What is a conglomerate
A conglomerate is a business structure comprising two or more legally independent companies that unite to form a single corporate entity. This organizational model involves a parent company exercising controlling influence over one or more subsidiaries, often functioning as the owner of these entities.
For a conglomerate to exert controlling influence over its subsidiaries, it must possess direct or indirect majority ownership. Direct majority ownership implies that the parent company owns the majority of shares in the conglomerate, while indirect ownership indicates that the parent company holds shares through other subsidiaries, collectively constituting a majority ownership in the conglomerate
Operating as a conglomerate is a prevalent approach in large-scale business operations. In extensive corporations, numerous shareholders may exist, but the presence of multiple companies forming a parent entity allows the conglomerate to exercise greater control over the subsidiaries.
Examples of conglomerates
An illustrative example of a conglomerate can be observed in the food industry, where a parent company owns several subsidiaries engaged in diverse product lines.
Wesfarmers, a notable conglomerate, serves as an exemplary case. With majority ownership, Wesfarmers oversees subsidiaries producing a wide array of items. It has interests in retail, chemicals, fertilizers, coal mining, and industrial and safety products.