Answer to Question #268666 in Economics for Mae

Question

is conglomeration beneficial in society and economics?

Answer 1

Advantages. Despite their rarity, conglomerate mergers have several advantages: diversification, an expanded customer base, and increased efficiency. Through diversification, the risk of loss lessens. If one business sector performs poorly, other, better-performing business units can compensate for the losses.

Disadvantages. Using the Republic of Korea as an example, conglomerates known as chaebols have been propped up as “too big to fail” and have been found to foster widespread, corrupt business practices and eliminate the growth of smaller companies.