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Branch offices

A branch is a unit of a parent company that is in a foreign market or otherwise separate location with the aim of doing business. A branch is not a separate entity in a legal or functional sense - it is established as an extension of the parent company, which is responsible for its liabilities and taxes.

Branch activities Because branches are extensions of the parent company, they can be used to carry out all of the same activities including, but not limited to:

Sale of goods and services Manufacture of products Store products collect data Conducting market research Start advertising campaigns In other words, a branch acts as the representative of the parent company even though it is physically separate from the main office. This aspect of physical presence in a foreign or otherwise remote market is the main benefit of having a branch. It ensures a tangible presence and also acts as a base or hub in the parent company's logistics network.

Another important task of a branch is to serve as a contact point for customers. In addition to selling a product or service, depending on the company's production, a branch can perform repairs, store goods for on-site business (i.e. act as a retail store), and generally act as a customer support center.

In addition, having an office is an important element in a company's market research and business expansion strategy. A branch can employ local residents to gain insights into the culture and environment of a foreign market, as well as to be able to access knowledge of the market itself. The home office of the parent company cannot do this and would require mediators or advice from experts on the foreign market. Depending on the distance from the home office, a branch can also be advantageous in responding to certain business-relevant events, as it is likely to receive information earlier.

Advantages of a branch A branch office has several advantages over other forms of company representation in a foreign market:

Scope of activities A branch office can perform the same activities as the home office while also providing better access to local resources and information.

Local presence A branch can access local suppliers and customers without having to build a supply and delivery network, which increases the overall effectiveness of the company's services and negates the effect of the distance between the overseas market and the home office, which can put off potential partners.

Service customizability Since a branch is an independent structure, its activities can be adapted to the needs of a foreign market without revising the structure of the entire company - location-specific products, types of services, etc. can be assigned to the branch for administration, but as the home office. Disadvantages of a branch A branch also has certain disadvantages:

Formation requirements Since a branch is an extension of the parent company with the same field of activity, most legal systems impose stricter regulations on the registration and management of branches.

Legal status A branch is not an independent unit in the legal sense, which is why liabilities and tax charges remain the responsibility of the parent company; If a branch goes down, the parent company will have to bear all related costs (this may vary depending on the jurisdiction).

Establishment costs Since branch offices are usually integrated as fully-fledged branches of the parent company (otherwise their original purpose would be lost), they need more resources and a well-developed network of connections to the home office to function properly.

http://www.confiduss.com/en/services/incorporation/structure/branch-office/