Overview
IntroductionGlobalisation has brought in an increase in parent companies and subsidiary relationships into the business environment of today. The benefits of the structure, varying from its creation to its different advantages, including flexibility in operations, tax benefits, exposure to different markets, and segregation of legal liabilities, cannot be overlooked. with these advantages comes a network of intricate legal relationships, control frameworks, and governance expectations. There have been challenges in achieving a balance between oversight duties of the parent company and independence needs of the subsidiary. This has been the cause of gaps in governance, regulatory dangers, and cultural differences. With the above, group relationships are no longer limited to simple compliance with law.
They need deliberate structuring of decision-making, a strong corporate culture, sound risk management, and open communication channels. Part B of the article on 'Group Dynamics' has the most applicable reasons to practice why tensions between a parent and subsidiary company may arise. In particular, we will consider the extent to which a parent company can control, autonomy need of the subsidiary, and management of risk and conflict.
