The advantages of a holding company are protection from losses, limited legal liability and the potential to limit tax liability, according to Investopedia. Disadvantages include limited knowledge of subsidiary operations and industries, conflicts of interest among shareholders and owning unprofitable assets and lines of business, explains Shaa Hudson for the Houston Chronicle.Know More
A holding company exists for the sole purpose of owning other companies, notes Investopedia. In the case of a corporate conglomerate, the holding company owns a controlling interest in a variety of corporations by holding enough voting shares of the stock to control management and its policies. This results in the advantage of the holding company controlling and profiting from the companies it owns without being liable for their debts. Holding companies can also limit their tax liability by strategically placing certain subsidiaries in locations with lower tax rates.
The challenges faced by holding companies include management's limited knowledge of the day-to-day operations of the controlled companies and a frequent lack of understanding of the controlled companies industries, according to Hudson. Holding companies also frequently end up owning unprofitable assets or lines of business contained in their subsidiary corporations. When a company is acquired by a holding company, its management must contend with reporting to a new board of directors while still being required to act in the best interests of the subsidiaries' shareholders. Often, the best interests for the holding companies' shareholders come into conflict with the best interests of the subsidiaries' shareholders.Learn more about Managing a Business
Common strategies used by companies to motivate their employees include acknowledging and rewarding accomplishments, providing learning and training opportunities and involving employees in the decision-making process, according to the Guardian. Because contented employees are seen as more productive in the workplace, a company's motivational game plan is most effective if it makes employees happy.Full Answer >
The term "Six Sigma" refers to a set of tools and techniques implemented by companies to improve the quality of process outputs and minimize variability in business processes. Motorola developed the Six Sigma certification in 1986 and nowadays numerous companies from various sectors employ it for their development.Full Answer >
Used by companies that are selling securities, a prospectus is used to disclose all the essential information that investors need to know about the organization. These facts may include outstanding loans, revenue data and other key risks they face in the market.Full Answer >
Seminars can be advantageous because they provide an environment where participation is encouraged and group learning can take place. On the other hand, the organization of a seminar may not be conducive to some learning styles, and some participants' expectations may not be met adequately.Full Answer >