What Is a Conglomerate?

What Is a Conglomerate?

By Charles Joseph | Editor, Financial Affairs
Reviewed by Corey Michael | Senior Financial Analyst

A conglomerate is a large corporation or group of companies that operates in diverse industries or sectors. These companies are often the product of mergers and acquisitions. The idea behind forming a conglomerate is risk reduction; by having operations in various fields, the company becomes less vulnerable to losses in any one sector. Despite the diversity of sectors, all companies under a conglomerate are owned and controlled by one single corporate group.

Related Questions

1. What is an example of a conglomerate?

An example of a conglomerate is Berkshire Hathaway Inc. This American multinational conglomerate holding company owns a multitude of businesses like Geico, Duracell, Fruit of the Loom and part of Heinz Ketchup.

2. How does a conglomerate benefit a business?

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A conglomerate can provide a business with advantages like sharing resources, diversifying risk, cross-promoting products, and expanding its market.

3. Can a conglomerate contain companies in the same industry?

Yes, while conglomerates often operate in multiple sectors, they can contain companies in the same industry. This is particularly common in media conglomerates, where multiple outlets serving similar markets are owned by the same entity.

4. How is a conglomerate different from a corporation?

A corporation is a single business entity, while a conglomerate is a group of two or more corporations, operating in diverse industries, under one umbrella partnership or corporate structure.

5. Who controls a conglomerate?

A conglomerate is typically controlled by a parent company. This parent group has ownership and control over all the various individual companies that form the conglomerate.