Conglomerate Diversification

Conglomerate Diversification

When a firm diversifies into business, which is not related to its existing business both in terms of marketing, and technology it is called conglomerate diversification. Several Indian companies have adopted this strategy. Reliance, Sahara, DCM, Essar group, ITC, Godrej, HMT are examples of conglomerate diversification.

Conglomerate diversification strategy is suitable for the following purposes:

(I) To grow faster than the growth realized through expansion;

(ii) To avail of potential opportunities for profitable investment;

(iii) To achieve competitive edge and greater stability;

(iv) To make better use of cash surplus of present products or service;

(v) To allocate the risks.