A holding or holding company is a special form of pooling of capital, an integrated company that does not engage in production activities, but uses its own funds to acquire controlling stakes in other enterprises in order to coordinate their activities. Subjects that unite in holdings have financial and legal independence, but the holding company has the right to resolve major issues.
Instructions
Step 1
So, a holding is a system of commercial organizations that includes a parent company that owns a controlling stake in other organizations that are subsidiaries in relation to the parent company. The parent (management) company can both perform production functions and be directly involved in the management of the holding. A subsidiary will be an enterprise whose actions are regulated by a holding company due to the prevalence of its share in the authorized capital or in accordance with the concluded agreement.
Step 2
The holdings are not formed by chance. The purpose of their appearance is to conquer new market sectors and reduce costs. These factors increase the value of the company, its capitalization, for the achievement of which the effective operation of the entire system of enterprises included in the holding is required. At the same time, the value of the holding's shares grows only if the subsidiaries and the parent organization work effectively.
Step 3
A holding can be formed by successive mergers or gaining control over companies that are engaged in one sector of the economy. The main goal of creating such holdings is to expand business boundaries, spheres of influence and conquer new market sectors. In this case, we are talking about horizontal integration.
Step 4
Another way of forming a holding is vertical integration, when enterprises of a single technological cycle are united (from the procurement of raw materials to the production of finished products). The purpose of creating such a holding is to reduce costs, increase price stability and improve the efficiency of the company as a whole.
Step 5
A holding can be created by successively creating enterprises and joining them to an already existing group. This is how the world famous McDonald's company operates. This policy allows you to avoid large losses in the event of bankruptcy of one of the enterprises.
Step 6
The holding is managed through shareholders' meetings, boards of directors, and executive management. In this, there are no fundamental differences between the management of a holding company and a joint-stock company. However, for the holding, the main shareholders are clearly defined and they are the ones who manage the entire group of enterprises.
