At SmartCapitalMind, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.
A sister company is a company with close affiliations to another company with a separate name and personnel. Both companies are owned by the same parent and are considered subsidiaries of the larger company. While some subsidiaries are not closely related and may have limited interactions with each other, others can have a close connection, and are examples of sister companies. It is possible for any number of companies to have this kind of relationship.
In a simple example of how sister companies work, a large corporation could have 10 subsidiaries in different industries like food, shipping, and manufacturing. The companies within each sector might be sister companies. The company could own a chain of bar and grilles under the ABC brand, and another restaurant group under the XYZ brand. The two chains might be affiliated, rather than operating entirely separately. This can attract customers loyal to one brand, encouraging them to try another because they like the services offered by the original brand.
Each sister company has its own personnel and branding. It is accountable to the parent company but can operate largely autonomously when it comes to making purchasing decisions, designing packaging and facilities, and so forth. Companies with a sister relationship to each other can run cross-promotions, encouraging customers of one to visit the sister company as well. They are usually careful to avoid operating in competition, targeting slightly different markets or operating in different regions to provide complete coverage of a given nation or state.
Products and services offered by sister companies can vary considerably. They may offer different tiers of products and services to appeal to different kinds of customers, one way to avoid causing conflict between subsidiaries. Their sister company relationship can allow for more industry clout, as they can do things like negotiating collectively for contracts, or lobbying together for changes in industry standards and policies.
The fact that sister companies are owned by the same parent is not always immediately obvious. In some cases, the company's mission statements and informational disclosures may include a discussion of each sister company as part of a larger parent. In others, it may be necessary to dig to find out who owns the companies and to learn more about the nature of their relationship. For parent companies, there can be advantages in not branding their subsidiaries with their name, like attracting consumers who may be trying to avoid the parent company, or might be attempting to visit more independent businesses.