When a company chooses to divest a particular strategic business unit, it ________.
A) increases the advertising budget for that strategic business unit
B) invests more in the strategic business unit to build its market share
C) sells off or phases out the strategic business unit
D) invests just enough in the strategic business unit to keep its market share at the current level
E) gradually increases investment in the strategic business unit over time to maximize profits

Question

Quizplus · Accepted Answer

When a company chooses to divest a particular strategic business unit, it means that they are selling off or phasing out that unit. Divestment is usually done when a company wants to refocus its resources on core areas of business or when a particular business unit is not performing well. It is unlikely that the company would increase advertising or invest more in a unit they have decided to divest. The company may invest just enough to keep its market share, but the ultimate goal is to sell off or phase out the unit. Increasing investment over time would not make sense if the company has already decided to divest.

When a Company Chooses to Divest a Particular Strategic Business