What is a holding, its value and market share
Modern markets have grown to enormous proportions. Roughly speaking, our entire planet has become one global market. In most countries, a market economy is well established, where every entrepreneur is his own master. He has the right to decide what he will sell to whom, in what volumes, at what prices. Such a rosy view is overshadowed by one very significant problem. Competition.
What is a holding? Definition
The definitions of this concept can be found mass. This is not a new trend of market structure. All of them are somewhat similar and something different, but they carry the same essence.
What is a holding? This is a huge enterprise organization. The main role in it is played by the parent company, which has bought a smaller controlling shareholder from smaller firms. The size of this package should not be less than 25% of all securities. After purchasing the manager of the package, the parent organization has the final vote in all matters of activity. The subsidiary is under the full control of the central company.
With the same success, subsidiaries acquire shares from the so-called "grandchild" firms. And now, the holding already represents a kind of pyramid.
Types of holdings
- What is a financial holding? In such a coalition, the parent company carries the meaning of a unifying link. It owns half of the shares of other enterprises. It is engaged in that makes the most various financial operations and makes the important decisions in a life of the affiliated firms. He has no right to conduct his production, since he performs an exclusively financial function.
- What is a mixed holding? In this union, the main firm conducts economic and commercial activities. This type is usually chosen for complex scientific and technical activities.
Ways to create a holding
- What are horizontal integration holdings? This is a group of companies that conducts its economic activities in the same industry of the market. They are engaged in one business, produce similar products. In order to minimize competition in this niche, an association is created. Integration is carried out by absorption by one stronger firm of others.The market is expanding significantly, and costs are becoming less.
- What are holdings with vertical integration? In this case, it is said about the merger of companies engaged in activities ranging from the procurement of raw materials and ending with the final sale of the product. That is, one organization included in the holding produced raw materials, another transported it, a third processed it, another made the planned products from it, the last but one packed it and sent it to the stores. Here is a sketch of the scheme of work on the vertical. This method of production and release guarantees a sustainable scheme and lower costs for third-party services.
- What is a holding with consistent creation of firms? New organizations are created and in turn join the already existing holding. By this method, many restaurant chains operate. If one of the subsidiaries fails, the rest will not be affected.
Purpose of creating holdings
In order to determine the goals of this structure, let's look at its history. What is a holding company and where did it come from? Like many other trends, the holding legal structure came to us from the United States.There it originated in the 19th century, and its purpose was to bypass the antitrust law. Such an organizational structure coped well with its task due to the fact that each of the subsidiaries is an independent legal entity.
In Russia, there is still no law on holding companies. This word is used by many organizations in its names, but there is no such thing in the legislation. There is a Law "On the Privatization of State and Municipal Enterprises in the Russian Federation" of July 3, 1991. That is, in our country, the original purpose of forming such a structure was the so-called "denationalization". With the collapse of the USSR, many of the production were transferred to private hands, it was important to preserve their functioning and communication routes between themselves.
In modern market relations, however, the meaning has become equal to the original idea and consists in circumventing antitrust laws and eliminating competition. However, the most impressive giants among holdings remain under the control of the government, as they are engaged in oil and gas production, which is of great importance for the country.