Understanding Corporate Structures: Diversification to Transnationals
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Understanding Corporate Structures
Diversification: This occurs when a company offers new products and attempts to enter new markets.
Holding: A parent company buys the shares of its subsidiaries, making the parent the owner. The parent company makes the most important decisions, holding the majority of shares and votes.
Trust: The subsidiaries are the owners of the shares, so the profits are shared among each company. The management of the shares is handled by a board of directors. The companies produce the same or similar products, with the objective of growing as a company and becoming more competitive.
Cartel: Companies that produce the same product sign an agreement to reduce competition. They agree to sell the product at the same price and create a zone for each company, restricting sales to that zone.
Takeover: Company #1 buys the assets of Company #2. Company #1 maintains its legal identity. As the assets of Company #2 are now within Company #1, Company #1 becomes larger.
Merger: Company #1 and Company #2 combine their assets. The initial legal identities of both companies disappear. A new legal entity is created, and the new company owns both sets of assets.
Cluster: A group of companies belonging to the same economic sector, often located in the same geographical area, that collaborate to be more competitive.
Joint Venture: A "venture in common," is a contract signed by two or more companies to collaborate on a specific project. It is a temporary situation in which a small group of companies collaborates to achieve specific objectives.
Multinational: A company that creates subsidiaries in different countries but has a parent company where it originated. The parent company controls the operations of the entire group, centralizing management in one country.
Transnational: A group of companies located in different countries. They operate as a group but do not have a centralized management company in one country, so management is decentralized across each company.
Market Share Formulas
Unit Market Share (%): (100 x Unit Sales) / Total Market Unit Sales
Unit Sales: (Unit Market Share (%) x Total Market Unit Sales) / 100
Total Market Unit Sales: (100 x Unit Sales) / Unit Market Share
Revenue Market Share (%): (100 x Sales Revenue) / Total Market Sales Revenue
Inventory Management Formulas (Basque)
ESKAERA-PUNTUA (Reorder Point): Buffer Stock + Sales in the Delivery Time
BATEZ BESTEKO STOCK MAILA (Average Stock Level): Buffer Stock + 1/2 Quantity Order
ERROTAZIO INDIZEA (Rotation Index): Sales of the Whole Year / Average Stock