Disinvestment strategy includes

Question

Question

This question was previously asked in

MPPSC Assistant Prof 2022 Commerce Paper II

The sell or liquidation of a portion of business or major division, profit center subsidiary of business unit
The management no longer wishes to remain in business either partly or wholly due to continuous losses and unviability
The merger is considered to be process when two or more companies come together to expand their business operations
They safeguard its existing interests and strengths to pursue will establishment and tested objectives

Answer 1

The correct answer is - The sell or liquidation of a portion of business or major division, profit center subsidiary of business unit

Key Points

Disinvestment strategy
- Involves the sell or liquidation of a portion of the business or a major division.
- It is a strategic decision taken to reduce assets for various reasons, including financial restructuring.
- Often used to improve financial performance by focusing on core activities.

Additional Information

Reasons for Disinvestment
- To focus on core operations by shedding non-core or underperforming assets.
- To raise capital for other strategic investments or to pay off debts.
- To improve operational efficiency by streamlining business activities.
Types of Disinvestment
- Partial Disinvestment: Selling a minority stake to raise capital while retaining control.
- Full Disinvestment: Selling the entire stake, thus exiting the business completely.
Impact of Disinvestment
- Can lead to restructuring and more efficient business operations.
- May result in short-term financial gains but also potential long-term strategic shifts.