A parent company refers to a company that can actually control and dominate other companies by owning a certain amount of equity in other companies or through agreements. The most basic characteristic to determine whether it is a parent company is whether it participates in the business operations of the subsidiary, not just holds shares in the subsidiary.

A subsidiary refers to a company in which a certain proportion of shares are owned by another company or is actually controlled and dominated by another company through an agreement. The "ownership" relationship between a parent company and its subsidiaries is essentially the parent company's actual economic control and decision-making rights.

①The subsidiary has independent legal personality

② The subsidiary is controlled by the parent company

③The parent company controls the operations of the subsidiary; the parent company has limited liability for the subsidiary

A branch is a concept corresponding to the head office. It is a part of the head office and is neither legally nor economically independent.

①The branch does not have legal personality

②The branch has no independent property

③The branch and the head office are the same legal entity

①Only have limited debt liability

② Subsidiaries report corporate results to the parent company only in terms of production and business activities, while branches must report comprehensive information to the head office.

③Can obtain tax benefits

④ The repatriation of subsidiary profits to the parent company should be more flexible than that of subsidiary companies.

① Branch companies are generally easy to operate, and the requirements for financial accounting systems are relatively simple.

② The cost borne by the branch may be less than that of the subsidiary

③ The profits of the branches are consolidated and taxed by the head office. Since the branches are not independent legal persons, when they suffer losses in the early stages of operation, their losses can be offset against the profits of the head office, reducing the tax burden.

④ The profits delivered by the branch to the head office are usually not subject to withholding tax.

⑤The capital transfer between the branch and the head office does not involve any change in ownership, so no tax is required.

The larger the management scope, the fewer the management levels, and the corresponding organizational structure type is called a flat structure.

The smaller the management scope, the more management levels there are, and the corresponding type of organizational structure is called a high-level structure.

Control exercised by superiors through individual contact with subordinates

The company guides the actions of its subsidiaries through a series of rules and charters. The most important administrative controls are budget and fund use rules.

Set goals for subsidiaries, such as profitability, productivity, growth rate, market share, quality and other specific goals to evaluate the performance of subsidiaries.

Corporate Principles and Values

(1) Centralization helps coordination between departments

(2) Centralization can ensure that decision-making is consistent with organizational goals

(3) Centralization is conducive to change

(4) Avoid duplication of business activities

(1) Share the work of senior managers so that they can focus on key issues

(2) Inspire people’s work enthusiasm

(3) Greater flexibility and strong market adaptability

(4) Clear rights and responsibilities for easy management

Mainly found in Western European companies

Mainly found in American companies

Mainly found in Japanese companies