A conglomerate is an association of firms characterized by participants. See what "Conglomerate" is in other dictionaries
The closest “relatives” of the conglomerate are and, however, breccias are formed from peaked stone fragments, and tuff is a product of volcanic activity.
Many of the conglomerates are very decorative: multi-colored boulders, heterogeneous pebbles form a fanciful ornament on the cut of the conglomerate sample. A strict thin section pattern is inherent in conglomerates composed of a limited number of minerals.
Varieties of conglomerates
Conglomerates are distinguished primarily by composition. The fraction of the pebble component of the rock is also important: specialists count at least four classes of conglomerates formed by small, medium, large pebbles and boulders - rounded pieces of minerals from decimeter to meter across.Polymix (also called polymict) conglomerates can contain pebbles of various sizes and minerals.
The origin of conglomerates
As a result of weathering of mountain formations, clastic screes are formed. Transported by water or ice streams, fragments turn into pebbles and settle on the bottom and banks of the channel or in the strip of sea surf.Gaps between pebbles are filled with loose rocks. Over time, the layers are compacted, compressed, cured, turning into a conglomerate monolith. Over time, the formation of conglomerates stretches for hundreds of thousands of years.
In nature, pseudoconglomerates are also formed. Such rocks are the result of processes of chemical substitution of minerals, affecting only certain types of pebbles in the layers. Destroyed minerals turn into cement, but the transformation rarely goes through completely. In cement of pseudoconglomerates, inclusions of unchanged primary material usually remain.
Conglomerate properties
Depending on the physical properties of the cementitious rock, the conglomerate may have different hardness indices. Soft marls form conglomerates with a hardness of one point on the Mohs scale. Carbonates and aluminosilicates give conglomerates with a hardness of up to 6 points. Glandular and siliceous deposits can reach 8 points on the Mohs scale.The heterogeneous structure of the stone complicates the mechanical processing of the conglomerate. It is not easy to smoothly cut and sand a conglomerate plate with high quality. That is why, as a building and finishing material, a conglomerate of roads.
Often, conglomerates are valuable raw materials for the mining industry. In the channels of gold-bearing rivers, conglomerates with a high content of gold and platinoids are found. The erosion of kimberlite pipes results in conglomerates containing garnets and diamonds. Conglomerated ores of various metals are also frequent.
The artistic potential of the conglomerate
The conglomerates folded by colored different-sized pebbles are in high demand.. Landscape architecture, the design of courtyards and premises, the cladding of buildings and the creation of small architectural forms cannot do without the use of highly decorative conglomerates. 
Along with multicomponent conglomerates, mono-composite stone is also valued. Expressive conglomerates of red-brown, blue-gray, green-brown shades. Pedestrian alleys, walking areas protected by canopies of the territory are successfully paved with such a stone.
However, it should be borne in mind that anthropogenic and weather loads can lead to uneven wear of the material.
Artificial conglomerates
In modern conditions it is easier and cheaper to produce artificial ones than to produce natural conglomerates. As a binder in the manufacture of artificial conglomerates, polymer-cement mixtures are used, in which stone dust and crumbs are often added “for beauty”.Artificial pebbles are obtained by tumbling - rolling stone fragments in volumetric cylindrical mills. The quality of such pebbles is, as a rule, lower than that of natural stone: the losses are too great when finishing the chipped material to its ideal shape. However, in some cases, manufacturers do not take into account the loss of raw materials and energy costs.
Industrial conglomerates are well processed, easy to grind, polished to a mirror finish.
It is almost impossible to confuse an artificial conglomerate and a conglomerate of natural origin: the man-made material is of impeccable quality and pathos beauty.
Conglomerate represents the organizational form of a business combination that results from the merger of various firms, regardless of their horizontal or vertical ties. Conglomerate mergers are divided into several types: 1) functional; 2) market oriented; 3) pure conglomerate mergers.
As a rule, conglomerates are entities focused on the development and maximization of profits regardless of their areas of activity. As the newest form of monopolistic associations, they arose in the 1960s and became widespread in the form of integration of enterprises of various industries that do not have a production community. At present, conglomerates are common, uniting a network of heterogeneous enterprises under the unified financial control of the holding company. These enterprises have neither technological nor targeted unity with the holding's core business. Therefore, profiling in conglomerate-type associations takes vague outlines or is absent altogether.
