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GE may be broken but conglomerates have survived

When General Electric has been announced this week that it is preparing to break up, it seems to be closing its head on the manufacturing industry. Yet the history of all corporate events has been recorded many times and, in a way, it still exists.

Once the most important companies in America, GE offerings took everything from plastics and jet engines to credit cards and TV commercials. It has now joined a group of companies emphasizing simplicity, with plans to become three specialized companies focusing on health, energy and aviation.

Since 2017, there have been 178 spinouts worth about $ 800bn, excluding GE, according to Dealogic figures. Siemens split its health and energy components. United Technologies did the same with Otis elevators and Carrier Heating and air conditioning. DuPont is producing polymers, and Toshiba thinks to himself three ways split – though this was not a definite thing.

Conglomerates are often criticized by investors, who say competing businesses are not performing well and share prices fail to reflect the value of the various shares. The argument is compelling: big companies often go slow, spend a lot of money on positions and just focus on their good and bad business while ignoring what is going on.

GE’s chief executive, Larry Culp, said the resolution was “growing interest and accountability” by Trian Partners, a controversial businessman who has been a thorn in GE’s side, admitted.

The history of conglomerates is the drawing of war, not a straight line. Viewers announced “decrease and collapse of conglomerate”In 1994 and declared“conglomerates are dead”In 2007. The breakdown of corporations in the 1980’s reduced the proportion of large U.S. corporations working in three or more divisions from half to 30 percent. ITT split in 1995 and Tyco broke up after the unrest in 2006. However everyone was old enough by 2011 to split again.

“It is a common sense that conglomerates are not good and should be broken. Then we have so many private companies that one feels it is necessary to work directly and horizontally,” says Alexander Pepper, a professor of management at the London School of Economics. and a meeting. “

The re-emergence of conglomerate is in the desire to do better along with the enthusiastic idea that good managers can manage everything. Entering new business lines seems exciting when competition rules restrict the control of one sector. Critics see the boss’s pay and influence growing along with the company’s growth.

Western corporate alliances have been forced to change over the past 50 years. The growth of global competition reduced the ability of one multinational country to offer emerging markets with everything from railroad chambers to connecting towers. And GE did well in the beginning but the economic downturn made many teams fail to do the same.

Multi-sector companies still have advantages in some developing areas where large markets are smaller. And even in the west, some big companies still have their fingers in various pies. Major secret buildings that made their first fortune in breaking US institutions in the 1980s they built their own great kingdoms. KKR companies alone employ more than 800,000 people and its lending arm is larger than most regional banks.

Proponents of her case have been working to make the actual transcript of this statement available online. The site focuses on revenue sharing, allowing CEO professionals to have the right to run their own businesses. PE funds also reimburse investors over time, reducing their right to grow. However, one has to wonder how long the rapid growth can continue.

Modern tech giants also have teams, though they sell a lot, but not completely, in modern technology. Amazon, Apple and Google argue that their businesses are in agreement because everything is in line with the “tech” rubric. And their rapid growth to date has resulted in significant financial costs due to any inadequacies resulting from their rapid growth.

This too may not last long. Two previous technical meetings, IBM and Microsoft, have caught fire in an attempt to expand their reach. When they were busy fighting in the courts, small, well-meaning competitors made good use of them, and in time they grew to become giants themselves. The cycle continues.

brooke.masters@ft.com

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