Foreign subsidiary and global expansion.
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A foreign subsidiary is a company operating overseas that is part of a larger corporation with headquarters in another country, often known as a parent company or a holding company.
Companies primarily open foreign subsidiaries to establish a corporate foothold in a specific overseas economy, primarily to boost revenues, generate tax benefits and diversify company assets to better manage risk.
Those resources enable the subsidiary to shift into higher gear immediately, and better compete in its market.
A company that opens its own foreign subsidiary has considerable clout in how that subsidiary is run. By installing its own board of directors, the parent company can take a “top-down” approach at instituting its own unique culture, values and vision in the subsidiary.
That said, the subsidiary also benefits, primarily being on the receiving end of valuable shared resources, like financial systems, technology systems, sales and marketing experience, and vast business opportunities that stem directly from the parent company.