![]() ![]() Sister companies may function entirely independently of one another or may rely on each other for specific functionalities or share common goals. Parent companies often determine the level of independence that sister companies have from one another. Here's a list of some key differences that result from these organizational relationships: Independence You can refer to another company as a sister company if the same parent organization owns both entities, whereas you can refer to a company as a subsidiary if a parent organization owns it. The main difference between sister companies and subsidiaries is in their relationship with each other and their parent company. Read More: What Is a Subsidiary and How Does It Work? Sister company vs. The level to which subsidiaries function independently from other subsidiaries and their parent company depends on the organization, but commonly, parent organizations handle many top-level business decisions within their subsidiaries. The organization that owns the subsidiaries is a parent company. For instance, a large staffing organization may own multiple subsidiary companies that each specialize in temporary staffing in a different industry. Related: How To Perform a Smooth Company Reorganization What is a subsidiary?Ī subsidiary, also called a daughter company, is any company that another organization owns. These two brands may call each other sister companies. For example, a shoe manufacturer may create two distinct brands, one for children's shoes and one for adults. Organizations can also create sister companies by establishing multiple subsidiary brands. Many large organizations acquire and merge with other companies throughout time, creating the opportunity for many sister companies to emerge. For instance, if an organization owns several cereal companies, each of the cereal companies is a sister to the others. Sister companies are multiple businesses that the same parent organization owns. In this article, we discuss what a sister company versus a subsidiary is, the definition of each and provide some examples to help you better understand how they work. Understanding the differences between these types of entities can help you gain more insight into the complexities of organizational relationships. Large organizations often have many subsidiary entities that act as sister companies to one another. ![]()
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