conglomeration theory

Conglomeration theory refers to the idea that companies diversify their operations by acquiring or merging with other businesses across different industries. This strategy aims to reduce risk by spreading investments, stabilizing profits, and enhancing market power. By owning various types of businesses, a conglomerate can balance losses in one area with gains in another, leading to more consistent overall performance. It also allows access to new markets and resources. In essence, conglomeration is about creating a larger, more resilient company through diversification.