Editing Conglomerate (company)

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A '''conglomerate''' ({{IPAc-en|k|ə|ŋ|ˈ|ɡ|l|ɒ|m|ə|r|ə|t}}) is a type of '''multi-industry company''' that consists of several different and unrelated [[List of legal entity types by country|business entities]] that operate in various industries. A conglomerate usually has a [[Holding company|parent company]] that owns and controls many [[Subsidiary|subsidiaries]], which are legally independent but financially and strategically dependent on the parent company. Conglomerates are often large and [[Multinational corporation|multinational corporations]] that have a global presence and a diversified portfolio of products and services. Conglomerates can be formed by [[merger and acquisition]]s, [[Corporate spin-off|spin-offs]], or [[joint venture]]s.

Conglomerates are common in many countries and sectors, such as [[Media (communication)|media]], [[Finance|banking]], [[Energy industry|energy]], [[mining]], [[manufacturing]], [[retail]], [[Arms industry|defense]], and [[transportation]]. This type of organization aims to achieve [[economies of scale]], market power, [[Risk management|risk diversification]], and financial synergy. However, they also face challenges such as complexity, [[bureaucracy]], agency problems, and [[Government regulation|regulation]].<ref name=":0" />

The popularity of conglomerates has varied over time and across regions. In the [[United States]], conglomerates became popular in the 1960s as a form of [[economic bubble]] driven by low interest rates and leveraged buyouts.<ref>{{Cite web |title=Conglomerate Boom: What It Is, How It Works, Example |url=https://www.investopedia.com/terms/c/conglomerate-boom.asp |access-date=2024-05-16 |website=Investopedia |language=en}}</ref> However, many of them collapsed or were broken up in the 1980s due to poor performance, accounting scandals, and [[antitrust]] regulation.<ref>{{Cite journal |last1=Davis |first1=Gerald F. |last2=Diekmann |first2=Kristina A. |last3=Tinsley |first3=Catherine H. |date=1994 |title=The Decline and Fall of the Conglomerate Firm in the 1980s: The Deinstitutionalization of an Organizational Form |url=https://www.jstor.org/stable/2095931 |journal=[[American Sociological Review]] |volume=59 |issue=4 |pages=547–570 |doi=10.2307/2095931 |jstor=2095931 |issn=0003-1224|url-access=subscription }}</ref> In contrast, conglomerates have remained prevalent in Asia, especially in [[Greater China|China]], [[Japan]], [[South Korea]], and [[India]]. In [[mainland China]], many [[State-owned enterprises of China|state-affiliated enterprises]] have gone through high value [[mergers and acquisitions]], resulting in some of the [[List of largest mergers and acquisitions#State-owned enterprises|highest value business transactions]] of all time. These conglomerates have strong [[Crony capitalism|ties with the government]] and preferential policies and access to capital.<ref name=":0">{{Cite web |last=Chen |first=James |date=July 31, 2023 |title=Conglomerate |url=https://www.investopedia.com/terms/c/conglomerate.asp#:~:text=A%20conglomerate%20is%20a%20corporation%20made%20up%20of%20several%20different,ways%2C%20including%20mergers%20or%20acquisitions. |access-date=2023-11-23 |website=Investopedia |language=en}}</ref>

==United States==
===The conglomerate fad of the 1960s===
During the 1960s, the United States was caught up in a "conglomerate [[fad]]" which turned out to be a form of an [[economic bubble]].<ref name="Carlisle_Page107">{{cite book |last1=Carlisle |first1=Tobias E. |title=Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations |date=2014 |publisher=John Wiley & Sons |location=Hoboken, NJ |isbn=9781118747964 |page=107 |url=https://books.google.com/books?id=Nf38AwAAQBAJ&pg=PA107 |access-date=September 29, 2020}}</ref>

