Conglomeration – Definition

Cite this article as:"Conglomeration – Definition," in The Business Professor, updated December 15, 2019, last accessed August 7, 2020, https://thebusinessprofessor.com/lesson/conglomeration-definition/.

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Conglomeration Definition

A Conglomerate is a company that is comprised of smaller unrelated businesses. this company has a significant stake in the smaller businesses and has control over them. The small businesses in a conglomerate operate distinctly because they deal with different products and services.

Conglomeration refers to the process of bringing businesses with unrelated products and services together to form a conglomerate. Conglomeration is also described as a group or a bunch of items or businesses. Conglomeration can be used in a different context, the central idea is that it is a collection of things, items, or businesses.

A Little More on What is a Conglomeration

Conglomeration is an important term that describes the process through which conglomerates are created. The creation of conglomerates emerged in the early days but became only popular in the 1950s, conglomeration became an important process through with a corporation or company can diversity its operations and generate resources through multiple means. A conglomerate is made up of small businesses with unrelated products and services, these businesses operate separately but under a parent company.

Through conglomeration, two or more businesses can come together to form a collection of business or a corporate group. A conglomerate can be formed by businesses in similar industries or businesses in unrelated industries, but the businesses have different operations, products and services.

History of Conglomeration

Companies that seek multiple lines of businesses do so through conglomeration, this is an avenue through which they bring multiple smaller but unrelated businesses together in exchange for a stake in these businesses. A conglomerate enables a corporation to access higher funding with lower interest rates or costs. When conglomeration became very popular in the late 1950s and early 1960s, many reputable conglomerates were formed.

In most recent times, internet and network conglomerates emerged. Such conglomerate can be between two internet service provider firms, social media firms, and others. Despite that conglomerates are commonly formed across the world, their drawback includes inadequate management, poor accountability and issues surrounding business ethics.

Reference for “Conglomeration”

https://www.investopedia.com › Investing › Financial Analysis

https://www.vocabulary.com/dictionary/conglomeration

https://dictionary.cambridge.org/dictionary/english/conglomeration

https://whatis.techtarget.com/definition/conglomerate

https://en.wiktionary.org/wiki/conglomeration

 

 

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