Sunday, June 19, 2011

Conglomerate

A "conglomerate", being an assembly, under one management, of a wide diversity of businesses without a common core of unity, cannot expect superior results and performance in the long run, and, specially not in turbulent times."
 From the above statement it is clear that diversification and performance are related but there are many conditions to interpret their perfect relations. In other words, there are inconclusive relations. When a firm is in single-product businesses and tries to diversify around its competencies, markets can have a competitive advantage and profits. Otherwise, it would be costly diversification.

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