DECA Buying and Merchandising Practice Exam 2025 – Complete Prep Guide

A parent company with multiple operating divisions that are called subsidiaries is referred to as a conglomerate. This term describes a large corporation that owns a variety of companies across different industries or sectors. By doing this, a conglomerate can diversify its business interests and reduce risks associated with being dependent on a single market or industry.

Conglomerates often operate in various fields, allowing them to leverage synergies, share resources, and mitigate downturns in specific markets. This structure not only provides financial stability but also offers broader growth opportunities as the parent company can strategically invest and manage different subsidiaries.

The other terms presented do not accurately capture this concept. A franchise pertains to a business model where individuals, known as franchisees, are granted rights to operate a business under a brand’s name, while a joint venture represents a partnership between two or more businesses collaborating for a specific project or goal. Lastly, a cooperative is an organization owned and operated by a group of individuals for their mutual benefit, often focused on a specific trade or service. These definitions highlight the unique nature of a conglomerate as a parent company with diverse subsidiary operations.