What is the primary focus of a firm in a divestiture?

In the context of a divestiture, a firm's primary focus is to sell off unproductive business units. This strategic decision is often made when a company identifies that certain parts of its operations are not contributing positively to its overall profitability or strategic objectives. By divesting these units, the firm can streamline its operations, improve its financial health, and concentrate resources on more productive areas that align with its mission and goals.

Divestitures can also be motivated by the need to generate cash, reduce debt, or refocus on core competencies. The execution of a divestiture allows the company to reposition itself in the market, often leading to a more competitive and efficient organization. This approach contrasts sharply with the ideas of merging, acquiring new markets, or expanding product lines, which are focused on growth and expansion rather than on rationalizing existing operations.