Comparative Discussion among Trust, Cartel, and Holding Company
Trust, Cartel, and holding company are the branches of business combination but they are not same. They have some differences regarding formation, objectivity, and nature. Trust is an organization in which shareholders of the constituent. Cartel means an alliance of producers who combine together retains their identities for the purpose of perusing a monopolistic policy in their joint efforts. A holding company is one which is formed mainly to acquire the controlling amount of share or stocks of other companies and to control their policies and operations.
Comparative discussion among trust, cartel, and holding company are given below:
Trust
- Definition: Trust is an organization in which shareholders of the constituent organizations transfer a controlling amount of their stock or share to a bond of trust in exchange for trust certificate.
- Objectives: Primarily it is formed with a view to centralizing both management and administration of the constituent units.
- Consent: It needs the consent of shareholder of different companies.
- Complexities information: Formation of trust is complex and expensive.
- Management: The responsibility to conduct the business is depending on Board of a trustee and its management is centralized.
- Profit: Trust does not establish to earn a profit.
- Authority: Trust affects the authority by its contract.
- Stability: Trust is a permanent and inflexible business combination.
- Advantages: Sufficient capital, Efficiency of direction, mono-politics control one the main benefits of the trust.
- Field of Activity: Its field of activities may be in the country.
Cartel
- Definition: Cartel means an alliance of producers who combine together retains their identities for the purpose of perusing a monopolistic policy in their joint efforts.
- Objectives: The main objective of the cartel is to enhance the profits of their members.
- Consent: To form cartel need consent of the member companies.
- Complexities information: Formation of the cartel is easy and comparatively less expensive.
- Management: It receives the responsibility to sell the products.
- Profit: Cartel is established to earn more profit.
- Authority: Cartel authorizes on its distribution it’s by contract.
- Stability: Cartel is not permanent in nature and it is very flexible.
- Advantages: Cartel tries to cover the cost of production and reduce the cost of distribution.
- Field of Activity: Its field may be expanded in all over the world
Holding Company
- Definition: A holding company is one which is formed mainly to acquire the controlling amount of share or stocks of other companies and to control their policies and operations.
- Objectives: Main objective of holding company is to control the policy and operations of subsidiaries.
- Consent: There is no necessity to get the consent of the shareholders.
- Complexities information: Formation of holding company is easy but very expensive.
- Management: The responsibility to conduct business is depending on Board, of directors.
- Profit: Holding company is a profit earning company.
- Authority: It authorizes by its ownership.
- Stability: There is no time bound for the elimination of holding company.
- Advantages: Fare of formation, financial help, facility management one the advantages.
- Field of Activity: It may be an international business combination.
