LeoGlossary: Conglomerate (Company)
A conglomerate is a multi-industry company that with multiple business entities under one corporation. This is often a parent or holding company and many subsidiaries.
Conglomerates are often large and operate in many difference countries. It is the result of mergers or acquisitions made over time.
One of the main advantages of a conglomerate is that it allows for diversification in goods and services into unrelated industries. This not only provides a hedge against a decline in specific sectors of the economy, it also allows the company to reach more customers.
The main disadvantage is that a company could be spread too thin and not utilize its resources in the best way.
Success
Examples of successful conglomerates are Berkshire Hathaway and Honeywell. These were able to bring companies together from different industries and merge them into one single parent company.
The key is to have cohesion by establishing a set of operating standards and expectations throughout the new entities. Companies that excel in this arena have protocols in place to integrate new acquisitions in a seamless manner.
It does carry some risk and reward depending upon the company.
General:
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