Expalin The Advantages Of Holding Company?


1 Answers

Rabbia Pasha Profile
Rabbia Pasha answered
Advantages of holding company
Easy to organize
The holding is easy to organize as no legal formalities are required for its formation. A company is just to hold the majority of the shares of other companies from the market. It does not need consent of the shareholders of the subsidiary companies.
Financial benefits
The holding company can collect large amount of capital to be used for expansion and modernization of the business.

Centralized management
The subsidiary companies retain their entity. They have the additional advantage that their management is centralized which reduces the expenses of management.
Controlling output market
The holding company is in the better position to restrict production according to the market demand. It does not face problems of over production and undercutting of prices by the competing firms.
Advantages of vertical integration
The holding company realizes all the advantage inherent in the vertical combination.
Allotment of territory

The holding company eliminates the competition by earmarking of market for the sale of product by each subsidiary company.
A stable combination
Holding company is a very stable form of business combination. It does not dissolve with the whims of any subsidiary company.
Business good will
The holding company with the sound financing base raises the goodwill in the market not only of its own but of the subsidiaries companies as well.

Answer Question