The Corporation as a Decision, Management and Planning Unit

The Corporation as a Decision, Management and Planning Unit

A corporation is a separate legal entity, usually used to conduct business. They are the main agents generating trade and using the international transport system. Some corporations are generators of movements (producers), while others are attractors of movements (retailers) and, finally, some are involved in transportation and distribution. The great majority of corporations combine some of the previous elements. All corporations act as management, decision, and planning units:

  • Management unit. A corporation maintains its operational conditions, which involve activities such as production, sales, marketing, payroll, and distribution. It must disburse wages to its labor force, pay its suppliers, and collect from its customers as well as ensuring that its customers receive the asked product in the right quantity and delivered at the right time. These tasks are mainly related to production cycles, which are ensuring that all the tasks related to its output are efficiently performed and matching fluctuations in demand. For instance, it could involve all the tasks and information flows required to fill an order. For freight distribution, management issues would relate to the operations of the supply chain in terms of routing and scheduling.
  • Decision unit. A corporation also makes decisions about how its resources, such as capital (finance), labor, and raw materials, can be allocated in light of its expected output. This is linked with product life cycles, ranging from the introduction, maturity, and obsolescence of a good.
  • Planning unit. A corporation is subject to constant changes and must thus consider what growth opportunities are and how its factors of production can be allocated. It can consider a set of expansion strategies, such as vertical or horizontal integration. This mainly falls within business cycles with periods of growth and contraction.