Subsidiary Meaning and Definition
Subsidiary
Pronunciation
/ˈsʌb.sɪ.ˌdeɪ.ri/
Part of Speech
Noun
Definition
A subordinate organization or entity that is owned or controlled by a parent company, often providing specialized services or products.
Examples
- The company’s subsidiary in Asia operates independently but reports to the parent company.
- The parent company’s subsidiary specialized in risk management and consulting services.
Synonyms
- Corporeal affiliate
- Body shop
Antonyms
- Holding company
- Main entity
Additional Information
Subsidiaries are often established to tap into new markets, reduce risks, or increase efficiency. They can provide specialized knowledge, skills, or resources that complement the parent company’s operations. Subsidiaries may also be used to diversify a company’s products or services, or to enter new industries.
Subsidiaries are usually subject to the direction and control of the parent company, and may have limited autonomy. However, they can still operate independently and make decisions within their area of expertise. The success of a subsidiary depends on its ability to generate profits, innovate, and adapt to changing market conditions.
In corporate finance, subsidiaries are often used to manage risk, optimize capital structure, and create value for shareholders. They can provide a means for companies to extend their reach, leverage new technologies, or exploit emerging opportunities.
Etymology
The word “subsidiary” comes from the Latin “subsidium,” meaning “assistance” or “assistance,” and the suffix “-ary,” indicating a relationship or connection.
Usage Notes
Care should be taken to use the correct term when referring to a subsidiary entity. Refer to the parent company when discussing its overall operations or strategy, and use the term “subsidiary” when specifically discussing the entity.
Cultural References
Subsidiaries have been featured prominently in popular culture, such as the concept of a subsidiary agency in the James Bond series or the fictional subsidiary companies in the TV show “Mad Men.”
Idiomatic Expressions or Phrases
Terms like “parent company” or “affiliate” are often used to describe the relationship between a subsidiary and its parent organization.