Main benefits or advantages of holding company can be expressed as follows:
1. Eliminate The Competition
Because of centralized control and same group of management it is possible to avoid competition between subsidiary companies and holding company. It helps to maximize profitability of both companies.
2. Easy To Form
Formation of holding company does need legal formalities and consent of subsidiary. It can be established or formed simply by purchasing the shares of other business company direct from open stock market.
3. Large Capital
Holding company can raise large amount of capital to expand its business operation.
Identity and goodwill of both holding company and subsidiary company is established and increase their image before the public.
5. Secrecy
Another benefit of formation of holding company is that high level of secrecy can be maintained because of centralized authority and control.
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6. Stability
Holding company is highly appreciated and accepted by the public because of large capital, adequate resources and effective management. So, formation of holding company ensures stability.
7. Separate Books Of Account
Both holding company and subsidiary company records their financial transactions separately and maintain their own accounting system. It helps to know their business performance and financial position separately.
8. Economical
Holding company is economical in nature because of large volume of production, centralized control. It helps to minimize administrative and marketing expenses. It can also enjoy the cash discount and quantity discount because of bulk purchase of materials and supplies.
7. Separate Books Of Account
Both holding company and subsidiary company records their financial transactions separately and maintain their own accounting system. It helps to know their business performance and financial position separately.
8. Economical
Holding company is economical in nature because of large volume of production, centralized control. It helps to minimize administrative and marketing expenses. It can also enjoy the cash discount and quantity discount because of bulk purchase of materials and supplies.
