Group vs Company
In business world, entities operating to make profits by selling goods or providing services are called by different names. This nomenclature is based upon differences in their structures and also on the basis of how these entities are taxed by the authorities. Two words confuse people used in common parlance and these are group and company. There are similarities in the two entities but enough differences also to justify independent existence. This article will attempt to explain these differences on the basis of the features of group and company.
Practically speaking, the difference between a company and a group is more in their name than in functioning as both are organizations involved in business activities of manufacturing or selling. They can even be entities providing services only as is the case with consultancy firms that may operate as a company or as a group of companies. Whether a group or a company, both come into existence as per the prevalent laws of a country and to make it easier for tax authorities.
When you hear the word a corporate group, it merely reflects the fact that a particular business group has interests in various sectors of economy rather than a single field which is the case with a company that may be involved in production and selling a particular good or services. A group comprises the parent company and its subsidiaries that may be involved in different businesses though the overall control of the group remains in the hands of the parent company. The concept of a corporate group emerged to save companies trying to diversify in various sectors of economy from taxation on various fronts.
There are parent companies that started their business in one field and later diversified into various fields such as communications, pharmaceuticals, FMCG, consultancy and so on. The name of the parent company remains attached with each subsidiary company that works as a brand name and helps create awareness among stakeholders about diverse activities of the group.
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In brief: • A company and a corporate group are different names for organizations carrying out business activities. • A corporate group is a conglomerate of companies operating under administrative and financial control of a parent company. • The concept of a group helps companies to diversify in different sectors of the economy keeping the same brand name and also helps in following the provisions of tax laws prevailing in a country.
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