Results for conglomerate
On this page:
 
Dictionary:

conglomerate

  (kən-glŏm'ə-rāt') pronunciation

v., -at·ed, -at·ing, -ates.

v.intr.
  1. To form or gather into a mass or whole.
  2. To form into or merge with a corporate conglomerate.
v.tr.

To cause to form into a mass or whole.

n. (-ər-ĭt)
  1. A corporation made up of a number of different companies that operate in diversified fields.
  2. A collected heterogeneous mass; a cluster: a city-suburban conglomerate; a conglomerate of color, passion, and artistry.
  3. Geology. A rock consisting of pebbles and gravel embedded in cement.
adj. (-ər-ĭt)
  1. Gathered into a mass; clustered.
  2. Geology. Made up of loosely cemented heterogeneous material.

[Latin conglomerāre, conglomerāt- : com-, com- + glomerāre, to wind into a ball (from glomus, glomer-, ball).]

conglomeratic con·glom'er·at'ic (-ə-răt'ĭk) or con·glom'er·it'ic (-ə-rĭt'ĭk) adj.
conglomerator con·glom'er·a'tor n.
 
 
Investment Dictionary: Conglomerate

A corporation that is made up of a number of different, seemingly unrelated businesses. In a conglomerate, one company owns a controlling stake in a number of smaller companies, which conduct business separately. Each of a conglomerate's subsidiary businesses runs independently of the other business divisions, but the subsidiaries' management reports to senior management at the parent company.

The largest conglomerates diversify business risk by participating in a number of different markets, although some conglomerates elect to participate in a single industry - for example, mining.

Investopedia Says:
These are the two philosophies guiding many conglomerates:

1. By participating in a number of unrelated businesses, the parent corporation is able to reduce costs by using fewer resources.

2. By diversifying business interests, the risks inherent in operating in a single market are mitigated.

History has shown that conglomerates can become so diversified and complicated that they are too difficult to manage efficiently. Since the height of their popularity in the period between the 1960s and the 1980s, many conglomerates have reduced the number of businesses under their management to a few choice subsidiaries through divestiture and spinoffs.

Related Links:
Find out why huge companies don't always deliver big returns for investors. Conglomerates: Cash Cows Or Corporate Chaos?
Reducing risk and increasing returns in your portfolio is all about finding the right balance. Introduction To Diversification
We help to make clear the fine line between diversifying and overstretching your portfolio. The Dangers Of Over-Diversification
Key financials often fail to provide insight into large cap companies. The Importance Of Segment Data


 

Corporation composed of companies in a variety of businesses. Conglomerates were popular in the 1960s, when they were thought to provide better management and sounder financial backing, and therefore to generate more profit, than small independent companies. However, some conglomerates became so complex that they were difficult to manage. In the 1980s and 1990s, many conglomerates sold off divisions and concentrated on a few core businesses. Analysts generally consider stocks of conglomerates difficult to evaluate because they are involved in so many unrelated businesses.

 

In business, a widely diversified company, especially a corporation that acquires other firms whose activities are unrelated to its primary activity. Conglomerate mergers are undertaken for many reasons, including the prospect of making additional use of existing facilities, improving the corporation's overall marketing position, decreasing the risk of relying on a single type of product, and effecting corporate reorganization. The practice was widespread in the 1960s and 1980s, but in the 1990s many conglomerates began to sell off unwanted subsidiaries.

For more information on conglomerate, visit Britannica.com.

 
Columbia Encyclopedia: conglomerate,
corporation whose asset growth, often very rapid, comes largely through the acquisition of, or merger with, other firms whose products are largely unrelated to each other or to that of the parent company. Merger to gain monopoly (“horizontal integration”) was notable at the end of the 19th cent.; somewhat later, acquisition of suppliers or buyers (“vertical integration”) became fairly common. Conglomerates did not emerge until the 1960s, when they quickly became popular among investors. Their stock prices often rose (and sometimes fell) spectacularly. Economic advantages attributed to the conglomerate include protection against overspecialization, availability of management expertise, and reduced costs. The rise of the conglomerate in the 20th cent. has been attributed to restrictions imposed by antitrust laws: As businesses were constrained within their own industry, they instead expanded into different markets. This trend greatly intensified during the 1980s and 1990s (see merger); a notable exception was ITT, which split up (1995) its companies to strengthen operations. The mid-2000s again saw the breakup of a number of conglomerates, most notably Cendant and Viacom, when investors seemed to favor more focused companies over larger companies with disparate businesses, but other conglomerates continued to thrive and grow.


 
Law Encyclopedia: Conglomerate
This entry contains information applicable to United States law only.

A corporation operating in several different and unrelated enterprises, such as the movie industry, baking, and oil refining.

A conglomerate merger is one that brings together two firms with totally different product lines, economic relationships, and functions. Such a merger may violate antitrust acts inasmuch as it may have an adverse effect on competition.