Due to a combination of low interest rates and a repeating [[bear-bull market]], conglomerates were able to buy smaller companies in [[leveraged buyout]]s (sometimes at temporarily deflated values).<ref name="Gilmore">{{cite news |last1=Gilmore |first1=Nicholas |title=The Forgotten History of How 1960s Conglomerates Derailed the American Dream |url=https://www.saturdayeveningpost.com/2018/11/the-forgotten-history-of-how-1960s-conglomerates-derailed-the-american-dream/ |access-date=September 28, 2020 |work=The Saturday Evening Post |publisher=Saturday Evening Post Society |date=November 1, 2018 |location=Indianapolis}}</ref> Famous examples from the 1960s include [[Gulf and Western Industries]],<ref name="Holland1989pp57-64,81-86">{{Harvnb|Holland|1989|pp=57–64, 81–86}}.</ref> [[Ling-Temco-Vought]],<ref name="Holland1989pp57-64,81-86"/>  [[ITT Corporation]],<ref name="Holland1989pp57-64,81-86"/> [[Litton Industries]],<ref name="Holland1989pp57-64,81-86"/> [[Textron]],<ref name="Holland1989pp57-64,81-86"/> and [[Teledyne]].<ref name="Holland1989pp57-64,81-86"/> The trick was to look for acquisition targets with solid earnings and much lower [[price–earnings ratio]]s than the acquirer.<ref name="Coxe_Page14">{{cite book |last1=Coxe |first1=Donald |title=The New Reality of Wall Street |date=2003 |publisher=McGraw-Hill |location=New York |isbn=9780071436311 |page=14 |url=https://books.google.com/books?id=whXvGI4m9m8C&pg=PA14 |access-date=October 11, 2020}}</ref><ref name="Carlisle_Page102">{{cite book |last1=Carlisle |first1=Tobias E. |title=Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations |date=2014 |publisher=John Wiley & Sons |location=Hoboken, NJ |isbn=9781118747964 |page=102 |url=https://books.google.com/books?id=Nf38AwAAQBAJ&pg=PA102 |access-date=September 29, 2020}}</ref> The conglomerate would make a [[tender offer]] to the target's shareholders at a princely premium to the target's current stock price.  Upon obtaining shareholder approval, the conglomerate usually settled the transaction in something other than cash, like [[debenture]]s, [[Bond (finance)|bond]]s, [[Warrant (finance)|warrants]] or [[convertible bond|convertible debentures]] (issuing the latter two would effectively dilute its shareholders down the road, but many shareholders at the time were not thinking that far ahead).<ref name="Brooks_Page161">{{cite book |last1=Brooks |first1=John |title=The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s |date=1973 |publisher=Allworth Press |location=New York |isbn=9780471357551 |page=161 |url=https://books.google.com/books?id=cEDFRo4Kab0C&pg=PA161 |access-date=September 28, 2020}}</ref> The conglomerate would then add the target's earnings to its earnings, thereby increasing the conglomerate's overall [[earnings per share]].<ref name="Carlisle_Page102" /> In finance jargon, the transaction was "[[Accretion (finance)|accretive]] to earnings."<ref name="Coxe_Page14" /> 

The relatively lax accounting standards of the time meant that accountants were often able to get away with creative mathematics in calculating the conglomerate's post-acquisition consolidated earnings numbers.<ref name="Brooks_Page158">{{cite book |last1=Brooks |first1=John |title=The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s |date=1973 |publisher=Allworth Press |location=New York |isbn=9780471357551 |page=158 |url=https://books.google.com/books?id=cEDFRo4Kab0C&pg=PA158 |access-date=September 28, 2020}}</ref> In turn, the price of the conglomerate's stock would go up, thereby re-establishing its previous price-earnings ratio, and then it could repeat the whole process with a new target.<ref name="Carlisle_Page102" /><ref name="Brooks_Page158" /> In plain English, conglomerates were using rapid acquisitions to create the illusion of rapid growth.<ref name="Carlisle_Page102" /> In 1968, the peak year of the conglomerate fad, U.S. corporations completed a record number of mergers: approximately 4,500.<ref name="Brooks_Page154">{{cite book |last1=Brooks |first1=John |title=The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s |date=1973 |publisher=Allworth Press |location=New York |isbn=9780471357551 |page=154 |url=https://books.google.com/books?id=cEDFRo4Kab0C&pg=PA154 |access-date=September 28, 2020}}</ref> In that year, at least 26 of the country's 500 largest corporations were acquired, of which 12 had assets above $250&nbsp;million.<ref name="Brooks_Page154" />

