Question

Why do you think Google enthusiastically invests in non-core businesses (Moonshots)?

Why do you think Google restructured and created a new holding company, Alphabet?

What are the benefits of this conglomerate structure? What are the drawbacks?

Answer 1

The company enthusiastically invested in non-core businesses mainly because of the following reasons.

• For creating new markets.
• For the expansion of the consumer base.
• To brand the company as a provider of all internet related services.
• It helped the company to improve the capacity of its existing products.
• The company wants to focus on things that may not be relevant now but will be relevant in the future.

Reasons behind restructuring and creating a new holding company

The following are the reasons why the company restructured and created a new holding company.

• There will be independence for each operation of the company.
• For promoting experiments in the company.
• For ensuring better transparency.

Benefits of the conglomerate structure

The following are the benefits of the conglomerate structure of the company.

• The company could diversify its businesses.
• The company shall reduce its business risk.
• The company could create new markets.
• The company shall expand its customer base.

Drawbacks of the conglomerate structure

The following are the drawbacks of the conglomerate structure of the company.

• The company may get deviate from its core operations.
• It may increase the cost of operations of the company.
• Some accounting problems may occur.

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