Conglomeration

Conglomeration

Yesterday in class we learned about conglomeration. Conglomeration is two or more corporation combing and operation together. 

An Example of conglomeration:

Disney( The head of the corporation) owns or owns parts of.....

Lucasfilm(which owns star wars), Marvel, Pixar, ABC, ESPN

Disney was originally just a film company but then bought multiple different companies, a reason why conglomerations are built are that one company feels threatened by another so they just combine or one of those companies buys out the other. In this case, Disney felt threatened by Pixar so they bought that company.

Pros and Cons of conglomerations:

Pros:

-Conglomerations make more money. When two companies combine you tend to not need that many more people, for example, you don't need two human resources or two accounting branches. Therefore you don't need to pay as many people, so you make more money.

-Like I mentioned previously when one company feel threatened by each other they either will buy or combine the companies. This cause there to be less competition, which can make it easier to sell their products.

Cons:

- When two companies combine the two corporations fire people because they don't need as many jobs.

- A bigger company means more mass productions which means their products are lower quilty.

- There is less room for originality.

- There can be fewer brands and options for the consumer 

What is an illegal Conglomeration?

In the U.S there are some illegal conglomerations. For example, a "Horizontal Conglomeration" is illegal. When someone has a monopoly on a specific product that is considered a "Horizontal Conglomeration". The reason this is illegal is that one company basically controls that produced and can raise and lower the price whenever. This would put to much power into that one companies hands.