What is a subsidiary?

• A. A multinational corporation's headquarters
• B. A joint venture with a local company
• C. A branch of a multinational corporation in a different country
• D. A wholly owned production unit within the same country

Answer: (C)

A subsidiary is a company that is controlled by a parent company and exists as a separate legal entity under the parent’s ownership. In multinational operations, parents often set up subsidiaries in other countries to operate locally under that country’s laws while staying under the parent’s control. The option describing a branch of a multinational corporation in a different country best fits this idea because it implies a distinct entity tied to the parent and operating abroad, which is the usual way a subsidiary functions across borders. The other options describe different arrangements: the headquarters is the main management center, not a subsidiary; a joint venture is a new entity jointly owned with another firm; and a wholly owned production unit within the same country lacks the cross-border, legally separate nature that defines a subsidiary, making it a less precise fit.