technical officer (CTO)
• CTOs are common in companies with a strong technical
element, such as those selling software as a service
(SaaS) products. Large companies that require a complex
technical infrastructure may also have a CTO, even if the
products they sell are not inherently technical. The CTO is
responsible for making all high-level decisions about new
technology the company invests in, or major changes to
technical product lines.
 Shareholders
• Shareholders are the owners of the company, who each
own a portion of it in the form of shares. Shareholders
may be the organisation's founders or external investors
who contribute capital in exchange for part ownership.
They may also receive dividends, which are a portion of
the company's profits, which are usually paid out annually
or quarterly.
 Shareholders
• While shareholders are not usually liable for the
company's actions, in some cases, they can help make
decisions on behalf of the business. This depends on the
number of shares a shareholder owns, as the bigger their
portion of the company, the more power they have. This
enables them to do things like choose members of the
board of directors or decide on the bylaws or policies of
the company.
Why is a corporate structure important?
• Corporate structures are important because they ensure
that everyone working at an organisation understands
how it functions and who is responsible for each task.
Corporate structures can also help employees to
understand the potential paths to a promotion that is open
to them, and the steps that could help them get there.
Below are some reasons it's important to have a clearly
defined corporate structure:
 Provides hierarchy
• In companies of any size, it's important that all employees
understand how they fit into the structure of the
organisation as a whole. Having a clearly defined
corporate structure ensures that employees know who
they report to and who they depend on to complete their
work. It also helps them to understand who is responsible
for making final business decisions.
 Provides balance
• Corporate structures usually give everyone that works for
the business a clearly defined role, with specific
responsibilities attached to it. In companies without a
clearly defined structure, managers can take on extra
responsibilities over time, which can result in them having
an unreasonable workload. It can also make it difficult for
other employees to understand exactly everyone's
responsibilities. With a defined corporate structure in
place, managers are typically responsible for a particular
department.
 Helps avoid duplication of work
• In some companies, employees don't have a clear view of
everyone's responsibilities, which can lead to them
duplicating each other's work. This is particularly common
in organisations that have grown quickly without defining
an organisational structure. When there is a clear
structure in place, all employees understand their roles
and those of others, which minimises duplication errors.
 Supports better communication
• When departments understand how they are working
together towards a common goal, this can promote better
communication between managers and employees at all
levels. For example, if a marketing team understands how
their efforts will eventually contribute to the sales team's
goals, they may be able to better understand each other
and their work. Understanding who each person or
department reports to can also foster an environment of
more open and effective communication.