Conglomerates

As stated earlier, a conglomerate is a business enterprise that participates in multiple value chains that are different in nature. An example of a conglomerate is General Electric, which engages in the manufacture of appliances, construction of energy facilities, financing of projects, and media ventures, just to name a portion of its product portfolio.

One attraction of conglomerates is the ability to diversify so that the firm can withstand difficult times in one industry by having a presence in other kinds of markets. Beyond diversification, a conglomerate can move capital from one of its businesses to another business without the cost and difficulties of using outside capital markets. Often conglomerates will have some divisions ...

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