The advantages of organizing a business in a holding form can be conditionally divided into two groups. The first group is associated with the effect of integration in general, regardless of the form in which it is presented: a holding, a financial industrial group, a simple partnership, since it is clear that during the period of general economic globalization, it is usually less profitable to carry out activities in an autonomous, uncooperative structure than in an integrated. The effect of combining business entities into a holding as a synergistic effect of the system lies in the fact that the benefits from the combination are achieved not through arithmetic addition, but by multiplying the capabilities of all organizations that are part of the holding structure. Holdings as a type of business associations have the following advantages in comparison with non-integrated commercial organizations:
- the implementation of the scale of the resources used (production assets, investment funds, labor resources), including the ability to attract qualified management, scientific, production personnel;
- minimization of the negative impact of competition for the members of the association in comparison with independent producers that are not part of it, since the members of the association, as a rule, do not allow mutual competition in the same market;
- the possibility of producing competitive products (works, services) due to the creation of a self-sufficient vertically integrated system from the extraction of raw materials to the release of finished products with a high degree of processing;
- significant centralization of capital, which, depending on the economic situation, can "flow" from one sphere of entrepreneurial activity to another;
- the possibility of diversifying production to reduce entrepreneurial risks and ensure the specialization of certain types of activities as a condition for their competitiveness;
More information here - https://en.wikipedia.org/wiki/Holding_company
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