As stated earlier, a conglomerate is a business enterprise that participates in multiple value chains that are different in nature. An example of a conglomerate is General Electric, which engages in the manufacture of appliances, construction of energy facilities, financing of projects, and media ventures, just to name a portion of its product portfolio.
One attraction of conglomerates is the ability to diversify so that the firm can withstand difficult times in one industry by having a presence in other kinds of markets. Beyond diversification, a conglomerate can move capital from one of its businesses to another business without the cost and difficulties of using outside capital markets. Often conglomerates will have some divisions that are cash cows in being profitable operations in mature markets, and other businesses that have great potential but require sizeable investment that can be funded by profits from the cash-cow businesses.The concept of cash-cow businesses is an aspect of the Boston Consulting Group matrix for corporate strategy (1970).
Another argument for conglomerates is that companies with very talented management staffs may be capable of excelling in more than one type of business. For instance, the former chairman of General Electric, Jack Welch, was widely praised as providing superior senior management for the wide range of businesses in which General Electric participated.