Conglomerate diversification

This refers to the business strategy 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 strategy 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 diversification is a term normally found in strategic management. Explore our learning zone to discover more