Question

Conglomeration is a technique to

• A. Expand in the same industry
• B. Diversity in other areas
• C. Taking over the other units
• D. Divide the organisation in sub-units

Hint:

Associate "Conglomerate" with "Unrelated Diversification." Think of examples like the Tata Group or Reliance Industries in India, which have businesses in vastly different sectors (e.g., steel, cars, software, retail, telecom).

Answer 1

The Correct Option is B

Step 1: Understanding the Question:
The question asks for the strategic purpose of conglomeration.
Step 2: Key Concept:
A conglomerate is a large corporation that consists of several distinct, often unrelated, businesses. Conglomeration is the process or strategy of building such a corporation, typically through mergers and acquisitions.
Step 3: Detailed Explanation:
- (A) Expand in the same industry refers to strategies like market penetration or market development, not conglomeration.
- (B) Diversity in other areas is the core idea of conglomeration. The company diversifies its business portfolio by entering into industries that are different from its core operations. This helps in spreading risk and finding new growth opportunities.
- (C) Taking over the other units (i.e., acquisition) is a method used for conglomeration, but it is not the strategic goal itself. The goal is diversification.
- (D) Divide the organisation in sub-units refers to decentralization or departmentalization, which is an organizational structuring technique.
Step 4: Final Answer
Conglomeration is a strategic technique for a company to diversify its operations into other, often unrelated, areas.