Competition. Diversification and conglomeration (most important)

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Competition. Diversification and conglomeration (most important)

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45. Diversification and conglomeration

Diversification there is a process of intersectoral expansion of capital, in which the monopolies rely on technical and economic ties and relations between different sectors.

Diversification belongs main role in the formation of an intersectoral structure of timely monopolies, which gives the concern a diversified character.

Diversification is considered as a kind of processes that make up the intersectoral expansion of monopoly capital. It was this approach that made it possible to form two points of view on diversification. According to the first of them, diversification includes intersectoral capital flows, which lead to the formation of conglomerates, concerns, uniting unrelated (with the exception of financial control) enterprises of different sectors of the economy. According to the second - in the approach to analysis as a process, which is based on the unification of industries on the basis of new connections born by the level of development of production, with new opportunities in the field of organization and management of production, and the further development of scientific and technological revolution.

Diversification is carried out by the largest corporations, this is the main method of economic growth of modern monopolies. Simultaneously with the expansion of the scale of diversification and in connection with it, the monopoly is revising its internal structure, adapting it to the conditions of functioning of the growing production complex.

Conglomeration - the latest form of movement of intersectoral capital. It is fundamentally different from other forms of intersectoral expansion of monopolies. Conglomeration is characterized by very high rates of its implementation.

A conglomerate, unlike vertically integrated and diversified corporations, is an association of enterprises, but is not a production association of enterprises. As a result of conglomeration, there is no interaction between previously independent production links. Mergers and acquisitions have become a way of existence, life of conglomerates, and not just self-enrichment. Outside the buying and selling of firms, conglomerates practically ceased to exist. At their expense, there was an expansion of the system of capitalist marketing, supplemented by the corporate market. This market subsystem had its own price system, its own brokers and dealers, and its own financiers. Conglomerates are only formally industrial associations. In the early stages of the development of the process, none of the production and economic tasks was solved centrally. The conglomerates shifted this function to other agents. Acquiring an efficient company, the conglomerate then sold it if it lost this quality over time.

Author: Ilyina V.N.

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