Conglomerate differentiation

This refers to the business activity of entering markets that have little or no relation to the organisation’s current core business.

Although there may be synergies between the businesses, for example using common management approaches or sharing financial resources, each business unit is typically run separately. This approach may be adopted in order to reduce the risks of focusing on a single market sector; it can also be used by cash rich organisations where investment in new markets, typically through acquisition of existing businesses, is predicted to offer better yields than other investments.

Conglomerate differentiation is a term normally found in strategic management; explore our learning zone to discover more.