What is the Difference between Subsidiary, Consortium, Joint Venture, Merger, Franchise, Consignment
A large number of people are involved in different kinds of business, all around the world. Some of them are educated enough to understand different types of corporate terms, while others often get confused when it common to different business strategies and related terms. Here, we are discussing few commonly used corporate terms and the differences between them.
Subsidiary
A subsidiary company is that company which is owned or controlled by another company, who holds more than half of the subsidiary stock. The hold of that company could be complete or partial. Controlling company is called as parent company while subsidiary company is also called as Daughter Company.
Consortium
If two or more groups, companies or individuals work together to achieve a common goal, this association is called as consortium. All participants pool their resources to achieve their common object.
Joint Venture
When two or more business companies join their hands to create new assets for a definite period of time, it is called as joint venture. All participants contribute equally in this type of association and share all the expanses and revenues as well.
Merger
When two or more companies merge into one, it is called as merger. It could be due to purchase or due to common interest. It is creation of a new entity, by merging two or more.
Franchise
Franchise is a business method, which is famous around the world. It involves giving license of a trademark or method of doing a business. The central management is the same in this type of business. Chain stores are example of franchise.
Consignment
When a company or person give any material to another person, but holds the rights until the goods are sold or that person is transferred is called as consignment. Shipping of goods and transference of prisoners are examples of consignment.
Subsidiary vs Consortium vs Joint Venture vs Merger vs Franchise vs Consignment
When a company holds more than half shares of another company, it is called as subsidiary or daughter company. On the other hand when two or more companies get together to achieve some common goals, we call it as consortium. Joint venture is same as consortium but all participants contribute equally in this case. In case of joint venture a new company is created. When two or more companies merge due to purchase or common interest it is called as merger. Franchising is giving license of a trademark while consignment is giving a material to someone but holding its rights until it is sold.
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