All this complex company reorganization had very real consequences for people who worked for companies that were either acquired by conglomerates or were seen as likely to be acquired by them.  Acquisitions were a disorienting and demoralizing experience for executives at acquired companies—those who were not immediately [[layoff|laid off]] found themselves at the mercy of the conglomerate's executives in some other distant city.<ref name="Brooks_Page177">{{cite book |last1=Brooks |first1=John |title=The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s |date=1973 |publisher=Allworth Press |location=New York |isbn=9780471357551 |page=177 |url=https://books.google.com/books?id=cEDFRo4Kab0C&pg=PA177 |access-date=September 28, 2020}}</ref> Most conglomerates' headquarters were located on the [[West Coast of the United States|West Coast]] or [[East Coast of the United States|East Coast]], while many of their acquisitions were located in the country's interior.<ref name="Brooks_Page177" /> Many interior cities were devastated by repeatedly losing the headquarters of corporations to mergers, in which independent ventures were reduced to subsidiaries of conglomerates based in New York or Los Angeles.<ref name="Brooks_Page177" /> Pittsburgh, for example, lost about a dozen.<ref name="Brooks_Page177" /> The terror instilled by the mere prospect of such harsh consequences for executives and their home cities meant that fending off takeovers, real or imagined, was a constant distraction for executives at all corporations seen as choice acquisition targets during this era.<ref name="Brooks_Page175">{{cite book |last1=Brooks |first1=John |title=The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s |date=1973 |publisher=Allworth Press |location=New York |isbn=9780471357551 |page=175 |url=https://books.google.com/books?id=cEDFRo4Kab0C&pg=PA175 |access-date=September 28, 2020}}</ref>