The main methods for the formation of conglomerates are mergers and acquisitions of firms of various industrial and commercial orientations. The merger in this case means the union of several firms, as a result of which one of them survives, and the rest lose their independence and cease to exist. Three methods of mergers are possible: 1) company A buys the assets of company B with payment in cash or securities issued by the purchasing company; 2) company A can buy a controlling stake in company B, while becoming a holding company for company B, which continues to function as an independent business unit; 3) the shares of company A can be issued specifically for the owners of company B, as a result of which company A acquires the assets and liabilities of company B, and B loses the right to exist.
Merger is different from associationsin which a new company is formed on the basis of several previous firms, completely losing their independence. A new company formed on the basis of the association takes control and management of all assets and liabilities of the companies participating in the association, after which the latter are dissolved. For example, if company A merges with companies B, C, D, then as a result a new company D may appear on the market, and all the rest will dissolve. Despite some differences between mergers and associations, the economic consequences of these processes are the same - the creation of conditions for combining activities under common centralized control.
Conglomerates as the newest form of monopolistic associations appeared during a period of strengthening general economic trends towards diversification of production, growth of concentration and centralization of capital of the largest companies, which are looking for their application on the market, on the crest of the rapid development of the scientific and technological revolution, in the face of dynamic changes in market conditions, demand and supply. The conglomerates, whose field of activity extends to firms of various branches that are neither functionally, nor technologically related, are non-identical, however, to diversified concerns, because they have a number of specific features in the organization of management.
Conglomerates are characterized by significant decentralization of governance. Branches of conglomerates enjoy significantly greater freedom and autonomy in determining all aspects of their activities than similar structural units of traditional diversified concerns. Under decentralization, the main levers of conglomerate management are financial and economic methods, indirect regulation of the activities of units by the holding company, which is at the head of the conglomerate.
The specifics of the conglomerate's activity on the market necessitates the formation of a special financial core in its structure, which, in addition to the holding company, includes large financial investment companies. Such conglomerate structures give them greater stability in the competition and reduce the risk of losses from market, structural and cyclical fluctuations.
The main area of \u200b\u200binterest of conglomerate mergers are young, technologically advanced industries related to the production and use of high technology products, technological innovations, and sophisticated equipment. In conglomerate mergers, there is an absorption of promising firms that exchange their shares for conglomerate shares on favorable terms. In addition, the exchange of conglomerate shares for shares of absorbed firms is stimulated by providing loans for these purposes, partial exemption from taxes on the amount of interest on the loan.
The tactic of buying conglomerates of various companies on credit, being quite successful during periods of economic recovery, turns out to be unpromising during a recession, with the onset of the crisis, and the excess of the cost of shares of purchased firms over their market value increases the likelihood of depreciation of shares of conglomerates and their exchange crash. This is the main weakness of the monopolistic associations of the conglomerate type. Creation of conglomerates in countries with developed market economies is uneven, waves of conglomerate mergers replace periods of decline in their activity. In particular, it is characteristic that, unlike the United States, where conglomerates take over large firms, small and medium-sized companies, family firms, and small joint-stock companies of related industries are absorbed in Europe.
Since the 60s XX century conglomerate is becoming a widespread type of intercompany integration. Prior to this, the unification of efforts went along the path of production of homogeneous products (horizontal integration), technologically related industries (vertical integration according to the scheme: production - production - sales). Note that now simple structures for the production and sale of technologically unrelated products began to unite, t .e. it is about expanding the range of economic activity, or diversifying production. The benefits of diversification are known. This is the possibility of reorienting funds from industries in decline, to industries that are on the rise (and vice versa) based on the use of the difference in the capital turnover of various industries, and the mitigation of seasonal fluctuations in sales, cost reduction, etc.
Conglomerate - the organizational form of company integration, uniting under a single financial control a whole network of heterogeneous enterprises, which arises as a result of the merger of various companies, regardless of their horizontal and vertical integration, without any industrial community.
In the United States, conglomerates are called concerns, which arise in a very short time when a large number of firms functionally independent from one another are absorbed.
In recent years, in developed countries transnational concerns. Their goal is to get high profits in countries with low tax rates, and in countries where taxes are high, to accumulate less profit.
