Question

A benefit of using aconglomerate structure is that:_____________

Answer 1

Answer:

Minimize the inefficiency of duplicated efforts across multiple locations

Explanation:

First of all, a conglomerate merger happens when two corporations that serve completely different markets and produce totally different products unite.

The main advantages of this not so common merger, are that:

1. increased diversification: they are entering new markets and producing new products.
2. increased efficiency: by joining forces, synergy may result and efficiency and productivity will increase. Duplicated efforts are eliminated, reducing costs.
3. Expanded customer base: similar reasons than point 1.
4. Lower operational risk: the same as with a diversified investment portfolio, a diversified portfolio of products and services reduces risks.

Answer 2

Answer:

Minimize the inefficiency of duplicated efforts across multiple locations.

Explanation:

A conglomerate is a corporation made up of a number of different, seemingly unrelated businesses. In a conglomerate, one company owns a controlling stake in a number of smaller companies which conduct business separately.

Advantage:

• There are potential cost savings. Once the companies combine there is no need to have two human resource departments, two finance and accounting departments, two marketing departments, or two company headquarters. You get the idea. There is opportunity to consolidate the different departments and in the process, eliminate duplicate jobs and excessive waste.

• Low cost of financing. Let's say one of the businesses can borrow money from the bank at a much lower rate than the other business.

Disadvantage:

• Lack of focus, and inability to manage unrelated businesses equally well.

• Brand dilution where the brand loses its brand associations with a market segment, product area, or quality, price or cachet.

• Conglomerates more easily run the risk of being too big to fail.