What is the Difference Between Subsidiary and Joint Venture?

The primary difference between a subsidiary and a joint venture lies in the control and ownership structure. Here are the key differences:

• Subsidiary: A subsidiary is a company that is either wholly or partially owned by a parent company. The parent company exercises control over the subsidiary, typically due to majority ownership, and may dictate the subsidiary's operations and strategic direction. Subsidiaries can be structured as wholly-owned subsidiaries, where the parent company owns all the shares, or as partially-owned subsidiaries, where the parent company owns a majority stake.
• Joint Venture: A joint venture involves collaboration between two or more independent companies, where they share ownership and decision-making responsibilities, including control over operations. Joint ventures are established for a common objective, often for a finite time, and equity is raised by the participating companies based on their unique contributions. Sharing of revenues and assets is a chief characteristic of a joint venture.

In summary:

• A subsidiary is owned and controlled by a parent company, either wholly or partially.
• A joint venture involves shared ownership and control between the participating companies, established for a common objective.

Comparative Table: Subsidiary vs Joint Venture

A subsidiary and a joint venture are both business arrangements, but they differ in terms of control, ownership, and purpose. Here is a comparison table highlighting the differences between the two:

In summary, a subsidiary is a company that is either wholly or partially owned by a parent company, while a joint venture involves collaboration between two or more independent companies for a common objective. The primary difference between the two lies in the level of control and ownership, with subsidiaries being controlled by a parent company and joint ventures involving shared control and ownership among participating companies.