What are concerns

The concern is a form of business combination, a financial and industrial group, the distinguishing features of which is the preservation of the legal and economic independence of the participants, but with some coordination from the parent financial institutions.

Instruction manual

1

The financial control in the group and some supply, production and marketing functions are under one control. Participants that are part of one concern cannot join another, i.e. cannot be simultaneously members of several concerns.

2

Concerns come in several forms. Vertical concerns are associations of enterprises that cover the entire production cycle: from the acquisition of raw materials to the sale of one or more of these types of products. Horizontal concerns are industrial groups that combine manufacturers with a similar assortment of goods, for example, brewing companies. There are also mixed concerns that combine signs of horizontal and vertical unification.

3

As a rule, the concern's activity covers one sector of the economy or part of it. The concern may include enterprises of one or several industries with highly developed large and mass production using new industrial technologies. Often this is engineering, metallurgy, steel production.

4

According to the type of participation in capital, two types of concerns are distinguished: a subordination concern and a coordination concern. The first is based on the spin-off of the parent and subsidiary companies. Most often, it is created to combine production into a technological chain. The coordination concern consists of enterprises engaged in equal exchange of shares, or sister companies. With such an association, the group members have a mutual influence on the current policy, but at the same time remain under the general leadership. A coordination concern is usually created to combine financial activities or scientific and technological potential for industrial development. Most often, the enterprises included in the coordination concern are weakly interconnected from the point of view of the technological process.