business

what is conglomerate »definition and concept

In a generic way, a conglomerate is understood to be a compact mass that is obtained by adding several fragments that remain joined together by a substance, which is called a binder.

This definition is also used to refer to a type of material composed of different kinds of wood that has followed a similar process, that is, different wooden boards are joined by some kind of glue or glue and subsequently pressed to offer a compact and uniform appearance. It is, therefore, a type of inferior quality material used to make cheap furniture.

The term conglomerate has another use at the company level, but it always refers to the basic concept that defines the union of several parts by means of an element that is common to all.

A business conglomerate is, therefore, a group of different companies that belong in a majority to a group of shareholders or owners with a common philosophy or objective, so that, although they are companies independent of each other, they are perceived as part of a larger whole. This type of groupings are very common in the media, since they lend themselves to the creation of currents of opinion.

Characteristics of a conglomerate of companies

A conglomerate of companies has a certain number of characteristics, but if it were necessary to define which ones define them with greater precision, perhaps the most significant would be the search for profitability and diversification.

Although there are conglomerates of companies made up of companies that belong to the same branch, it is usual for a conglomerate to be made up of companies that carry out different activities, so that in many cases the only criteria for their acquisition and integration into said structure be it your present or future ability to generate profits.

With this, it is also achieved that the risk is much lower for partners and investors, since the possibility that some company presents losses is compensated by the benefits of others.

In addition, by having a presence in different economic sectors, the management of these conglomerates obtains a greater area of ​​influence and power, which is in many cases one of the objectives that motivates the existence of this type of organization.

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