The Fox News Channel (Fox News), a cable and satellite news channel in the United States, is a sister company to Sky News in the United Kingdom thanks to their shared parent company, 21st Century Fox. Fox Business Network, Fox Broadcasting Company, Sky News Australia, and Sky TG24 are Fox News’ additional sister channels.
What is a Subsidiary Company?
Subsidiary vs. sister company
Sister companies are the related subsidiaries of the parent company, whereas a subsidiary is a business that is owned by the parent company. Although a sister company and a subsidiary share some characteristics, such as being owned by the same parent company, the main distinction between the two is how they interact with the parent company. When contrasting a sister company with a subsidiary, the following factors can be helpful:
Ownership
Larger corporations typically use subsidiaries to increase their customer base. A parent company, which typically establishes ownership either through an acquisition or other means, owns both a sister company and a subsidiary. Through acquisitions, a larger company can take over a smaller one by buying all or the majority of its stock. The acquirer gains the ability to make decisions for the company without needing the shareholders’ consent by acquiring the majority of the company’s shares.
A company must typically have another entity control at least 50% of its equity in order to be considered a subsidiary. In some instances, a parent company might decide to establish its own subsidiaries rather than buying a smaller business. Wholly owned subsidiaries are those that their parents completely own. A company is not a subsidiary and is not a sister company if it only holds a small portion of the shares in another company.
Operations
Typically, sister businesses operate independently of one another and may produce separate, unique products intended for various business sectors. Despite the fact that their competitors and activities may be very different, the parent company controls both of their operations. By balancing the gains and losses among subsidiaries, a parent company may be able to reduce revenue through a subsidiary. For instance, sales losses from a subsidiary that hasn’t performed as well as expected are offset by its successful sister company, which just set a new sales record.
There are frequently more opportunities for a corporation to streamline operations the more subsidiaries it has. Some corporations have a large number of subsidiaries that operate as sister companies in various industries. Individual investor interests frequently determine which subsidiaries the company places the most emphasis on.
Relationship
Although sister businesses frequently differ from one another and produce unique products to be sold in separate markets, there may also be some degree of interaction between them. Occasionally, sister businesses engage in direct competition with one another for the same market. When sister companies are in direct competition, the parent company may come up with a unique branding technique or marketing plan to set them apart from one another in the eyes of customers. Specific industries may have more sister companies than others. For instance, many automakers in the vehicle manufacturing sector have numerous subsidiaries.
Instead of being considered divisions of a single company, subsidiaries and sister companies are treated as distinct, independent legal entities. This allows the parent company to limit its liability. There might also be some advantages, like a lower tax rate, if sister companies are located elsewhere than the parent company. The fact that the parent company gives its sister company more autonomy may be noticed by a subsidiary. This may happen for a variety of reasons, such as the parent company’s desire to devote more attention to a particular industry during a particular season of the year.
What is a sister company?
Any business that maintains close ties with a company bearing a different name but owned by the same parent company is referred to as a sister company. These firms are regarded as subsidiaries of a parent company. While some businesses don’t interact much and don’t have close relationships, others can be regarded as sister businesses because they have a close relationship with a parent business. The number of sister companies a parent company can have is unlimited, and each of these businesses, despite sharing a parent company, has its own name, staff, and operations.
The sister company runs largely independently, concentrating on its own production methods and branding but having the option to advertise their sister company. Large corporations frequently have a number of sister companies, or subsidiaries, in various sectors, including technology, manufacturing, and finance. In some situations, sister companies consolidate business operations. For instance, a beverage producer and a retailer of packaged goods could collaborate to market and create a fresh fruit punch.
Advantages of a sister company
A sister company can benefit the parent company and other sister companies in the following ways:
Shared marketing
Sister businesses that work in the same industry can frequently profit from using the same marketing and advertising techniques. Sharing marketing initiatives between two sister businesses can increase scalability, free up a parent company’s time to concentrate on other subsidiaries, and lower costs. While combining marketing efforts isn’t always possible, the more subsidiaries a company has, the more likely it is that sister companies in the same industry or business sector will work together on marketing initiatives to offer exclusive access to products or exclusive promotional offers.
Risk mitigation
Sister companies reduce risk to a parent company because any losses incurred don’t directly affect the parent company because the companies are separate legal entities. Sister companies may not always provide direct tax benefits, but they do provide some general risk protection because the parent company can use them to shield the business from liability. For instance, the parent company of a production company that films a movie can benefit from the movie’s earnings while also being shielded from potential legal action during production.
Diversification
Sister companies allow for diversification by giving the parent company control over several different business domains. The parent company has the chance to increase efficiency and productivity by breaking up the business into more manageable, smaller companies that it can control. When a parent company concentrates on each subsidiary, the sister companies also have the chance to connect with unique, independent markets, potentially boosting their own success and brand recognition. Additionally, parent companies can easily replace underperforming subsidiaries, which benefits sister companies by fostering a closer bond with the parent company.
Sister company FAQs
Here are a few responses to some frequently asked queries about the operations of a sister company:
Whats an example of a sister company?
A food company might own several different brands of cereal. There are sister companies for each cereal brand, and each brand has its own look and intended audience. Children may make up one brand’s target market, while older adults may make up another brand’s.
How common is it for sister companies to compete?
Sister companies frequently engage in competition, and some parent companies have numerous subsidiaries that all produce comparable goods. For instance, the same parent company is the owner of numerous toothpaste brands. The parent company will frequently try to vary the packaging and design for each individual brand in an effort to prevent the brands from being too similar to one another.
How often do sister companies interact with each other?
Sometimes a parent company will ask sister companies to work together on a marketing campaign to promote a single product. In order to meet the needs of customers, sister businesses frequently promote one another’s goods and services. The sister companies may gain from this interaction and collaboration by getting access to market information and resources they might not otherwise have, like particular software programs and customer databases.
Are sister companies all affected the same?
Usually, the bankruptcy of one sister company won’t have a significant impact on the others. Depending on the circumstances, a subsidiary might witness its sister company carry on business even if the parent company files for bankruptcy. Depending on a variety of variables, including the state of the economy, a parent company will frequently sell its subsidiaries at various prices.
Are affiliate companies the same as sister companies?
day daydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydaydayday Frequently, the parent company only owns a small portion of the stock of an affiliate company. Like subsidiaries, a parent company may use an affiliate to enter a new market
FAQ
What is sisterhood company?
A sister company is a business that has close ties to another business but uses a different name and staff. As subsidiaries of the larger company, both businesses are owned by the same parent.
Is sister company a legal term?
Sister companies are a group of two or more subsidiaries that either share a parent company or are substantially controlled by the same entity or group. Sister Concern is not a legal term, and it is not required that the owners of a sister concern company be the same.
What are sibling companies?
A business is said to be a sister company if its parent company is also another business. The only reason the two businesses are connected is that they are siblings and have the same parent, even though they may run entirely independently of one another. Simply put, sister companies are the same company’s subsidiaries (daughter companies).
What is a brother company?
Brother companies are those that run their operations under the same umbrella as another group of businesses.
