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The problem with conglomerates is they tend to be inefficient over the long term. They use winning businesses to subsidize losing legacy businesses that managem
by jdsully 3y ago
The problem with conglomerates is they tend to be inefficient over the long term. They use winning businesses to subsidize losing legacy businesses that management has an attachment too. This eliminates the pressure they would normally have to fix the underperforming business and investors lose some of the benefit of the well performing business that is siphoned off.
Even tech isn’t immune to this, Amazon would be way more valuable if it split into separate retail and cloud businesses.
- hakfoo 3y agoYou trade flexibility for that promise of efficiency. Since AWS prints money, Amazon-Retail could afford to experiment with stuff. For example, I'd argue that Prime Video hit the market a few years ahead of viability, when we were still in the "I have Netflix and it has All The Things" era of the market. Now they've got a ready-to-go platform and content while other players scramble.