What is a conglomerate? a large corporation that produces and sells its goods and services throughout the world the combination of two or more firms involved in different stages of producing the same good or service a corporation that sells stock on the open market a business combination merging more than three businesses that make unrelated products

A conglomerate is a business combination merging more than three businesses that make unrelated products.

Explanation:

A conglomerate is a group of companies with different activities. This business concept spread to Europe from the United States after World War II. The benefits were considered to increase the company's long-term profitability by spreading risk to various business areas.

However, conglomeration often led to an increase in administrative costs. Furthermore, the conglomerate's management rarely had the competence to handle a number of companies in different industries. The conglomerates that were listed on the stock exchange were regularly valued lower than the total market value of the subsidiaries, indicating that the stock market did not believe in the very idea of creating such corporate groups. The risk diversification that the conglomerate was aiming for could equally well be achieved by the individual investor in his own equity portfolio. Therefore, since the 1970s, many conglomerates have split up, and most companies have instead focused on creating competitive advantages through their core business.

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