Question

Why do you think that other conglomerates such as Honeywell and United Technologies are performing much better than General Electric during the last 5+ years? What strategic actions are other conglomerates taking and/or what strategic actions is General Electric not taking that explain why these other conglomerates are performing better than General Electric?

Answer 1

Conglomerate are companies that owns several other business which generally have different product and services under one corporate group. a conglomerate is generally a multinational company that work for diversification and entering into different sectors. Honeywell is an multinational conglomerate American company making different commercial and consumer products while United technologies is also conglomerate American company which deals in aircraft engine, aerospace systems , elevators, fire an security system. like any other business conglomerates also have both risk and reward. some firms like Honeywell and United Technologies have gained from it while company like General electric which deals in aviation , healthcare, digital industry, venture capital etc. have not gained so much in last few years. A conglomerate can be successful if it focuses on "Synergy", it is the combined output of two companies which is much better than independent , individual companies. if companies are planning for conglomeration they must also check if it will have synergy effect, similarly diversification may be a key factor behind the success of any conglomeration. if the business of parent company gets diversified in new areas then it can bring profitability. the conglomerate should be capable of giving good growth, profitability to the parent company. companies like Honeywell and United technologies conduct detailed analysis before going for the above process and this is the major reason behind their success while a conglomerate fails if it enters in highly diversified business - each having different and multiple discipline which is very difficult to manage, leading to poor performance, high operating cost, low profitability etc. so if General Electrics performs thorough analysis of each buyout and compare the potential advantage as well as disadvantages then the company can be a successful conglomerate.