Transnational concerns are owned or controlled by entrepreneurs of one country, and multinational concerns have international capital distribution (General Motors)
Features of conglomerates:- integration within the framework of this organizational form of enterprises of various industries without the presence of a production community. The merged companies have neither technological nor targeted unity with the main field of activity of the integrator company. Profiling in conglomerate-type associations takes vague outlines or disappears altogether;
- merged companies traditionally retain legal and industrial independence, but are completely financially dependent on the parent company;
- significant decentralization of management. Departments of conglomerates enjoy significantly greater power and autonomy in all aspects of its activity compared to similar structural units of traditional diversified concerns;
- financial and economic methods act as the main levers of conglomerate management, indirectly regulates the activities of the units, the holding company at the head of the conglomerate;
- as a rule, a special financial core is formed in the structure of the conglomerate, which, in addition to the holding (pure holding), includes large financial and investment companies.
By the way, this integration form in different countries has its own features. Thus, conglomerates in the USA do not imply absolutely no production commonality between the combined companies, while in the countries of Western Europe enterprises are in a certain relationship in the production process.
Examples of conglomerates include, in particular, Mitsubishi, Raytheon, BTR, Hanson. Hanson, for example, specializes in acquiring technologically simple enterprises in stable market sectors. Hanson seeks to reduce production costs in the acquired company and strictly controls the work of managers, making sure that they fit into the allocated budget. Thanks to austerity measures and control, the conglomerate achieves excellent results from once unprofitable enterprises.
The main method of conglomerate formation will be mergers and acquisitions of firms of various industrial and commercial orientations.
The boom of large diversified companies, i.e. conglomerates, as already noted, came in the 60s. the past century, although large conglomerates were created in the 20s. But then their creation was initiated by the tasks of militarizing the economy. In the 60s, their development took place on a purely commercial basis.
The main motives for conglomerate mergers and acquisitions were:- obtaining a synergistic effect;
- providing a broader economic basis;
- the opportunity to buy cheap and sell expensive;
- forecasting changes in the structure of markets or industries;
- desire to increase the image of company management;
- the desire of senior management personnel to increase their income, given the use of options as a means of long-term promotion;
- focus on access to important new resources and technologies.
In the 70s. the active activity of large companies in their diversification continued and was associated with the desire to acquire assets in the fields of electronics and telecommunications.
But in the 80s. profits of conglomerates began to decline steadily. The companies included in the conglomerates showed worse results than independent enterprises in the same industries, and new acquisitions brought enormous losses. According to Michael Porter, in the first half of the 80s. acquisitions by conglomerates of companies in unrelated industries failed in 74% of cases.
Among the companies currently traded on the New York Stock Exchange, forty companies are officially classified as conglomerates. These include such well-known companies as General Electric, American conglomerates Textron Inc and United Technologies Corp, British Hanson, Dutch Philips Electronics, Italian Montedison, etc. But all these conglomerates reoriented its activities to those segments in which they are leading. Today they acquire companies in key areas and sell all non-key assets.
The decline in the profitability of conglomerates in our time. As the main problems that arise during the functioning of conglomerates, experts name the following:
- Excessive diversification, resulting in a gradual but steady decline in the competitiveness of goods and services produced by companies.
- Suboptimization: within integration forms, the desire to strengthen intra-group cooperative ties usually prevails, despite the weak technological community between the companies included in the conglomerate. With каждаяm, each company naturally seeks to set the most favorable transfer price for itself. As a result, output products become very expensive and uncompetitive, and mutual complaints about the level of transfer prices are constantly reviewed by the head company of the conglomerate.
- Motivation of the managerial staff of companies included in the conglomerate in the order of their absorption: the effectiveness of managers' work can be irreversibly affected by a change of ownership or their transformation from owners to employees.
- Significant funds required to acquire a target acquisition company: in addition to paying the market value of the company, it is often necessary to pay bonuses to shareholders for losing control of the acquired company, to pay the amount to give the management team the so-called “golden parachutes” so that they quickly leave the company without too much harm her. As a result, huge amounts of money invested in acquisitions of companies in unrelated industries often lead exclusively to a decrease in the overall functioning of the conglomerate.
