Management And Control Of Enterprise Groups, Parent And Subsidiary Companies

Enterprise group, based on high socialization of production andconsiderable development of market economy, is one of the forms ofexpression for production centralizing and capital gathering;Enterprise group,based on high development of modern enterprise, takes core enterprise asmain body through relations of property right and other coupling ties and setsup economic coalition with many corporate enterprises. Foundation ofenterprise group need coordinate the relations of enterprises with two forms—market and organization, to realize the mutual complementation of theenterprise organization and market mechanism, thus enhances itself integralfunction. But in the relationship mechanism of parent company and itssubsidiary, subsidiary company is a business entity that is equal to the parentcompany legally. The parent company can not directly interfere with affairs ofthe subsidiary company;subsidiary company's business is relativelyindependent on many things. As the same as the modern enterprise'sdelegation---agency problem, such a relatively independent relationshipbetween parent company and its subsidiary inevitably cause the fact thatsubsidiary company dose not get things done in the way the parent companywants, even generate act against the parent company's will. In order toprevent subsidiary company from abusing resources and upgrade itself tointegral objective of enterprise group, proper control mechanism should betaken to improve the integral performance. Hence, it is a question that needscareful consideration for enterprise group that to study how to conducteffective management and control to subsidiary companies, to designmanagement and control formation to enable the group resources allocatedeffectively, develop the group's integral advantage on the side of parentcompany' benefit.