Conglomerates: Quick Overview

Conglomerates in the US have witnessed slow revenue growth in recent years, with the fall in value of the US dollar and increasing raw material prices combining to detract from margins. An increasingly interdependent global economy characterized by excess manufacturing capacity has resulted in intense competition leading to pricing pressures.

The US is usually the largest, most lucrative market for conglomerates, although several less developed markets, such as China, provide significantly higher growth potential along with cost benefits such as cheap raw materials and labor. Despite the comparatively low level of wealth, a relatively large demand exists for consumer goods in emerging economies.

The worldwide scale of conglomerates gives them a unique insight into the direction of global markets, allowing them to predict and adapt to market developments in a fast, efficient manner. With this in mind, conglomerates continue to invest in high-growth regions and sectors such as water, security and consumer finance, using their business awareness and large scale economies to gain market share and boost revenues from these sectors.

The major conglomerates in the US include GE, Siemens, United Technology, LVMH, 3M and Honeywell. Using their huge economies of scale, conglomerates have begun to create strong direct sales divisions in order to eliminate intermediaries from the distribution chain. This development will allow companies to provide a higher quality service to their clients whilst fueling growth in margins by eliminating trade commissions.