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Posted On: 05/25/2019 4:43:38 PM
Post# of 87679
Benefits of Conglomerates
For the management team of a conglomerate, having a wide array of companies in different industries can be a real boon for their bottom line. Poorly performing companies or industries can be offset by other sectors. By participating in a number of unrelated businesses, the parent corporation is able to reduce costs by using fewer resources, and by diversifying business interests, the risks inherent in operating in a single market are mitigated.
In addition, companies owned by conglomerates have access to internal capital markets, enabling more ability to grow as a company. A conglomerate can allocate capital for one of their companies if external capital markets aren’t offering as kind terms the company wants.
For the management team of a conglomerate, having a wide array of companies in different industries can be a real boon for their bottom line. Poorly performing companies or industries can be offset by other sectors. By participating in a number of unrelated businesses, the parent corporation is able to reduce costs by using fewer resources, and by diversifying business interests, the risks inherent in operating in a single market are mitigated.
In addition, companies owned by conglomerates have access to internal capital markets, enabling more ability to grow as a company. A conglomerate can allocate capital for one of their companies if external capital markets aren’t offering as kind terms the company wants.
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