The life of the conglomerate largely depends on the skill level of senior management personnel. The absence of qualified senior managers in the management apparatus is tantamount to his "death". The validity of this statement is illustrated by the spectacular failures of conglomerates such as Textron, Polly Peck, and Maxwell Communications, which would seem to have reached the heights of success. Although ϶ᴛᴏ the statement is true for other macrostructures.
? Federal Agency for Education
State educational institution of higher professional education
Novgorod State University named after Yaroslav the Wise
Institute of economics and management
Department of Commerce
OKD abstract
On the topic: "Conglomerates"
Performed:
Student gr. 7271
Semenova Nelly
Checked:
Danilova E.A.
Velikiy Novgorod
2009
1. ?
1.1 essence p.3
1.2 value c.3
1.3 goals of creation p.3
1.4 basic ways to create p.3-4
2.? features of conglomerates p.4
3.? Functional problems p.4-5
4. ? Examples of conglomerate activities p.5-6
List of references p.6
1-entity, meaning, purpose of creation, the main methods of creating conglomerates
A conglomerate is an organization that operates in more than one industry. Conglomerates are based on the following principles:
The main guarantee of the development of the conglomerate is the regular acquisition of assets necessary for successful operations, as well as their possible reorganization if necessary.
The conglomerate structure is structured in such a way that the main (parent company) conducts centralized management of subsidiaries, plans and controls them. Sometimes, they have a common fund of expenses for financial services and staff. As a rule, conglomerates are formed by the absorption by a large company of several dozen small and medium-sized firms of various industries and fields of activity, often without production, marketing, or other functional relationships. Often the purpose of such takeovers is to profit from playing stock prices. This circumstance, combined with the complexity and lack of flexibility in managing the conglomerate, determine the instability of this form of business combination, which disintegrates when economic difficulties arise. However, some conglomerates have existed for a long time, due to the ability to widely manipulate financial resources and quickly adapt to changing market conditions.
Conglomerate - (lat. Conglameratus - assembled) - 1) organizational formation, in which under a single financial control are concentrated enterprises (companies) of technologically unrelated branches of production and trade, insurance, research, design and consulting, publishing, film industry, etc. .d .; 2) holding company.
A conglomerate (from lat. Conglomeratus - collected, accumulated) is a diversified, multidisciplinary structure, organized not on the basis of functional interconnections (production, marketing, finance, etc.), but on the union of semi-autonomous branches that bear economic responsibility for the results of their activities; one of the forms of monopolistic unions of firms interconnected in the production process (Western Europe) or without a production community (USA). They are characterized by a high level of decentralization of management. The central management of the conglomerate is engaged in strategic decisions, most often associated with the distribution of financial resources. Conglomerate branches enjoy wider autonomy than production branches in a diversified environment.
Conglomeration - a union under a single financial control of firms that do not have production and functional ties (i.e. there is no technological dependence). They can belong not only to various types of production, but also to various sectors of the economy. The conglomeration is based on the objective process of centralization of capital. The possibility of the emergence of conglomerates is caused by the accumulation of capital, the acceleration of scientific and technical progress, which creates new areas of capital application. Conglomeration can lead to a change in the scope of the company.
The purpose of creating conglomerates is to obtain large profits through the manipulation of securities: the issue of shares and bonds and their exchange. The leaders of conglomerates receive the constituent income from these operations. The acquisition of a shareholding is cheaper than the creation of a new enterprise at the expense of domestic investment. Despite the fundamental differences between these processes in modern conditions, the difference between conglomerates and differentiated companies is blurring.
The conglomerates, which were developed mainly in the United States, combine the most diverse types of industries that do not have any production connection between themselves and are not also connected by a single raw material, common sales conditions. The creation of conglomerates is the result of reinforcement since the mid-20th century. concentration of research, management. In conglomerates, conditions are created for the overflow of capital from one industry to another, bypassing the traditional capital market.
2- features of conglomerates.
The features of conglomerates include: integration within the framework of this organizational form of enterprises of various industries without a production community. The merged companies have neither technological nor targeted unity with the main field of activity of the integrator company. Profiling in conglomerate-type associations takes vague outlines or disappears altogether; the merged companies, as a rule, retain legal and industrial independence, but are completely financially dependent on the parent company; conglomerates are characterized by significant decentralization of governance. Their branches enjoy significantly greater freedom and autonomy in all aspects of their activities compared to similar structural divisions of traditional diversified concerns; the main levers of conglomerate management are financial and economic methods, indirect regulation of the activities of units by the holding company headed by the conglomerate; As a rule, a special financial core is formed in the structure of the conglomerate, which, in addition to the holding (pure holding), includes large financial and investment companies. This integration form in different countries has its own peculiarities: for example, in the United States absolutely no production community is expected between the combined companies, in Western European countries, enterprises should be interconnected to a certain extent in the production process.
