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What is a Satellite Operation?

By Anna B. Smith
Updated May 17, 2024
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A satellite operation is an office that is part of a larger business organization, but functions in a separate location. The two primary benefits of maintaining this type of operation are the ability to save money and the convenience of local representation. Through the use of these remote locations, corporations can create offices in multiple locations without substantially increasing operational costs. They can also maintain a presence wherever they do business.

A satellite operation is often equipped with access to the main company intranet, phone system, and email server. This is a benefit for companies that employ traveling businesspeople. Employees may access their email and remain in constant contact with their supervisors without the necessity of meeting face to face.

Allowing employees to remain local saves money when hiring new people. For instance, when a company finds a new employee it wishes to hire, it may employ that person from his home city without the expense of offering a relocation package. This typically includes moving expenses and even the closing costs associated with the new worker purchasing a new home in the city in which the business is headquartered.

Employees located remotely may also save the company on travel expenses because satellite employees can move exclusively within their local region. The expense of a worker traveling within a 100-mile radius of his home office will typically be lower than that incurred if the same employee from company headquarters to different meeting sites, potentially 1,000 miles away or more.

This type of operation is also frequently utilized by companies with foreign offices. A company can retain headquarters in one part of the world and operate multiple satellite offices in other countries. These remote locations do not require the costs of maintaining a large office complex, but can represent the company locally and make business deals on its behalf.

When corporations create a satellite operation in a foreign country, they receive the added benefit of obtaining employees familiar with local customs. These workers may maintain their nationality while working for a company in another country. They generally have a fuller understanding of local business dealings, and can bring local contacts to the foreign company to grow its customer base.

The use of a satellite operation is also often employed by manufacturing companies. A company that manufactures its own products may maintain corporate headquarters in one country while setting up factories and distribution centers in those to which it most often exports. Ikea®, the furniture company, for example, has corporate headquarters in the Netherlands but retains dozens of distribution facilities around the world. The company may save on shipping costs and provide a higher quality product by avoiding long transportation routes and delivery times.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
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