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This question is about what a chief finance officer does.
What is a conglomerate company?
A conglomerate company is a corporation that consists of several different independent business entities combined into one massive entity. In a conglomerate, one large company owns a controlling stake in various different smaller companies that conduct business independently from each other.
Conglomerates are useful in that they allow the controlling company to diversify business risk by participating and having a stake in several different markets or industries. However, there are some conglomerates that choose to focus all of their participation on one single industry.
Conglomerates can be created in several different ways, two of the most common ways a conglomerate comes into existence are through:
Mergers
Acquisitions
Taking part in many different smaller companies, and sometimes markets, conglomerates diversify their business risks from one signal industry to several. This also might help the parent company in the conglomerate relationship to need fewer resources and lower total operating costs.
However, there are times when conglomerates become too large, and as a result, they become wasteful in terms of resources and financial practices and ultimately create less efficient parent companies and subsidiaries.
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