What is a conglomerate? How does it benefit from a diversification strategy?
What will be an ideal response?
A company that combines two or more strategic business units under one overarching corporation and follows an unrelated diversification strategy is called a conglomerate. Unrelated diversification helps firms gain and sustain competitive advantage because it allows the conglomerate to overcome institutional weaknesses in emerging economies, such as a lack of capital markets and well-defined legal systems and property rights. Companies like Berkshire Hathaway, the South Korean LG chaebol, and the Yamaha group are all considered conglomerates due to their unrelated diversification strategy.
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Research by Morgan Stanley indicates that the United States is home to more companies with global competitive advantage than any other country
Indicate whether the statement is true or false
What is the total sales a business should generate if it must obtain a net profit of $125 million at a sales return of 20%?
A) $1.25 billion B) $250 million C) $2.5 billion D) $625 million E) $750 million
GAAP requires a company to report its property, plant, and equipment at fair value less accumulated depreciation
Indicate whether the statement is true or false
Rebates are an example of ________ promotion
A) trade B) product-oriented C) price-oriented D) horizontal