 
Economics Dictionary: conglomerate
(kuhn-glom-uhr-uht)

A corporation with diversified holdings that are acquired through mergers and acquisitions but that are not necessarily related.

 
Word Tutor: conglomerate
pronunciation

IN BRIEF: To form into a rounded mass. Also: A corporation made up of a number of different companies that operate in diversified fields.

pronunciation After the merger the conglomerate was so big she didn't know many of her coworkers.

 
Wikipedia: conglomerate (company)

Conglomerate is the term used to describe a large company which consists of divisions of often seemingly unrelated businesses.

History

The English East India Company can be considered to be one of the earliest conglomerate groups; originally a trade enterprise established to ship goods from the Far East to the United Kingdom, the East India Company grew into a powerful economic entity embracing economic ventures focused on commerce and manufacturing.

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

Conglomerates were popular in the 1960s due to a combination of low interest rate(s) and a repeating bear/bull market, which allowed the conglomerates to buy companies in leveraged buyouts, sometimes at temporarily deflated values. Famous examples of the 1960s conglomerators include Ling-Temco-Vought, ITT Corporation, Litton Industries, Textron, Teledyne, and Gulf and Western Industries. As long as the target company had profits greater than the interest on the loans, the overall return on investment (ROI) of the conglomerate appeared to grow.

For many years this was enough to make the company's stock price rise, as companies were often valued largely on their ROI. The aggressive nature of the conglomerators themselves was enough to make many investors, who saw a "powerful" and seemingly unstoppable force in business, buy their stock. High stock prices allowed them to raise more loans, based on the value of their stock, and thereby buy even more companies. This led to a chain reaction, which allowed them to grow very rapidly.

However, all of this growth was somewhat illusory. As soon as interest rates started to rise in order to offset inflation, the profits of the conglomerates fell. Investors also noticed that the companies inside the conglomerate were growing no faster than they had before they were purchased, whereas the rationale for buying a company was often that "synergies" would lead to more efficiency. By the late 1960s they were frowned on by the market, and a major sell off of their shares ensued. In order to keep the companies going, many conglomerates were forced to shed the industries they had purchased recently, and by the mid-1970s most had been reduced to shells.[citation needed] The conglomerate fad was subsequently replaced by newer ideas like focusing on a company's core competency.

Cash flush during the 1980s, GE also moved into financing and financial services, which in 2005 accounted for about 45% of the company's net earnings. GE also owns a majority of NBC Universal, which owns a major American television network. In some ways GE is the opposite of the "typical" 1960s conglomerate: the company was not highly leveraged, and when interest rates went up they were able to turn this to their advantage as it was often less expensive to lease from GE than buy new equipment using loans. United Technologies has also proven to be an extremely successful example of a conglomerate.

Another example of a successful conglomerate is Berkshire Hathaway, which used its insurance surplus to invest in a variety of manufacturing and service businesses.

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.

Mitsubishi is one of Japan's best known conglomerates, reaching from automobile manufacturing to the production of electronics such as televisions.

One of the best known German conglomerates, and one of the world's largest is Siemens AG.

The era of Licence Raj (1947-1990) in India created some of Asia's largest conglomerates such as the Tata Group, Kirloskar Group, Reliance Industries and the Aditya Birla Group.

Potential advantages

To modern business analysts, the best argument for conglomerate organizational form is that it may allow capital to be allocated in a more efficient way. For example, a hypothetical conglomerate consists of a candy store and an internet website. Suppose the candy store has high cash flow, but very few profitable investment opportunities. The website has low cash flow, but lots of good investment projects. By combining the businesses together, the cash from the candy store can be used to make profitable investments that would otherwise not be made in the web site. The main question associated with this strategy is why this improves upon a market-based allocation of capital. That is, if the entities were standalone, then presumably the investors in the candy store could receive dividends, and then reinvest those dividends in the startup. If this market-based mechanism works well, then all profitable internet startup investments can be made without having the two entities be under common ownership. Research suggests that financial markets may not always operate efficiently due to the presence of transaction costs and asymmetric information. If this problem is severe, then the common ownership of the assets might yield a more efficient allocation of capital. [1]

Media conglomerates

In her 1999 book No Logo, Naomi Klein provides several examples of mergers and acquisitions between media companies designed to create conglomerates for the purposes of creating synergies between them:

  • Time Warner (now merged with AOL) have a series of tenuously linked business including internet access, internet content provision and music, film and traditional publishing. Their diverse portfolio of assets allow cross-promotion and economies of scale. (However, Time Warner has since divested its music and book publishing interests, and there is growing pressure to spin off its Time Warner Cable and AOL units.)
  • Clear Channel Communications, a quoted company, at one point owned a variety of TV and radio stations, together with a large number of concert venues, across the U.S. 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 monopolistic, but are a clear advantage of the conglomerate strategy. On December 21, 2005, Clear Channel completed the spin-off of Live Nation. Live Nation owns the events and concert venues previously owned by Clear Channel Communications.

