Advantages of a Conglomerate

by Akash Sharma Akash Sharma

It has been nearly three decades since the Indian economy was liberalized, privatized, and opened up to the rest of the world. Since then, we have grown to a 3 trillion dollar economy in 2019 and have set our sights on a 5 trillion dollar economy by 2025. Private players in the market that have established themselves in numerous industries to build conglomerates can be credited for a share of the accomplishments.

What Exactly is a Conglomerate?

In layman's terms, a conglomerate is a multi-industry corporation. A conglomerate is a single organization that oversees many company units in completely diverse areas. The management of such a corporation may wish to diversify its field of operations for a variety of reasons, including making better use of existing plant facilities, improving its marketing position with a broader range of products, and lowering the inherent risk of relying on demand for a single product. There may also be financial benefits to be realized from the restructuring of other businesses.

Benefits:

●       One might ask why a company would seek to diversify into other sectors rather than retain a lucrative lead by focusing on one. Such businesses place a higher emphasis on expansion and recognize the effects that their financial potential may have.

●       It is worth noting that few of the world's largest companies have never been profitable since the company prioritizes long-term growth over profits. This is partly because various forms of finance have allowed enterprises to stay afloat and expand into numerous industries.

●       Conglomerates' success can also be related to customer brand familiarity. The success of a corporation in one field encourages people to try its products in other industries.

●       Another component that is critical to the success of large companies is the persons who lead them. In general maximum conglomerates, we can observe that founders are very successful in their field.

As an example, we can mention the renowned KCT Group began as a coal mining enterprise in 1929. They are now one of India's most powerful commercial empires, having holdings in aquaculture, logistics, and real estate. In such a very small time span their growth is noticeable to all. The Executive Vice Chairman of the KCT Group of Companies is Varun Thapar, a renowned entrepreneur.

The organizational philosophy of KCT Group is to absorb, drive, and practice a performance-driven and results-oriented culture. Therefore, the fresher hires are allowed to exhibit their talents and skills in a supportive atmosphere.

Conclusion:

Although there are several benefits to expanding into other sectors, not all businesses choose to do so. To increase its profit margin, the corporation expanded into every activity that would be required for its operation. In order to increase its profit margin, some companies expanded into additional operations that were not strictly essential for running a business. Various business organizations have assessed the industrial scenario of many emerging economies

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Created on Apr 28th 2022 00:40. Viewed 175 times.

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