What is a Conglomerate?

A conglomerate is a single corporation made up of smaller, merged companies. Companies acquired by or merged with a conglomerate become its subsidiaries. Holding companies that own controlling stock in a variety of businesses can also be considered conglomerates.

Conglomerates may absorb companies within a given niche, such as beauty products, or acquire a diverse group of businesses as part of a long-term investment plan. Conglomerates allow merged organizations to function on their own. This differs from cooperatives, partnerships, and other similar business structures. Conglomerates leave acquired companies to develop products and services independently, contributing mostly resources and general guidance as they grow.


Conglomerates can form via two main types of mergers:

  • Pure mergers — These involve two separate companies with no strong contextual link. Both businesses operate in entirely different industries and are not in direct competition with one another.
  • Mixed mergers — These mergers occur when closely related companies link up. Businesses that operate in a shared sector may choose a mixed merger to consolidate market share.

Conglomerates serve a variety of purposes, including improving market share for merged businesses, sharing resources, and fueling product development efforts. However, conglomerates are not always an appropriate approach to organizing business operations. In some cases, conglomerates have been shown to grow too large to be effective. This is especially true for conglomerates specializing in pure mergers.

Examples of conglomerates

Conglomerates exist in many countries around the world. In the US alone, there are over 100 functioning conglomerates. Many of these corporations are household names, such as Amazon.


Hasbro is an example of a narrowly focused conglomerate. The company has acquired and merged with businesses directly or indirectly related to its core competencies of games and entertainment over the years. These mixed mergers have earned Hasbro a much larger market share than it had initially. The company is now considered the largest board game business in the world after merging with other competitors such as Milton Bradley and Wizards of the Coast.


General Mills, another successful conglomerate, temporarily broadened its interests with a variety of acquisitions in retail and games. Pure mergers between General Mills and companies such as Parker Brothers (a board game company) as well as Talbots (a clothing retailer) did not last, though. Both were offloaded to Hasbro and AEON, respectively, as General Mills narrowed its focus to food-related operations.

Strengths and weaknesses of conglomerate

Conglomeration offers many advantages to corporations looking to seize greater market shares. A conglomerate can also ensure that its subsidiaries are well-funded regardless of market performance or economic outlook. This can also prove to be detrimental over the long term if subsidiaries continue to underperform.


Conglomerates that grow into industries beyond their core competencies may struggle to maintain profitability. A strong conglomeration trend emerged in the 1960s that demonstrated the potential for this strategy to backfire. Corporations that invested too heavily in acquisitions became burdened with bad debt and losses. These situations led to forced divestiture — selling or bankruptcy of subsidiaries to preserve profitability. Conglomerates are also more difficult for investors to value, owing to their complex structure and grouped revenue reports.