What does divestment involve?

Divestment involves selling off business assets or subsidiaries. This strategic decision can arise from a need to focus on core operations, improve financial performance, or respond to market changes. When a company divests, it typically aims to generate cash flow, reduce debt, or streamline its operations by shedding non-core segments.

The process of divestment can include selling divisions, subsidiaries, or specific assets that no longer align with the company's strategic goals. This action often allows the remaining business to focus on areas that are more profitable or strategically important, ultimately leading to a more efficient allocation of resources within the company.

The other choices involve activities that do not pertain to divestment. Acquiring other companies refers to mergers and acquisitions, which contrasts sharply with the concept of divesting. Reinvesting profits back into the company focuses on internal growth rather than external reductions of assets or subsidiary operations. Lastly, increasing operational efficiency entails making existing operations more productive without necessarily selling any parts of the business. Each of these activities serves different objectives and strategies within a business context.