The chain reaction of rapid growth through acquisitions could not last forever. When interest rates rose to offset rising inflation, conglomerate profits began to fall.  The beginning of the end came in January 1968, when Litton shocked Wall Street by announcing a quarterly profit of only 21 cents per share, versus 63 cents for the previous year's quarter.<ref name="Brooks_Page181">{{cite book |last1=Brooks |first1=John |title=The Go-Go Years: The Drama and Crashing Finale of Wall Street's Bullish 60s |date=1973 |publisher=Allworth Press |location=New York |isbn=9780471357551 |page=181 |url=https://books.google.com/books?id=cEDFRo4Kab0C&pg=PA181 |access-date=September 28, 2020}}</ref> This was "just a decline in earnings of about 19 percent", not an actual loss or a corporate scandal, and "yet the stock was crushed, plummeting from $90 to $53".<ref name="Carlisle_Page107" />  It would take two more years before it was clear that the conglomerate fad was on its way out.<ref name="Brooks_Page181" /> The stock market eventually figured out that the conglomerates' bloated and inefficient businesses were as cyclical as any others—indeed, it was that cyclical nature that had caused such businesses to be such undervalued acquisition targets in the first place<ref name="Coxe_Page14" />—and their descent put "the lie to the claim that diversification allowed them to ride out a downturn."<ref name="Carlisle_Page106">{{cite book |last1=Carlisle |first1=Tobias E. |title=Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations |date=2014 |publisher=John Wiley & Sons |location=Hoboken, NJ |isbn=9781118747964 |page=106 |url=https://books.google.com/books?id=Nf38AwAAQBAJ&pg=PA106 |access-date=September 29, 2020}}</ref> A major selloff of conglomerate shares ensued.<ref name="Coxe_Page15">{{cite book |last1=Coxe |first1=Donald |title=The New Reality of Wall Street |date=2003 |publisher=McGraw-Hill |location=New York |isbn=9780071436311 |page=14 |url=https://books.google.com/books?id=whXvGI4m9m8C&pg=PA15 |access-date=October 11, 2020}}</ref> To keep going, many conglomerates were forced to shed the new businesses they had recently purchased, and by the mid-1970s most conglomerates had been reduced to shells.<ref>{{cite web |url=http://www.referenceforbusiness.com/history2/49/Hitachi-Ltd.html |title= Hitachi Ltd – Company Profile; Information, Business Description, History, Background Information on Hitachi, Ltd |access-date=2010-08-25 |url-status=live |archive-url=https://web.archive.org/web/20100212035433/http://www.referenceforbusiness.com/history2/49/Hitachi-Ltd.html |archive-date=2010-02-12}}</ref> The conglomerate fad was subsequently replaced by newer ideas like focusing on a company's [[core competency]]<ref name="Sherman_Page_155">{{cite book |last1=Sherman |first1=Andrew J. |title=Mergers and Acquisitions from A to Z |date=2018 |publisher=AMACOM Books |location=New York |isbn=9780814439036 |page=155 |edition=4th |url=https://books.google.com/books?id=KD9RDwAAQBAJ&pg=PA155 |access-date=June 19, 2024}}  Google Books incorrectly indicates that this book was authored by Thomas Nelson, but the first page of this work indicates that the correct author is Andrew J. Sherman.</ref> and unlocking [[shareholder value]] (which often translate into [[Corporate spin-off|spin-off]]s).<ref name="Christensen_Page_243">{{cite book |last1=Christensen |first1=Clayton M. |last2=Raynor |first2=Michael E. |author1-link=Clayton Christensen |author2-link=Michael E. Raynor |title=The Innovator's Solution: Creating and Sustaining Successful Growth |date=2003 |publisher=Harvard Business Review Press |location=Boston |isbn=9781422196571 |page=243 |url=https://books.google.com/books?id=I5nBAgAAQBAJ&pg=PA243 |access-date=June 19, 2024}}</ref>

===Genuine diversification===
In other cases, conglomerates are formed for genuine interests of [[Diversification (marketing strategy)|diversification]] rather than manipulation of paper return on investment. Companies with this orientation would only make acquisitions or start new branches in other sectors when they believed this would increase profitability or stability by sharing risks. Flush with cash during the 1980s, [[General Electric]] also moved into financing and [[financial services]], which in 2005 accounted for about 45% of the company's net earnings. GE formerly owned a minority interest in [[NBCUniversal]], which owns the [[NBC]] television network and several other [[cable network]]s. [[United Technologies Corporation|United Technologies]] was also a successful conglomerate until it was dismantled in the late 2010s.

===Mutual funds===
With the spread of [[mutual fund]]s (especially [[index fund]]s since 1976), investors could more easily obtain diversification by owning a small slice of many companies in a fund rather than owning shares in a conglomerate. Another example of a successful conglomerate is [[Warren Buffett]]'s [[Berkshire Hathaway]], a [[holding company]] which used surplus capital from its insurance subsidiaries to invest in businesses across a variety of industries.

==International==
The end of the [[First World War]] caused a brief economic crisis in [[Weimar Germany]], permitting entrepreneurs to buy businesses at rock-bottom prices. The most successful, [[Hugo Stinnes]], established the most powerful private economic conglomerate in 1920s Europe – Stinnes Enterprises – which embraced sectors as diverse as manufacturing, mining, shipbuilding, hotels, newspapers, and other enterprises.

The best-known British conglomerate was [[Hanson plc]]. It followed a rather different timescale than the U.S. examples mentioned above, as it was founded in 1964 and ceased to be a conglomerate when it split itself into four separate listed companies between 1995 and 1997.

