This one is especially for young people who don't remember, actually, when alternative two was a genuine alternative, nor the debate that we had when "conglomeration" became an issue. Actually it was not much of a social or economic debate because we were just steam rolled into accepting it as the new norm.
Which is better?
You have a man who has become a great success with his own company. He started out with one company in his area of expertise, let's say a chemical company. He has decided to "diversify" so he starts acquiring businesses that are outside of and separate from his original area of expertise. So let's say he buys a candy making company, a clothing manufacturer, a television station and a manufacturer of health care products. They all are now part of his "conglomerate." How are they purchased? By paying large fees to financial managers, and then stripping off parts of the acquired companies that are viewed as not helping the bottom line. For "efficiencies" jobs that are "duplicating" are eliminated. The success of the conglomerate is measured by the one stock of the conglomerate and by the salaries the executives receive.
You have a man who has become a great success with his own company. He started out with one company in his area of expertise, let's say a chemical company. He decides to diversify so using his successful model he helps other chemical companies to start up, and to explore greener product lines. He thus goes into new lines of his old business and prospers, while modernizing his own company to be more green and innovative (let's say how to break down the very chemicals he produces in times where a pollution clean up is needed). He is honored as someone who is part of the solution, not part of the problem, and his company thrives, including bringing good jobs to underdeveloped countries.
A candy company has been in business for a long time and provides one hundred people with steady jobs. They "break even" each year; they operate at no loss but not with much profit. Yet one hundred people have homes, benefits and good jobs that they can count on. The owner thinks about offering her product on the Internet or partnering in marketing during special events, thus she continually looks for steady market growth or at least maintenance.
A clothing company is struggling, and they worry about the hundred people who work for them, if they will keep their jobs. They are tempted to let themselves be acquired, knowing that this will be a payout for the owners, but probably the demise of the local jobs. Instead of doing that they decide to remain where they are and find other ways to thrive and keep the local jobs. They create a new line of clothes that is branded by a local celebrity and sold in the casinos. Thus they have a unique clothing product that is not subject to the lowest price wars. They thus create and hang onto their niche, and those jobs.
I don't know much about the television station business, but know that they were the first to be sucked up by media conglomerates. I think that is a free market example of where the chips fall where they may. The question is, does being acquired by a media conglomerate give it more financial security, or render it a mouthpiece for certain viewpoints or "entertainment?" The station owners and managers make a thoughtful decision based on that question.
When the owners of a small health care product line are first asked about their interest in merging with a conglomerate, they wonder, "Why?" They know they have a small but important product, one that is not market driven so much as healthcare need driven. The conglomerate offers large "PR" and "advertising" resources, and says they can hook them up with decision makers who make bulk purchases. It's tempting, but would the product still be manufactured where it is, preserving the local jobs? Could they not do a better job themselves of marketing their product and keeping their profits rather than be absorbed into a conglomerate balance sheet? Would the conglomerate even know anything about their line of health care and care about their patients and their ability to afford their products? The conglomerate's interest stirs them to explore their options, but they recognize that their first obligation is to preserving their local jobs and meeting the needs of their patients and customers at the lowest possible cost.