EDIT: And they just leave those sub companies as they are (provided they are already making profit), so the only thing that changes it that the excess profit could go to the whole company; they leave it to function the same
ALSO EDIT: Not necessarily passive income (mb) but just to expand the larger companies reach- theoretically could one country have non-negligible stakes in every major industry through this method?
Thank you all this was actually very helpful 😀
In: Economics
They can but the issue is it’s difficult to actively manage a company from a different industry without having the skillset available. Yes, they can hire people with specialization to run the company but you still need knowledge to hire the right people.
It would be very difficult for let’s say… Nike to buy a computer company and then run the company efficiently. For example, Apple wanted to make electric cars but abandoned the idea. It goes to show how important and difficult specializing in a specific industry can be.
What companies actually do is they invest their money in a whole lot of industries, pretty much just like how you and I buy stocks.
Basically, passive investment > active investment because it’s much less risk and work
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