Parent company
A parent company is a company that owns the majority of a subsidiary's shares, giving it control over the subsidiary's operations, management and strategy. This helps in organizing business activities, risk management and tax benefits. The parent company provides strategic direction and support to its subsidiaries. This means they provide financial resources and management expertise and ensure consistent policies and operations. Thus, all subsidiaries work together toward common business goals.
Parent company for risk management
For a parent company, risk management is important. By having multiple subsidiaries, it can better spread possible risks. This ensures that the entire company is less vulnerable if one part performs worse. The parent company can spread investments and implement centralized rules to mitigate risks, such as legal problems and market changes. Good risk management ensures stability and growth, which benefits both the parent company and its subsidiaries.
