What is the diversification of the conglomerate?

The diversification conglomerate occurs when the company draws its business into an area that is different from its main business. This often occurs as a result of the merger or purchase of another society, or this may happen if the company simply wants to develop different products that are not related to those that already produce. In most cases, companies can benefit from diversification of conglomerate due to increased profit and extended business reach. On the other hand, a merged society may suffer if management is not adept with new products or if a new company stretches too thin.

In the business world, it is very common that the fighting company attracts the attention of another company that wants to make a significant investment to expand their business. In many cases, the stakeholders will be in the same industry and may even be direct competitors, leading to what is called "concentric diversification". In contrast, diversification conglomeratesThe product of two companies that have little to meet, which represents a unique set of advantages and disadvantages. In some cases, a company that focuses on a specific product on a particular market may intervene in the ceiling in terms of business that it is capable of. With the new product, the company can connect to other markets and attract a new customer base that could never achieve.

In addition to the special profit potential, the company can also use the diversification of conglomerate to strengthen its marketing force. Branding's capabilities that allow management to expand as much as possible to expand the recognition of the name of the corporation are drastically improved by introducing a new product for established society. The merger with the company from the difference in the geographical area can further increase the scope of the company and open even more ways for business.

with diversification of conglomerate is one disadvantage that exIt is only a few opportunities to produce corporate synergies because the new entity and old entity have little or no connection to each other. In addition, problematic areas could emerge when the main company management team is trying to solve a new business that they inherited, especially if they lack experience in this new area. Another problem is that a company that devotes too much energy to the new aspects of its business can absorb some sources that make the initial business so strong.