Can large companies simply buy large companies from smaller industries in order to a) get passive income and b) have alternate industries to fall back on?

Question

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

Answer 1

They certainly can,and often do. There was that infograph going around recently about how there are about 100 companies that own some ridiculous percentage of everything we buy. A lot of those products started out as being owned by independent companies, then were brought out by the big ones.

Another common trick is to buy a competitor and shut it down since long term that is more financially beneficial than competing with them.