In Hong Kong, some of the well-known conglomerates such as:
* [[Swire Group]] (AD1816) (or Swire Pacific) Started by Liverpool natives the Swire family, which controls a wide range of businesses, including property ([[Swire Properties]]), aviation (i.e. [[Cathay Pacific]]), beverages (bottler of [[Coca-Cola]]), shipping and trading.
* [[Jardine Matheson]] (AD1824) operates businesses in the fields of property ([[Hongkong Land]]), finance ([[Jardine Lloyd Thompson]]), trading, retail ([[Dairy Farm]]) and hotels (i.e. [[Mandarin Oriental]]).
*[[CK Hutchison Holdings|CK Hutchison Holdings Limited]]: Telecoms, Infrastructure, Ports (i.e. [[Hongkong International Terminals]], [[River Trade Terminal]]), Health and Beauty Retail (i.e. [[AS Watson]]), Energy, Finance
* [[The Wharf (Holdings)]]: Telecoms (formerly [[i-Cable Communications]]), Retail, Transportation (i.e. [[Modern Terminals]]), Finance, Hotels (i.e. [[Marco Polo Hotels]])

In Japan, a different model of conglomerate, the ''[[keiretsu]]'', evolved.  Whereas the Western model of conglomerate consists of a single corporation with multiple subsidiaries controlled by that corporation, the companies in a keiretsu are linked by interlocking shareholdings and a central role of a bank. [[Mitsui]], [[Mitsubishi]], [[Sumitomo]] are some of Japan's best-known keiretsu, reaching from automobile manufacturing to the production of electronics such as televisions. While not a keiretsu, [[Sony]] is an example of a modern Japanese conglomerate with operations in [[consumer electronics]], [[Sony Interactive Entertainment|video games]], the [[Sony Music|music industry]], [[Sony Pictures Entertainment|television and film production and distribution]], [[Sony Financial Holdings|financial services]], and [[So-net|telecommunications]].

In China, many of the country's conglomerates are [[Government-owned corporation|state-owned enterprises]], but there is a substantial number of private conglomerates. Notable conglomerates include [[BYD Company|BYD]], [[CIMC]], [[China Merchants Bank]], [[Huawei]], [[JXD]], [[Meizu]], [[Ping An Insurance]], [[TCL Corporation|TCL]], [[Tencent]], [[TP-Link]], [[ZTE]], [[Legend Holdings]], [[Dalian Wanda Group]], [[China Poly Group]], [[Beijing Enterprises]], and [[Fosun International Limited|Fosun International]]. Fosun is currently China's largest [[civilian-run enterprise|civilian-run]] conglomerate by revenue.<ref>{{cite news|last=Tsui|first=Enid|title=China conglomerate Fosun to scour for deals with $1bn fund|url=http://www.ft.com/intl/cms/s/0/5d98efb2-bb82-11e1-90e4-00144feabdc0.html |archive-url=https://ghostarchive.org/archive/20221210/http://www.ft.com/intl/cms/s/0/5d98efb2-bb82-11e1-90e4-00144feabdc0.html |archive-date=December 10, 2022 |url-access=subscription |url-status=live|newspaper=Financial Times|date=June 24, 2012}}</ref>

In [[South Korea]], the ''[[chaebol]]'' is a type of conglomerate owned and operated by a family. A chaebol is also inheritable, as most of the current presidents of chaebols succeeded their fathers or grandfathers. Some of the largest and most well-known Korean chaebols are [[Samsung]], [[LG Group|LG]], [[Hyundai Kia Automotive Group|Hyundai Kia]] and [[SK Group|SK]].

In India, family-owned enterprises became some of Asia's largest conglomerates, such as the [[Aditya Birla Group]], [[Tata Group]], [[Emami]],  [[Kirloskar Group]], [[Larsen & Toubro]], [[Mahindra Group]], [[Bajaj Group]], [[ITC Limited]], [[Essar Group]], [[Reliance Industries Limited|Reliance Industries]], [[Adani Group]] and the [[Bharti Enterprises]].
 
