The senior management teams are composed of the executive members of an organization having the top-most rank in the organization. they have the role of leadership and management within the organization. the role of management is achieved when the team plans, organizes, directs, controls and staffs all the resources of an organization for the achievement of goals. Leadership roles are portrayed when the team is involved in activities of encouraging he subordinates to contribute willingly to the goals and objectives of the organization. the senior management teams are the custodians of all resources bestowed upon them by the investors of the company. It is the purpose of the senior management to set goals of the organization. setting goals is done in consultation with all other stakeholders but the senior management has the final decision about the best strategies to be adopted (Mackyy, 2008). The senior management team resolves conflicts arising within the organization by negotiating with all the conflicting parties. Senior management teams advise the president of an organization about the best strategies to run business effectively. Information systems are maintained by the senior management teams. Communication with all stakeholders is important for smooth running of an organization. the purpose of the senior management is to maintain an efficient communication system in the organization. Secrets of the company are also maintained by the team. It is important for the senior management teams maintain secrets of the company to ensure that secrets are not exposed to competitors or other irresponsible individuals (Simmering, 2010).
Profits earned by an organization have a limit. The capital structure of an organization determines the profit levels which can be achieved. Profits are made when revenues exceed costs and there are many factors which determine the revenues as well as costs involved in trade (Boland, 2005). Over-exploitation of resources to earn more profits can lead to exhaustion. The management of an organization should balance all the factors of production to ensure that resources are not over-utilized. There is a limit to which resources can be used to achieve the goals set by an organization. exceeding performance beyond the set limit causes exhaustion and this may affect the future profits made by the organization. Micro-economic and macro-economic factors also hinder the profits earned by an organization. Inflation in an economy determines the amount of profits earned by organizations. Government regulations such as price floors and ceilings, tax systems and other control mechanisms regulate the amount of profits made by organizations in an economy. Entry of new firms in a competitive market environment limits the amount of profits earned. As more companies enter the market, abnormal profits are shared among the firms in the market and this reduces the amount of profits generated. The size of the market also determines the profits to be made by an organization. Firms operating in a small market cannot make a lot of profits because there is a limited amount of customers (Crew, 1994).