Management structure refers to the organization of the hierarchy of authority, which defines accountability and communication channels within an organization and with its external environment. Each organization has its unique management structure based on its operations, but the common denominator present in every organization's management structure is that it defines the flow of responsibility within an organization. It also defines who is responsible for each role in an organization.
The management structure of an organization clearly outlines the roles of the top management, which consists of the CEO and the board, the middle management, which is made up of the department heads and heads of divisions, and the lower management, which is comprised of the line managers, team leaders and supervisors. This is the basic management structure used by most organizations, but according to Business Case Studies, a company's shareholders are also a part of the management structure of a company.
The objectives of a company determine its management structure. Large companies like Proctor & Gamble, that manufacture numerous products, prefer to organize their company into subdivisions for various product lines. The company has organized its management structure according to the various regions where it operates and also according to all the different products it manufactures.