Disadvantages Archives

Subsidiary – Types, Advantages and Disadvantages

Subsidiary is a company that is controlled by another company through a parent child relationship. A company is only said to be a subsidiary company if the parent has controlling interest by owning over 50% of the issued share capital. A Subsidiary on its own may have subsidiaries. Subsidiaries are considered separate legal entities for taxation and regulation purpose.

Types of Subsidiaries – Three types of Subsidiaries can be formed namely:

-Public Limited Liability

-Minimum Capital – Must be paid by the founders (minimum two members)

-Shares – Can issue nominative or bearer shares

-Management – Should have at least three directors. One director should be a permanent resident of the country

-Private Limited Liability

-Minimum Capital – Must be paid by the founders

-Shares – Shares need to be nominative. Bearer shares cannot be subscribed

-Management – Managed by one or more managers

-Co-operative Company with limited liability

-Minimum Capital – Three partners are needed. One quarter of capital contribution must be paid-in

-Shares – Shares are nominative

-Management – A co-operative company with limited liability and managed by one or more managers

Parent Company – Subsidiary Relation

It is important that the subsidiary is recognized as an independent corporation managed by the board of directors even though it was incorporated by the parent company. This does not mean that the subsidiary is uncontrolled. The parent company has the legal authority to hold the subsidiary accountable to meet the financial objectives.

For the Parent company to control the independent subsidiary it should be:

-The sole shareholder

-Include voting control provisions in subsidiary article

-Prepare bylaws defining the authority of the officers, their term in the office and removal

-Prohibit bylaws amendment without shareholder’s approval

Legal Risks

As long as the parent company holds its subsidiary accountable for the expectations of its board of directors there is little risk for the parent to be found liable for the wrong doings of the subsidiary. But, if the parent company exercises excessive control for example has the same board of directors, use of common letterhead, in such case the parent company and the subsidiary are treated as one and the parent company is responsible for the subsidiaries debts etc.

Advantages and Disadvantages of Subsidiary

Advantages

-Considerable tax advantages and legal protections

-Ability to offset profits and losses of one part of a business with another

-Some countries allow subsidiaries to file tax returns on the profits obtained in that country

-Liabilities and credit claims are locked in that subsidiary and cannot be passed on to the parent company

-Allows for joint ventures with other companies with each owning a portion of the new business operation

Disadvantages

-Legal paperwork involved with creating a subsidiary can be lengthy and expensive

-Control also becomes an issue when a subsidiary is partially owned by another outside organization

Online Database – Key Advantages And Disadvantages

Database in a business scenario is commonly associated with a list of leads or customer information, though in a more technical environment it can also be referred to as Microsoft SQL Server, Oracle or Sybase. Traditionally available offline, databases have also spread across the online horizon delivered over the internet and available on a monthly subscription basis. Though Wikipedia gives you a wide list of online databases, here I’ll mention only about the advantage and disadvantage of getting your data online and forming an online database of your own.

Since the past ten years we have been collecting data using spreadsheets and enhancing our skills to convert it into a database which comes in handy later. Microsoft Access, SQL and Oracle has come along a long way supporting spreadsheets as the complexity of the database increased and it started falling apart. But these databases were available only on a single desktop or accessed over a LAN connection to an in-house server. Easily tackling the desktop spreadsheet applications in the mid-field, web-databases are closing in to score and has become the lifeline of people moving their data online. Most of these web-databases are hosted in a Cloud environment and protected by SSL encryption and a secure log-in with proper User Access Control.

Some advantages of using an Online Database

Online – As the name suggests, an online database can be accessed from a web browser from anywhere in the world. With Cloud Computing coming to the foreground, it is much easier to host an online database in an elastic public cloud making it more scalable and secure.

Elasticity – A web-based-database can hold infinite data and is totally elastic in nature. Whenever there is a surge in data flow, more storage space can be allocated and scaled up and down based on requirement.

Multi-tenancy – A public cloud database is generally multi-tenant in nature. This means the same database can be used by multiple customers on a shared model where you pay only for the space you use.

Pay-Per-Use – Monthly subscription based pay-per-use model makes online databases look quite lucrative where you do not need to invest a huge Cap-Ex on licensed software.

Limitations or disadvantages of an Online Database

Security – One of the gravest concerns of using a web-database is security. With not many security standards available in the Cloud Computing model, most of the users are worried about putting their financial data online.

Switching – Another concern when selecting an online database is switching. Different databases support different formats and switching from one to another becomes a pain thereby increasing switching cost.

Downtime – There are times when the server can be down because of multiple reasons which can lead to huge data loss and inaccessibility thereby causing great losses to customers.

Online database can improve your productivity in many ways and can serve multiple functions. You can customize an online database according to your business workflow or simply use it for data collection and information sharing. Web-based-databases work on different environments, so that is the biggest advantage you can get.

The Disadvantages of Home-Staging Business

There’s no doubt that there’s money at home-staging. If you are a home-stager, you know that you are in a unique business. You get to apply your designing and decorating skills while getting paid! But just like anything else, this business has its disadvantages aside from its benefits.