See also

References

  1. ^ David Besanko, David Dranove, Mark Shanley and Scott Schaefer: "Economics of Strategy". Chapter 5 ("Diversification")

External links


 
Translations: Translations for: Conglomerate

Dansk (Danish)
n. - konglomerat, kæmpekoncern
adj. - uensartet sammensat, komglomereret
v. tr. - samle til uensartet masse
v. intr. - samles til uensartet masse

Nederlands (Dutch)
(samen)klontering, conglomeraat, samengeklonterd, samenklonteren

Français (French)
n. - conglomérat
adj. - congloméré
v. tr. - conglomérer
v. intr. - se conglomérer, (Géol) s'agglomérer

Deutsch (German)
n. - Konglomerat
v. - ansammeln
adj. - zusammengeballt, zusammengewürfelt

Ελληνική (Greek)
n. - σύγκραμα, σύμφυρμα, (οικον.) συγκρότημα επιχειρήσεων, (γεωλ.) κροκαλοπαγές πέτρωμα
v. - συμφύρω/-ομαι, συσσωματώνω/-ομαι

Italiano (Italian)
conglomerato

Português (Portuguese)
n., -
adj. - conglomerado
v. - conglomerar

Русский (Russian)
конгломерат

Español (Spanish)
n. - conglomerado, grupo de empresas
adj. - relativo a un conglomerado o grupo de empresas
v. tr. - conglomerar
v. intr. - conglomerarse

Svenska (Swedish)
n. - hopgyttring, konglomerat
v. - gyttra ihop, samlas

中文(简体) (Chinese (Simplified))
集成物, 砾岩, 集块, 密集而固结的, 砾岩性的, 使聚集, 凝聚成一团

中文(繁體) (Chinese (Traditional))
n. - 集成物, 礫岩, 集塊
adj. - 密集而固結的, 礫岩性的
v. tr. - 使聚集
v. intr. - 凝聚成一團

한국어 (Korean)
n. - 집다, 역암, 거대복합기업
adj. - 밀집하여 뭉친, 복합적인, 역암질의
v. tr. - 모아서 굳히다
v. intr. - 집덩이를 이루다

日本語 (Japanese)
adj. - 塊になった, 礫岩の, 複合企業の
n. - 集合, 礫岩, 複合企業, 集団

العربيه (Arabic)
‏(الاسم) مؤسسه كبيرة من عدة شركات, تكتل متماسك, كتله صخريه (فعل) تكتل, كتل‏

עברית (Hebrew)
n. - ‮תלכיד, גוש‬
adj. - ‮מגובב, מאושכל‬
v. tr. - ‮גיבב‬
v. intr. - ‮התגבש, התלכד, התאשכל‬


 
 

Join the WikiAnswers Q&A community. Post a question or answer questions about "conglomerate" at WikiAnswers.

 

Copyrights:

Dictionary. The American Heritage® Dictionary of the English Language, Fourth Edition Copyright © 2007, 2000 by Houghton Mifflin Company. Updated in 2007. Published by Houghton Mifflin Company. All rights reserved.  Read more
Investment Dictionary. Copyright ©2000, Investopedia.com - Owned and Operated by Investopedia Inc. All rights reserved.  Read more
Financial & Investment Dictionary. Dictionary of Finance and Investment Terms. Copyright © 2006 by Barron's Educational Series, Inc. All rights reserved.  Read more
Britannica Concise Encyclopedia. Britannica Concise Encyclopedia. © 2006 Encyclopædia Britannica, Inc. All rights reserved.  Read more
Columbia Encyclopedia. The Columbia Electronic Encyclopedia, Sixth Edition Copyright © 2003, Columbia University Press. Licensed from Columbia University Press. All rights reserved. www.cc.columbia.edu/cu/cup/  Read more
Law Encyclopedia. West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved.  Read more
Economics Dictionary. The New Dictionary of Cultural Literacy, Third Edition Edited by E.D. Hirsch, Jr., Joseph F. Kett, and James Trefil. Copyright © 2002 by Houghton Mifflin Company. Published by Houghton Mifflin. All rights reserved.  Read more
Word Tutor. Copyright © 2004-present by eSpindle Learning, a 501(c) nonprofit organization. All rights reserved.
eSpindle provides personalized spelling and vocabulary tutoring online; free trial Read more
Wikipedia. This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Conglomerate (company)" Read more
Translations. Copyright © 2007, WizCom Technologies Ltd. All rights reserved.  Read more

Search for answers directly from your browser with the FREE Answers.com Toolbar!  
Click here to download now. 

Get Answers your way! Check out all our free tools and products.

On this page:   E-mail   print Print  Link  

 

Keep Reading

Mentioned In:

Related Topics