In Brazil the largest conglomerates are [[J&F Investimentos]], [[Odebrecht]], [[Itaúsa]], [[Camargo Corrêa]], [[Votorantim Group]], [[Andrade Gutierrez]], and Queiroz Galvão.

In Turkey the largest conglomerates are [[Koç Holding]], [[Sabancı Holding]], [[Yıldız Holding]], [[Çukurova Holding]], [[Doğuş Holding]], [[Doğan Holding]].

In New Zealand, [[Fletcher Challenge]] was formed in 1981 from the merger of [[Fletcher Building|Fletcher Holdings]], Challenge Corporation, and Tasman Pulp & Paper, in an attempt to create a New Zealand-based multi-national company. At the time, the newly merged company dealt in construction, building supplies, pulp and paper mills, forestry, and oil & gas. Following a series of bungled investments, the company demerged in the early 2000s to concentrate on building and construction.

In [[Pakistan]], some of the examples are [[Adamjee Group]], [[Dawood Hercules]], [[House of Habib]], [[Lakson Group]] and [[Nishat Group]].

In the [[Philippines]], the largest conglomerate of the country is the [[Ayala Corporation]] which focuses on [[Ayala Malls|malls]], [[Bank of the Philippine Islands|bank]], [[Ayala Land|real estate development]], and [[Globe Telecom|telecommunications]]. The other big conglomerates in the Philippines included [[JG Summit Holdings]], [[Lopez Holdings Corporation]], [[ABS-CBN Corporation]], [[GMA Network (company)|GMA Network, Inc.]], [[MediaQuest Holdings]], [[TV5 Network|TV5 Network, Inc.]],
[[SM Investments Corporation]], [[Metro Pacific Investments Corporation]], and [[San Miguel Corporation]].

In the United States, some of the examples are [[The Walt Disney Company]], [[Warner Bros. Discovery]] and [[The Trump Organization]] (see below).

In Canada, one of the examples is [[Hudson's Bay Company]]. Another such conglomerate is [[J.D. Irving, Limited]], which controls a large portion of the economic activities as well as media in the [[Province of New Brunswick]].

==Advantages and disadvantages of conglomerates==
{{pro con|section|date=March 2017}}

===Advantages===
*Diversification results in a reduction of investment risk. A downturn suffered by one subsidiary, for instance, can be counterbalanced by stability, or even expansion, in another division. For example, if Berkshire Hathaway's construction materials business has a good year, the profit might be offset by a bad year in its insurance business. This advantage is enhanced by the fact that the business cycle affects industries in different ways. 
*A conglomerate creates an internal [[capital market]] if the external one is not developed enough. Through the internal market, different parts of the conglomerate allocate capital more effectively.
*A conglomerate can show earnings growth, by acquiring companies whose shares are more discounted than its own. In fact, [[Teledyne]], [[General Electric|GE]], and [[Berkshire Hathaway]] have delivered high earnings growth for a time.<ref>{{cite web |url=http://www.investopedia.com/articles/basics/06/conglomerates.asp |title=Conglomerates: Cash Cows or Corporate Chaos? |access-date=2009-05-28 |url-status=live |archive-url=https://web.archive.org/web/20090413022751/http://www.investopedia.com/articles/basics/06/conglomerates.asp |archive-date=2009-04-13 }}</ref>

