Discuss the shift away from the conglomerate form in the advanced industrial countries, and its persistence in most emerging markets performance?

Résumé du document

Western business strategies are often held as models for emerging countries. Despite General Electric being the largest worldwide conglomerate, such success stories have become rather rare nowadays in the United States and Europe, although this is not true in Japan for cultural and historical reasons. For this reason, the dismantling of most conglomerates from the developed countries is for many a path to follow in the emerging markets. This belief was reinforced by the financial crisis in Asia and Latin American as multi-lateral financial institutions and consultants pressed for a closer convergence between first and third-world business models, to improve efficiency and productivity. The inefficiency resulting from the family-controlled enterprise model are the arguments used by proponents of this convergence.

Extraits

[...] Growth led to the accumulation of resources and capabilities, which in turn often led to new opportunities in new product markets. Conglomerates also offered to spread the presumably scarce resource of “professional management” across industries, then as a means to reduce corporate risk by building a portfolio of counter-cyclical businesses. Harold Green, the Chief Executive Officer of ITT, famously states (in Hubbard, Palia p113): picking and choosing what companies to acquire, .with our expertise in management and our access to greater financial resources add something to that particular company In most instances, we kept on the same management and introduced the company's managers to the ITT financial and face-to-café General Managers Meetings The unchallenged assumption was that those newly accumulated resources and capabilities would be more profitable being allocated by the “visible hand” of management than being sold or traded in the marketplace (Franko p45). [...]

[...] With the afore-mentioned features of a conglomerate, it seems there are optimal environmental conditions to make their existence more appropriate. But these conditions seems not be found anymore in the industrialised countries. From diversified to focus firms in industrial countries Before analysing the shift away from the conglomerate form in western countries, it is important to underline that the largest conglomerates are found in the industrial countries, with General Electric Company representing more than 14% of the total value of all the conglomerates (Datamonitor, 2005) Despite the publicity, the success of General Electric, Siemens and a handful of other conglomerates has not been the norm. [...]

[...] Discuss the shift away from the conglomerate form in the advanced industrial countries, and its persistence in most emerging markets performance? Introduction Western business strategies are often held as models for emerging countries. Despite General Electric being the largest worldwide conglomerate, such success stories have become rather rare nowadays in the United States and Europe, although this is not true in Japan for cultural and historical reasons. For this reason, the dismantling of most conglomerates from the developed countries is for many a path to follow in the emerging markets. [...]

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