What is disinvestment?
Disinvestiments, also known as sale, are processes used by companies if it is necessary to start a reduction in capital investment. The sale process was essentially the opposite of investment and includes the sale of current investments to generate assets that can be used for a better advantage in a different way. Businesses sometimes use disinvestics as a means of changing the direction of society to meet the changing needs of consumers and remain competitive.
One of the simplest ways to understand is to sell is to think about a company that has successfully created a product for many years. However, the change in technology reduces the demand for the company's product. A new product is expected to re -capture the interest of consumers. However, it will leave a company with several physical equipment and a large number of equipment that is not required for a production product.
In order to generate income to help in the production of a new product, the company will undergo a disinvestment period. Plants and other equipment that are no longer required for production are sold along with now outdated equipment. By creating revenue from the sale of these selling shares, the company creates sources that represent a capital investment in a new product.
Occasionally, the company can decide to sell a subsidiary or a business unit within the disinvestics strategy. This allows the company to start migration from focusing on one market sector to another sector that has more promising. In some cases, disinvestics include the sale of a business unit of another company. Other times, the business unit is completely started into a separate company.
Disinvestment can also occur when Decision is to make changes in industry regulation. Perhaps the best -known example of this type of disinvestice application would be deregulation of communication diarrheaMysl in the United States in the 80's. Within the process, the Bell system was completely sold and appeared as eight different entities: the new AT&T and the seven regional bell companies that were known together as Baby Bells.
Because disinvestics include sales of resources, companies often look at this process very carefully before doing any type of sale action. It is important to make sure that investments that are released are unlikely to be required in the future and that the income created from the sale of investment is very likely to lead to the increased profitability of the company in the long run.