===Disadvantages===
* The extra layers of management increase costs.<ref>{{cite news| url=http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2527470.ece| title=BP to strip out four layers of management| date=September 25, 2007| author=Dearbail Jordan and Robin Pagnamenta| work=The Times| url-status=dead| archive-url=https://web.archive.org/web/20110612141605/http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2527470.ece| archive-date=June 12, 2011}}</ref>
* Accounting disclosure is less useful information, many numbers are disclosed grouped, rather than separately for each business.  The complexity of a conglomerate's accounts makes it harder for managers, investors, and regulators to analyze and makes it easier for management to hide issues.
* Conglomerates can trade at a discount to the overall individual value of their businesses because investors can achieve diversification on their own simply by purchasing multiple stocks. The whole is often worth less than the sum of its parts.
* Culture clashes can destroy value.<ref>{{cite news| url=http://news.bbc.co.uk/2/hi/business/607338.stm| title=Culture clash: The risks of mergers| date=January 17, 2000| work=BBC News| url-status=live| archive-url=https://web.archive.org/web/20090602063140/http://news.bbc.co.uk/2/hi/business/607338.stm| archive-date=June 2, 2009}}</ref><ref>{{cite journal| title=Surviving Post-merger 'Culture Clash': Can Cultural Leadership Lessen the Casualties?| author=Michelle C. Bligh| journal=Leadership| volume=2| issue=4| pages=395–426| year=2006| doi=10.1177/1742715006068937| s2cid=146156535}}</ref>
* Inertia prevents the development of innovation.<ref>{{cite web | url=http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1319 | title=Innovation and Inertia | work=Stanford University's Entrepreneurship Center | url-status=live | archive-url=https://web.archive.org/web/20090801221352/http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1319 | archive-date=2009-08-01 }}</ref>
* Lack of focus, and inability to manage unrelated businesses equally well.<ref>{{cite web |url=http://moneyterms.co.uk/conglomerate/ |title=Conglomerate |access-date=2009-05-28 |url-status=live |archive-url=https://web.archive.org/web/20090811061808/http://moneyterms.co.uk/conglomerate/ |archive-date=2009-08-11}}</ref>
* [[Brand#Brand extension and brand dilution|Brand dilution]] where the brand loses its brand associations with a market segment, product area, or quality, price, or cachet.
* Conglomerates more easily run the risk of being [[too big to fail]].

Some cite the decreased cost of conglomerate stock (a phenomenon known as [[conglomerate discount]]) as evidential of these disadvantages, while other traders believe this tendency to be a [[market inefficiency]], which undervalues the true strength of these stocks.<ref>{{cite web |url=http://www.investopedia.com/terms/c/conglomeratediscount.asp |title=Conglomerate Discount |access-date=2015-03-31 |url-status=live |archive-url=https://web.archive.org/web/20150330060326/http://www.investopedia.com/terms/c/conglomeratediscount.asp |archive-date=2015-03-30 }}</ref>

==Media conglomerates==
{{main|Media conglomerate}}
{{further|Concentration of media ownership}}
<!-- Question: are these media companies really conglomerates in the sense of the definition, that their businesses are unrelated?--> 
In her 1999 book ''[[No Logo]]'', [[Naomi Klein]] provides several examples of [[mergers and acquisitions]] between media companies designed to create '''conglomerates''' to create [[synergy]] between them:
*[[WarnerMedia]] included several tenuously linked businesses during the 1990s and 2000s, including Internet access, content, film, cable systems, and television. Their diverse portfolio of assets allowed for cross-promotion and [[economies of scale]]. However, the company has sold or spun off many of these businesses – including [[Warner Music Group]], [[Warner Books]], [[AOL]], [[Time Warner Cable]], and [[Time Inc.]] – since 2004.
*[[Clear Channel Communications]], a public company, at one point owned a variety of TV and radio stations and [[billboard]] operations, together with many concert venues across the US and a diverse portfolio of assets in the UK and other countries around the world. The concentration of [[bargaining power]] in this one entity allowed it to gain better deals for all of its business units. For example, the promise of playlisting (allegedly, sometimes, coupled with the threat of blacklisting) on its radio stations was used to secure better deals from artists performing in events organized by the entertainment division. These policies have been attacked as unfair and even [[Monopoly|monopolistic]], but are a clear advantage of the conglomerate strategy. On December 21, 2005, Clear Channel completed the divestiture of [[Live Nation]], and in 2007 the company divested their television stations to other firms, some of which Clear Channel holds a small interest in. Live Nation owns the events and concert venues previously owned by Clear Channel Communications.
* '''Impact of conglomerates on the media''': The four major media conglomerates in the United States are [[The Walt Disney Company]], [[Comcast]], [[Warner Bros. Discovery]] and [[Paramount Global]]. The Walt Disney Company is linked with the [[American Broadcasting Company (ABC)]], creating the largest media corporation, with revenue equal to roughly thirty six billion dollars. Since Walt Disney owns ABC, it controls its news and programming. Walt Disney also acquired most of Fox, for over $70&nbsp;billion. When [[General Electric]] owned NBC, it did not allow negative reporting against General Electric on air ([[NBCUniversal]] is now owned by Comcast).<ref>{{Cite web |last=Street |first=The |title=How Comcast 'Stole' NBCUniversal From General Electric |url=https://www.forbes.com/sites/thestreet/2013/02/13/how-comcast-stole-nbcuniversal-from-general-electric/ |access-date=2024-12-13 |website=Forbes |language=en}}</ref> Viacom merged with CBS in 2019 as [[ViacomCBS]] (now [[Paramount Global]]) after originally merged in 2000 with Viacom as the surviving company while also Viacom divested CBS in 2006 due to [[FCC]] regulations as the time.