In this down real estate market, every seller wants to sell their homes fast that they do almost anything to generate a sale especially for their properties which had been stuck for more than a year or so. This is because in real estate, the longer the property stays in your hand; the more difficult it is to be sold. The listing becomes stale and real estate agents will not be willing to show those buyers as there are newer properties in the listings.

The best strategy for sellers to get rid of stuck properties is home-staging. But is repairing, painting, changing of curtains and putting a few flowers in a property worth it? Let’s just say that doing all those processes are not expensive, but have you thought about your competitions? The new built homes? The following are the other disadvantages of this business.

There are many anxious sellers who are desperate of getting rid of their homes and the easiest way that they seem to make that happen is to have their home for home-staging. Staging is, no doubt, the most unique approach to sell homes. However, is it really worth your time and effort? What if you staged a home, and still never sell? You just got your money wasted as well your own time. So what to do?

The following are some tips on the advantages and disadvantages of home-staging your property that is up for sale:

1. It takes so much time and so much effort, and may become expensive in the case of homes that are hard to sell.

2. When talking about investment, home-staging is not practical. Remember, a good investment is spending one dollar and getting two in return. If it’s 1 to 1 or 1 to 0, then it is a very bad investment.

3. If you stage the home while you are still living on it, you will have to empty the furniture, empty the closets and drawers, and keep the bathroom clean and fresh every day. That’s another household chore that is difficult to maintain in regular days.

Unless you are willing to make sacrifices, exert extra effort and willing to risk your money, home-staging might not work for you, so think carefully.

Beginners’ Guide – Advantages and Disadvantages of Social Media

We all are beginners at some point. For the beginners the biggest challenge is to know the advantages and disadvantages of Social Media. Today we are going to talk about the Social Media – Advantages and Disadvantages. Many small business owners have not yet taken advantage of social media to help grow their business. It has become so vital for us to stay connected and convey the right message. To get the best out of this platform here are some tips and guidance for the beginners to know.

First of all some facts and figures of social media sites:

One in every nine people on earth is on Facebook
Twitter is adding nearly 500,000 users everyday
One in four Americans watches a video online everyday
During the second half of 2010, LinkedIn membership base grew, on average, by 1 million new members every ten days

Connect: Facebook helps you connect and share with people in your life. Just think what was your life before Facebook invented? Was it more relax, exiting, boring or challenging? In Facebook we can create a personal profile, add other users as friends & exchange messages. If we talk about LinkedIn, it gives us the opportunity to connect with professionals across the globe. Whether you are using it for personal growth or spreading your business. It also gives you the opportunity to connect with business minded people like you. If we talk about Twitter, it is simply amazing! Twitter is a real time information network that connects you to the latest stories, ideas what you find interesting. It gives you an opportunity to know what’s happening around the world in 140 characters long tweet!

Interact: With your connections Facebook gives you an opportunity to let people know about you. You can share your photos, stories and create fan page. As a business, Facebook pages are a good source of feedback on your product/services. In LinkedIn you can interact with professionals on one single platform. You can discuss business, resources, ideas, learning opportunities and lot more. In Twitter, tweets are text based posts of up to 140 characters displayed on the author’s profile page and delivered to the followers. On a personal level Twitters allows one to communicate with friends and families. On business level it connects your current & potential customers with your product & service.

Exchange: With the use of Facebook, we exchange joy, fun, sorrows, help and many more things at one place! Facebook slowly also being used like email. So this is one of the cost-effective ways to connected. With the use of LinkedIn we exchange professional expertise along with useful information which eventually enhances our professional brand. It also exchanges stronger business ideas with each other. On a business level, it helps us to exchange feedback, comments which eventually lead to increase business. On a personal level, it helps you in personal development. Twitter is a powerful tool for exchanging information and news as Twitter user often link to useful sites or articles & can be source of alternative news.

Disadvantages: As we discussed the Advantages of Social Media but we cannot ignore the Disadvantages just to be more secure on online platform.

Think about the viral potential of media. When news are negative and bad in taste, the same will happen with that brand. It is hard to undertake damage control when you are dealing with social media. Your name might get spoiled within hours. The best example is MacDonald’s Twitter promotion. According to Mail Online news article – Mac Fail! MacDonald’s Twitter promotion backfires as users highjack hash tag MacD stories to share fast food horror stories. Opponents accused the burger franchise of making customer vomit, serving pig meat from gestation crates and dishing up a burger containing a finger nail. Another disadvantage is to face threat from fake profile and ID. This is one of the biggest disadvantages of Facebook. People often use fake profile to insult or harassing someone. Students who are Facebook addicted do a bad result on his or her exams. One of the major risks of social networking and the Internet in general is breaches in privacy. These sites collect considerable amounts of personal information, with email addresses being one of the most collected pieces of personal data. Also these social networking sites possibly reduce persons’ compassion. You can check Twitter updates from your phone and send messages from anywhere. Social networking sites have the potential of having spreading negative or Anti-social messages. Amongst

As discussed above there are both Advantages and Disadvantages of Social Networking. One thing is clear; it is up to the person how he/she wants to get benefit from Social Media platform. In life we are often subjected to good and bad choices it is only we ourselves, who can decide what we want.