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Advantages and Disadvantages of a subsidiary company

Posted By admin on December 25, 2013 1 Comment

Advantages and Disadvantages of a subsidiary company-

Advantages of a subsidiary company

Advantages of a subsidiary company

  • The holding company provides the subsidiary company with buying power, research and development funds, marketing money and know-how, employees, technical and other features which otherwise it could not afford or accomplish alone.

  • The parent can provide the monetary means and capability to jump start new companies and products.

  • Ability to offset profits and losses of one part of a business with another

  • Liabilities and credit claims are locked in that subsidiary and cannot be passed on to the parent company

  • Allows for joint ventures with other companies with each owning a portion of the new business operation.

Disadvantages of a subsidiary company-

subsidiary company

subsidiary company

  • A major disadvantage of being a subsidiary of a large organization is the limited freedom in management

  • Decision-making can become time-consuming as issues often must go through various chains of command within the parent bureaucracy before any action can be taken.

  • Legal paperwork involved with creating a subsidiary can be lengthy and expensive

  • Control also becomes an issue when a subsidiary is partially owned by another outside organization


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Are you looking for

Are you looking for


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  • Are you looking for Fastest Subsidiary Company Formation in India with the help of purchase of readymade clean company

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