Benefits. One of the key advantages of conglomerates seems to be increased efficiency in the distribution of capital between different companies. In addition, the fact that risks are distributed and incomes are diversified leads to a smoother dynamics of the conglomerate's income changes within business cycles. Hanson pic and SCM Group “grind” example
? 3- Functioning problems
As the main problems arising during the functioning of conglomerates, experts are called:
1. Excessive diversification, resulting in a gradual, but steady decline in the competitiveness of the goods and services they produce.
2. Suboptimization: within integration forms, the desire to strengthen intra-group cooperative ties usually prevails, despite the weak technological community between the companies included in the conglomerate. Moreover, each company, of course, seeks to establish the most favorable transfer price for itself. As a result, output products become very expensive and uncompetitive, and mutual complaints about the level of transfer prices are constantly reviewed by the head company of the conglomerate.
3. Motivation of the managerial staff of the companies included in the conglomerate in the order of their absorption: the effectiveness of managers' work may be irreversibly affected by a change of ownership or their transformation from owners to employees.
4. Significant funds required to acquire a target acquisition company: in addition to paying the market value of a company, it is often necessary to pay a bonus to shareholders for loss of control over the acquired company, and to pay an amount to endow the management team with so-called “golden parachutes” (so that they quickly leave the company, do not too much harm). As a result, huge amounts of money invested in acquisitions of companies in unrelated industries often only lead to a decrease in the functioning efficiency of the entire conglomerate as a whole.
The life of the conglomerate largely depends on the skill level of senior management personnel. The absence of qualified senior managers in the apparatus of his administration is tantamount to his "death". The validity of this claim is illustrated by the spectacular failures of conglomerates such as Textron, Polly Peck, and Maxwell Communications, which seemingly reached the heights of success.
? 4- Examples of conglomerates
Hanson pic. - A company based in the UK, which until its recent division had over 600 subsidiaries around the world.
As one of the largest British companies, Hanson achieved a turnover of $ 11 billion in 1994. Art. Her main strategy for a number of years was to buy “sleeping” conglomerates, and then to disaggregate them by selling each subsidiary separately in the hope that the total amount received as a result of this disaggregation will exceed the yen paid for the takeover. The following example illustrates this process well. In January 1986, Hanson bought a 100% stake in the American company SCM Group. At the time of the transaction, the American company consisted of 1 7 companies operating in various fields (production of dyes, chemicals, food, paper, typewriting equipment, etc.). Hanson, having bought SCM Croup, immediately began to return the money invested in this purchase, splitting the company and selling it in parts. The chronology of events is as follows: 1 986 - Hanson buys SCM for $ 930 million;
1986 - Hanson sells former SCM for $ 935 million;
1987 - Hanson sells former SCM for $ 28 million;
1988 - Hanson sells former SCM for $ 266 million;
1989 - Hanson sells a 52% stake in one former SCM for $ 309 million; 1,990 - Hanson sells former SCM for $ 41 million.
The total amount from the sale of former SCM companies in 1990 amounted to $ 1.579 billion. Given / that the purchase price was equal to $ 930 million, Hanson made a profit on the deal in the amount of $ 649 million. This step was already quite competent from the point of view of the business. However, the company did not sell everything. One company - SCM Chemicals, based in Baltimore and the world's third largest company - a supplier of an industrial chemical product (titanium dioxide) - has survived. This company alone is capable of annually generating profits of more than $ 350 million per year (excluding taxes).
The Anglo-American conglomerate Hanson PLC, following ITT Corp., AT & T Corp., Dun & Bradstreet, Minnesota Mining and Manufacturing Corp., Lonrho and other brothers (in size), announced its disintegration. The firm, with a market valuation of £ 11.4 billion ($ 17.16 billion), intends to split into four companies - energy, chemical, tobacco and building materials. The Hanson PLC division will be one of the largest integrated transactions in British corporate history. According to preliminary estimates, it will take at least a year and will cost more than £ 100 million.
