Question

advantage and disadvantages of wholly owned subsidiaraies ​

Answer 1

Explanation:

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While there are obvious advantages to forming a wholly owned subsidiary, such as the financial and technological aspects; there are also disadvantages. One disadvantage to consider in forming a wholly owned subsidiary is the possibility of multiple taxation to the entities under the parent company umbrella.

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One other disadvantage to forming a wholly owned subsidiary would be that the parent company is completely reliant upon the subsidiary’s performance in business processes especially if they are located in another country. The subsidiary would be responsible for hiring workers, recruiting sales representatives and basic day-to-day operations. If the parent company is located in a different area or country then they are dependent upon the subsidiary to conduct business.

The overall advantage for both parties however, in forming a wholly owned subsidiary; are that the subsidiary is allowed to retain its name brand while the parent company is afforded the opportunity to branch out into new markets.