Conglomerate

A conglomerate is a large corporation that owns controlling stakes in several subsidiary companies operating in different industries. The subsidiaries typically remain separate legal entities with their own management, while the parent coordinates strategic decisions and capital allocation. The defining trait is unrelated diversification across diverse lines of business.

Conglomerates usually maintain centralized services such as finance, human resources, and legal, but the degree of operational integration varies. Some subsidiaries act autonomously, while others are tightly coordinated under a shared corporate strategy.

The model rose to prominence in the mid-20th century as a way to spread risk and pursue growth through acquisitions. In later decades, critics argued that diversification could impair focus, reduce transparency, and lead to inefficient capital allocation. Many pure conglomerates diminished or reorganized.

Pros include risk reduction, access to capital, and potential cross-subsidization. Cons include management complexity, higher overhead, difficulties in valuing diverse businesses, and potential conflicts of interest between management and shareholders.

Notable examples historically cited include Berkshire Hathaway in contemporary practice, General Electric and ITT as classic conglomerates. In some regions, large diversified groups such as Mitsubishi or Samsung are described as conglomerates or diversified holdings, though terminology varies.