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- DictionaryCon·glom·er·ate
noun
- 1. a number of different things or parts that are put or grouped together to form a whole but remain distinct entities: "the Earth is a specialized conglomerate of organisms"
- 2. a coarse-grained sedimentary rock composed of rounded fragments (> 2 mm) within a matrix of finer grained material: "the sediments vary from coarse conglomerate to fine silt and clay"
adjective
- 1. relating to a conglomerate, especially a large corporation: "conglomerate businesses"
verb
- 1. gather together into a compact mass: "atoms that conglomerate at the center"
Learn the meaning of conglomerate as an adjective, verb, and noun, with synonyms, examples, and word history. Find out how to use conglomerate in different contexts, such as rock, corporation, or mixture.
noun. anything composed of heterogeneous materials or elements. a corporation consisting of a number of subsidiary companies or divisions in a variety of unrelated industries, usually as a result of merger or acquisition. Geology. a rock consisting of pebbles or the like embedded in a finer cementing material; consolidated gravel. adjective.
A conglomerate is a large company that owns several smaller businesses or a rock that consists of small stones and clay. Learn more about the meaning, usage and synonyms of conglomerate with Cambridge Dictionary.
A conglomerate is a company that owns several smaller businesses or a rock that consists of small, rounded stones. Learn more about the meaning, usage and synonyms of conglomerate with Cambridge Dictionary.
- What Is a Conglomerate?
- Understanding Conglomerates
- How Conglomerates Come to Exist
- Benefits of Conglomerates
- Disadvantages of Conglomerates
- Examples of Conglomerates
- Conglomerates in the 1960s
- Foreign Conglomerates
- What Company Is the Biggest Conglomerate?
- Is Facebook a Conglomerate?
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A conglomerate is a corporation of several different, sometimes unrelated, businesses. In a conglomerate, one company owns a controlling stake in several smaller companies, conducting business separately and independently.
Conglomerates often diversify business risk by participating in many different markets, although some conglomerates, such as those in mining, elect to participate in a single sector industry. Economists, however, warn that large and far-flung conglomerates can become inefficient and costly to maintain, eroding value for
A conglomerate is a corporation made up of several different, independent businesses.
In a conglomerate, one company owns a controlling stake in smaller companies that each conduct business operations separately.
Conglomerates can be created in several ways, including mergers or acquisitions.
The parent company can cut back the risks from being in a single market by becoming a conglomerate diversified across several industry sectors.
made up of smaller independent entities that may operate across multiple industries. Each of a conglomerate's
businesses runs independently of the other business divisions; but, the subsidiaries' managers report to the senior management of the parent company. Many conglomerates are thus multinational and multi-industry corporations.
Taking part in many different businesses can help a conglomerate company diversify the risks posed by being in a single market. Doing so may also help the parent lower total operating costs and require fewer resources. But, there are also times when such a company grows too large and loses efficiency. To deal with this, the conglomerate may divest. This is known as the conglomerate "curse of bigness."
There are many different types of more specialized conglomerates today, ranging from manufacturing to media to food. A media conglomerate may start out owning several newspapers, then purchase television and radio stations and book publishing companies. A food conglomerate may start by selling potato chips. The company may decide to diversify, buy a soda pop company, and then expand by purchasing other companies that make different food products.
Companies can become conglomerates can be created in a variety of ways, and sometimes in a combination of ways.
The most common way is via
simply buying other companies. If a target firm is big enough, it might not become a mere subsidiary; instead, it and the acquiring company might actually
, combining their talent, assets, resources, and personnel into one new legal entity. A conglomerate merger occurred when The Walt Disney Company merged with the American Broadcasting Company (ABC) in 1995, for example.
For the management team of a conglomerate, a wide array of companies in different industries can be a real boon for their bottom line. Poorly performing companies or industries can be offset by other sectors and
companies can be balanced by
or non-cyclicals. By participating in several unrelated businesses, the parent corporation is able to reduce costs by utilizing fewer inputs that may be shared across subsidiaries, and by diversifying business interests. As a result, the risks inherent in operating in a single market are mitigated.
In addition, companies owned by conglomerates have access to internal capital markets, enabling greater ability to grow as a company. A conglomerate can allocate capital for one of their companies if external capital markets aren’t offering as kind terms the company wants. One additional advantage of conglomeration is that it can provide immunity from the takeover of the parent company as it grows ever larger.
Economists have discovered that the size of conglomerates can hurt the value of their stock, a phenomenon known as the
The sum of the values of the individual companies held by a conglomerate tends to be greater than the value of the conglomerate's stock by anywhere from 13% to 15%.
History has shown that conglomerates can become so vastly diversified and complicated that they grow too challenging to manage efficiently. Layers of management add to the overhead of their businesses, and depending on how wide-ranging a conglomerate's interests are, management's attention can be drawn thin.
The financial health of a conglomerate is difficult to discern by investors, analysts, and regulators because the numbers are usually announced in a group, making it hard to discern the performance of any individual company held by a conglomerate. This lack of transparency may also dissuade some investors. Since the height of their popularity between the 1960s and the 1980s, many conglomerates have reduced the number of businesses under their management to a few choice subsidiaries through
Warren Buffet's Berkshire Hathaway (
) is a well-known conglomerate that has successfully managed companies involved in everything from plane manufacturing and textiles to insurance and real estate. Berkshire is well-respected and has become one of the world's largest and most influential companies. Buffet's approach is to manage the
and allow companies near-total discretion when managing the operations of their own business. Berkshire Hathaway has a majority stake in over 50 companies and minority holdings in dozens more. Still, the company has only a small headquarters office staffed with a relatively small number of people.
Another example is General Electric (
occurred in the 1960s, and these early conglomerates were initially deemed to be overvalued by the market. Low-interest rates at the time made it, so leveraged buyouts were easier for managers of big companies to justify because the money came relatively cheap. As long as company profits were more than the interest needing to be paid on loans, the conglomerate could be ensured a return on investment (
). Banks and capital markets were willing to lend companies money for these buyouts because they were generally seen as safe investments.
At the same time, the theory of
was becoming fashionable in business management and economic circles: the idea that the cross-combining of companies, products, and markets can enhance efficiency and profitability. This the-whole-is-greater-than-the-sum-of-its-parts concept helped justify mergers and acquisitions, even if the target firms were pretty far from the parent company's core business.
Conglomerate companies take on slightly different forms in different countries.
Many conglomerates in China are state-owned.
where companies own small shares in one another and are centered around a core bank. In some ways, this business structure is a defensive one, protecting companies from wild rises and falls in the stock market and hostile takeovers. Mitsubishi is an excellent example of a company engaged in a Keiretsu model.
Korea’s corollary when it comes to conglomerates is called
The biggest conglomerate in the world, based on market value, is the company Reliance Industries, whose market cap is $226.2 billion (as of April 16, 2022).
Although the company itself doesn't love the term, Facebook—now known as Meta Platforms Inc. (
)—can indeed be considered a conglomerate. It has acquired
A conglomerate is a corporation of several different, sometimes unrelated, businesses. Learn how conglomerates are created, what benefits and disadvantages they have, and see some real-world examples of conglomerates.
A conglomerate is a large company formed by joining together different firms, or a type of rock made of small stones held together by dried clay. Learn more about the word origin, usage and synonyms with Oxford Advanced Learner's Dictionary.
A conglomerate is a group of things, especially companies, put together to form one. If you are rich enough to buy a TV network, a record company, several newspapers, and a radio station, you too can own a media conglomerate. The root of conglomerate is glomus, a Latin word for “ball.”