In fact, this is not one division, but three. New companies will budge from the inheriting name of the group of building materials and equipment not simultaneously, but individually.
At the same time, the conglomerate will continue to work on the launch of Suburban Propane securities in the United States and new acquisitions and investments made with the aim of expanding into all four main areas of its activity. Yes, at the same time as the division into four parts, Hanson is trying to acquire the three divisions of National Power, a new power plant and a coal mine in Australia.
Each of the four new companies formed in the separation process will have a market value of more than £ 2 billion, and the stock prices of these firms should be listed on the FTSE100.
Hanson announced in advance its plans to be able to discuss everything with the tax authorities and bankers. The company is preparing for lengthy negotiations and dozens of smaller transactions to place subsidiaries in the right order.
The most difficult issue is Hanson’s debt of around 5 billion pounds. The firm expects it to fall by about £ 2 billion thanks to the Suburban Propane flotation this year, the sale of a 12.5% \u200b\u200bstake in National Grid and the complete disposal of Cavenham Forest Industries. The sale of Seven Seas and Ever Ready South Africa businesses is also expected.
The remaining 3 billion pounds of debt should be divided between four new companies. A chemical company listed in New York will take on up to 1.5 billion of debt, due to the fact that most of the Hanson PLC debts are in the United States. About 750 million debt will be written to the new tobacco company. The tobacco and energy businesses will have about 375 million each, which promises them good prospects for future development. The energy company is already considering expansion plans on the Asian continent.
http://www.partida.su, http://www.emc.komi.com/02/10/ 081_01.htm,
http://www.doclist.ru/slovar/ konglomerat.html, http://slovari.yandex.ru/dict/ bse / article / 00049 / 32700.htm & stpar1 \u003d 249.4965.1, http://www.ir -russia.ru/ archive / issue2008-2 (3) may- june / KimZakharova.pdf, http://stratman.ru/management/ strategicheskoe-razvitie / strategie / razukrupnenie-company + print version Kommersant newspaper (http : //www.kommersant.ru/doc. aspx? DocsID \u003d 126903 & print \u003d true)
2
This is a group of two (or more) enterprises, including the parent and subsidiary companies. The latter operate independently of each other, but constitute a single multidisciplinary corporate structure, managed by the parent company. The conglomerate is also known as a "holding".
Types of conglomerate
The following types of conglomerate are distinguished depending on the share in the capital of managed firms:
- the parent company and subsidiaries partially or fully owned by it (the first owns a controlling stake in other organizations);
- parent company with an association or subsidiary. The first holds less than 50% of the voting shares of another company, which is an association, or a branch.
Famous conglomerates: Berkshire Hathaway, General Electric (GE), Hitachi, Emerson Electric, ITT Industries, Textron.
Conglomerate Forms
Conglomerates take different forms depending on the countries. The Asian model is different from the western one, consisting of a single corporation with subsidiaries controlled by it. The following forms of conglomerate have developed in Asia:
- keiretsu is a group of organizations in Japan, whose members own small shares in each other's capital and are concentrated around the main bank. The most famous keiretsu Mitsubishi, Tokai (Toyota Group);
- chinese - mainly state-owned enterprises, but there are also private ones (Huawei, Fosun International, etc.);
- chaebol is a large family-type industrial association in South Korea, consisting of a large number of diversified branches. The president of the group is inherited by members of his family. Famous chaebols include Samsung, Hyundai, LG.
Benefits of creating conglomerates
The formation of conglomerates provides the corporation with the following benefits:
- business expansion and profit growth. The merger of organizations can increase the productivity and return on assets when using common resources. Buying stocks at a large discount ensures profit growth;
- diversification of the business sector. The presence in the association of companies belonging to different industries, allows you to enter new markets, participate in business that differs from the core business of the holding;
- reduction of investment risk. Shareholders diversify their investment portfolios to hedge their capital loss risk. The financial problems of one subsidiary may be offset by the profit of another;
- creation of an internal capital market. As a result of the combination of enterprises, an internal capital market is formed through which resources are distributed. The parent company provides funds for the individual firm if external capital markets do not provide suitable conditions. This leads to an increase in the value of shares and creditworthiness of the company.
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