A subsidiary is a smaller company owned by a larger one.
Subsidiaries are created for a variety of reasons. Sometimes it is easier to comply with laws of a state or country with a subsidiary incorporated in that locality. Sometimes subsidiaries are used to downplay the big name ownership of the operation. Liability, union issues, lender requirements, organizational styles, even training ground for executives are sometimes considerations in the decisions. Most major companies are in fact composed of a number of individual corporations for various purposes.