An owned entity is a legal business structure a company establishes in a foreign country. It’s entirely owned and operated by the parent company.
What are the benefits of relying on an owned entity?
Opening a legal entity in a new country is costly and takes time. Few small institutions can afford to wait that long or pay significant fees, especially if the process could impact quality of service and savings for customers. One common reason institutions choose to enter into a foreign entity partnership is because it allows them to serve international clients. Here are several other benefits an owned entity provides:
- Owned entities provide superior service
- They are significantly less expensive than opening a new entity
- The partnership better protection for the company’s intellectual property
- Owned-entity providers take good care of remote employees
- They safeguard sensitive company data
- Owned-entity providers provide a single point of contact for the company’s needs
- They understand local laws better
- They can provide better benefits for your team
- Owned entity providers stay compliant when local laws change
1. More operational control
An owned entity grants gives a company operational control with real-time adjustments without needing to be physically present. This control is valuable when introducing new products, services, or approaches aimed at a local population.
2. Stronger market presence
An owned entity’s physical presence creates a sense of trust, loyalty, and credibility with local customers. Companies can actively engage with customers, better understand the market, and quickly address customer needs.
3. Access to talent
Accessing local talent has advantages beyond speaking the language. Local employees have a better understanding of the cultural behaviors, which makes creating effective products, services, and marketing strategies easier.
4. Mitigated risks
Owning an entity reduces legal and regulatory risks. Non-compliance with foreign laws can lead to fines, legal battles, and reputational damage. Through an owned entity, businesses compliantly enter the market.
5. Strategic agility
An owned entity allows businesses more agility when changing strategies to adapt to market trends and local competitors.