Board Architecture and Groups of Companies

The relationship between companies in a group is a key factor in the success and survival of the group. As we have already observed in the previous chapters the relationship will usually be a dynamic one. The best positioning of the holding and the subsidiary company will vary according to the needs of the group and the rationale for the creation and continuation of separate subsidiary companies. However, the analysis of the reasons for the establishment and continuation of operating through separate companies within a group is not undertaken that frequently. Most of the research into holding and subsidiary company relationships has involved large multinational groups of companies. However, the lessons are the same for any group relationship. Indeed, the even apply to a situation where responsibility is devolved within an organization to operating units rather than to separate companies.