Definition and Function
An operating company does all the trading – selling products, entering into contracts, hiring employees. A holding company holds the business’ assets such as real estate and intellectual property. Suppose that Company C owns Company D. Company C is a holding company, if more than 50 percent of its income derives from its investment in Company D. Company C is an operating company if it makes 30 percent of its income from Company D and 70 percent from Company C’s own operations.
Key operating activities for a company include manufacturing, sales, advertising, and marketing activities. The operating income shown on a company’s financial statements is the operating profit remaining after deducting operating expenses from operating revenues.
Operations Management
Operations management focuses on managing all aspects of an organization’s operations. An operations team may consist of production, inventory management, quality control, and other roles. The operations team reports to the Chief Operating Officer.
With digital products, monitoring processes and updating software is key to streamlining collaboration between teams. Attention should be paid to outsourcing: what should employees spend time on versus what should be left to experts. Optimal operations means continually improving how the business is run.
Emergency Response Procedures
Each operating company shall establish written procedures that will provide instructions to appropriate operating personnel who will minimize the hazard resulting from a gas pipeline emergency. The procedures shall provide a system for receiving, identifying, and classifying emergencies that require response by the operating company. The procedures shall indicate clearly the responsibility for instructing employees in the procedures listed in the emergency plans and for training employees.
Opco/Propco Strategy
In an opco/propco deal strategy, companies are divided into at least an operating company and a property company in order to improve the finances of both prospects. REITs do not need to operate the properties. The operating company does all the trading while the property company owns assets such as real estate.