===Internet conglomerates===
A relatively new development, Internet conglomerates, such as [[Alphabet Inc.|Alphabet]], Google's parent company<ref>{{cite web|url=https://googleblog.blogspot.com/2015/08/google-alphabet.html|title=G is for Google|website=googleblog.blogspot.com|date=August 10, 2015|access-date=May 2, 2018|url-status=live|archive-url=https://web.archive.org/web/20180409234154/https://googleblog.blogspot.com/2015/08/google-alphabet.html|archive-date=April 9, 2018}}</ref> belong to the modern media conglomerate group and play a major role within various industries, such as [[brand management]]. In most cases, Internet conglomerates consist of corporations that own several medium-sized online or hybrid online-offline projects. In many cases, newly joined corporations get higher [[return on investment|returns on investment]], access to business contacts, and better rates on loans from various banks.<ref>{{Cite web |title=What Are the Sources of Funding Available for Companies? |url=https://www.investopedia.com/ask/answers/03/062003.asp |access-date=2024-12-13 |website=Investopedia |language=en}}</ref>

==Food conglomerates==
Similar to other industries, many food companies can be termed as conglomerates.
* The [[Altria|Philip Morris group]], which once was the parent company of [[Altria]] group, [[Philip Morris International]], and [[Kraft Foods]], had an annual combined turnover of $80 bn. Phillip Morris International and Kraft Foods later spun off into independent companies.
*[[Nestlé]]

==See also==
{{columns-list|colwidth=35em|
* [[List of conglomerates]]
* [[Media conglomerate]]
* [[Big Tech]]
* [[Concern (business)]]
* [[Consolidation (business)]]
* [[Conglomerate discount]]
* [[Holding company]]
* [[Subsidiary]]
* [[Associate company]]
* [[Chaebol]]
* [[Keiretsu]]
* [[Zaibatsu]]
* [[Multi-divisional form]]
* [[Mergers and acquisitions]]
* ''[[ITT: The Management of Opportunity]]''
}}

==References==
{{Reflist|2}}

==Bibliography==
* {{Holland1989}}
* McDonald, Paul and Wasko, Janet (2010), ''The Contemporary Hollywood Film Industry'', [[Blackwell Publishing]] Ltd. {{ISBN|978-1-4051-3388-3}}

==External links==
{{wiktionary|conglomerate}}
* [https://www.britannica.com/EBchecked/topic/132310/conglomerate "Conglomerate"]. ''[[Encyclopædia Britannica]]''. 2007. Encyclopædia Britannica Online. November 17, 2007.
* {{usurped|1=[https://web.archive.org/web/20070928060803/http://luminouslogic.com/conglomerate-earnings-growth.htm Conglomerate Monkeyshines]}} – an example of how conglomerates were used in the 1960s to manufacture earnings growth

{{Business organizations}}
{{Authority control}}
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[[Category:Types of business entity]]
[[Category:Conglomerate companies| ]]