divestment


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Divestiture

The removal of assets from a person or firm's balance sheet through sale, exchange, closure, bankruptcy, or some other means. Divestiture may occur when a person or company has acquired more than he/she/it can properly administer. This sort of divestiture may occur slowly; for example, a corporation may slowly sell subsidiaries to concentrate exclusively on its core competence. On the other hand, divestiture may occur because a person or company has become cash poor and needs to build liquidity very quickly.

divestment

the closure or sale by a firm of one or more of its operating units (for example a production plant) or a whole business division. In the former case, divestment usually occurs in order to rationalize production and/or to concentrate the firm's output in a more modern plant. In contrast, the divestment of a whole business division represents a more fundamental strategic decision on the part of the firm. Divestment in this case may reflect a number of considerations, including a desire to pull out of an unprofitable, loss-making activity deemed to be incapable of TURNROUND; the wish to shed peripheral businesses in order to release cash and managerial resources which, in opportunity cost terms, could be more effectively, redeployed in the firm's other activities; a major rethink of a firm's strategic position involving a retrenchment back to ‘core’ businesses; and finally, a wish to avoid the opposition of the COMPETITION POLICY authorities, particularly in cases of MERGERS and TAKEOVER.

Divestment by one firm often presents an opportunity for some other firm to diversify (see DIVERSIFICATION), in turn, into new business areas, or for former competitors to increase their market shares. See ENDGAME STRATEGY, BUSINESS STRATEGY, BOSTON MATRIX, DEMERGER, MANAGEMENT BUYOUT, JOINT VENTURE, PRODUCT MARKET MATRIX, PRODUCT RATIONALIZATION, CORE BUSINESS.

divestment

the closure or sale by a firm of one or more of its operating units (e.g, a production plant) or a whole business division. In the former case, divestment usually occurs in order to rationalize production and/or to concentrate the firm's output in a more modern plant. In contrast, the divestment of a whole business division represents a more fundamental strategic decision on the part of the firm. Divestment in this case may reflect a number of considerations, including a desire to pull out of an unprofitable, loss-making activity; the divestment of ‘peripheral'businesses in order to release cash and managerial resources that, in opportunity cost terms, could be more effectively redeployed in the firm's other activities; divestment may reflect a major rethink of a firm's strategic positioning, involving a retrenchment back to ‘core’ businesses. Finally, divestment may be required so as to avoid the opposition of the COMPETITION POLICY authorities, particularly in cases of merger and takeover.

Divestment by one firm, in turn, often presents an opportunity for some other firm to diversify (see DIVERSIFICATION) into new business areas or for former competitors to increase their market shares. See RATIONALIZATION, BOSTON MATRIX, DEMERGER, MANAGEMENT BUYOUT.

References in periodicals archive ?
The solidarity expressed in the FSAM was with a struggle far away (far away at least in practical terms, even if it was also conceived by many as fundamentally a global struggle), but it was a solidarity that was organized and expressed locally in corporate boycotts, in consulate pickets, and in local and state divestment campaigns in cities across the United States before it could be effectively mobilized for the national campaign for sanctions.
I know of only one attempt by prominent student groups to discuss the impact of the pullouts on divestment organizing.
Sabeel, however, has concentrated on selective divestment, Mr.
another 280,000 metric tons/yr of woodfree coated capacity will also go with the divestment of the Grycksbo mill in Sweden
His chief of staff explained that divestment was a "moral imperative' for the Governor.
The report highlights that divestment of producing assets is a key reason for reduced output of oil and gas majors in Q3 2012.
Previous studies have calculated the general costs divestment inflicts upon a portfolio due to higher risk, reduced diversification and increased transaction fees.
According to the company, this SBS divestment allows it to accelerate the deleveraging of its balance sheet and provides much more financial and strategic flexibility to grow its stronghold businesses.
ISLAMABAD -- Finance Minister, Senator Mohammad Ishaq Dar here on Thursday chaired a meeting to review the divestment process with regard to state enterprises.
Stephen Zunes misstates important facts, among them the purpose of the boycott, divestment and sanctions (BDS) efforts against Israel (NCR, July 19-Aug.
To that end they want Massachusetts to become the eighth state to enact divestment legislation, part of an overall strategy to stop the Sudanese government's systematic slaughter of Darfur citizens, which President Bush has condemned as genocide.
The resolution was passed at the November meeting of COGS; it states that the eco-justice committee, along with the financial management development investment sub-committee, should "explore a range of socially responsible investment strategies, including corporate engagement and positive investment or divestment.