Management Daft Chapter 4 Flashcards | Quizlet

Wholly owned foreign affiliate. A foreign subsidiary over which an organization has complete control. Greenfield Venture. The most risky type of direct investment, whereby a company builds a subsidiary from scratch in a foreign country. China Inc. Outsourcing to China and India. A wholly owned subsidiary, also known as the parent company, is a company whose common stock is 100% owned by a holding company. 1. What is an “affiliate”? As stated above, SBA determines whether an entity qualifies as a small business concern by counting its receipts, employees, or other measures including those of all its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit. 13 C.F.R. § 121.103(a)(6). Wholly Owned Subsidiary Definition. A wholly owned subsidiary is a business firm whose complete stock is held and owned by the parent company. A company can get the title of wholly owned subsidiary if the parent company owns its common stock. If a parent firm owns between 51% to 99% of the company’s stock, it is said to be a regular subsidiary. Advantages of a Subsidiary . In other instances, when entering a foreign market, a parent company may be better off by putting up a regular subsidiary than a wholly owned subsidiary.

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