Conglomerates are common in many countries and sectors, such as media, banking, energy, mining, manufacturing, retail, defense, and transportation.
This type of organization aims to achieve economies of scale, market power, risk diversification, and financial synergy.
In the United States, conglomerates became popular in the 1960s as a form of economic bubble driven by low interest rates and leveraged buyouts.
[4] Due to a combination of low interest rates and a repeating bear-bull market, conglomerates were able to buy smaller companies in leveraged buyouts (sometimes at temporarily deflated values).
[12] Many interior cities were devastated by repeatedly losing the headquarters of corporations to mergers, in which independent ventures were reduced to subsidiaries of conglomerates based in New York or Los Angeles.
[17] The conglomerate fad was subsequently replaced by newer ideas like focusing on a company's core competency[18] and unlocking shareholder value (which often translate into spin-offs).
Companies with this orientation would only make acquisitions or start new branches in other sectors when they believed this would increase profitability or stability by sharing risks.
Flush with cash during the 1980s, General Electric also moved into financing and financial services, which in 2005 accounted for about 45% of the company's net earnings.
Another example of a successful conglomerate is Warren Buffett's Berkshire Hathaway, a holding company which used surplus capital from its insurance subsidiaries to invest in businesses across a variety of industries.
The end of the First World War caused a brief economic crisis in Weimar Germany, permitting entrepreneurs to buy businesses at rock-bottom prices.
Mitsui, Mitsubishi, Sumitomo are some of Japan's best-known keiretsu, reaching from automobile manufacturing to the production of electronics such as televisions.
While not a keiretsu, Sony is an example of a modern Japanese conglomerate with operations in consumer electronics, video games, the music industry, television and film production and distribution, financial services, and telecommunications.
In Brazil the largest conglomerates are J&F Investimentos, Odebrecht, Itaúsa, Camargo Corrêa, Votorantim Group, Andrade Gutierrez, and Queiroz Galvão.
At the time, the newly merged company dealt in construction, building supplies, pulp and paper mills, forestry, and oil & gas.
In the Philippines, the largest conglomerate of the country is the Ayala Corporation which focuses on malls, bank, real estate development, and telecommunications.
In many cases, newly joined corporations get higher returns on investment, access to business contacts, and better rates on loans from various banks.