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CMA Intermediate · Operations Management and Strategic Management · Formulation and Implementation of Strategy

A Chennai textile group sells its loss-making synthetic yarn division to a rival and uses the proceeds to strengthen its core cotton fabrics business. Which retrenchment strategy is this?

This is divestment, because the group is selling off one business unit, the loss-making yarn division, to another firm and redeploying the money into its core business. Turnaround would fix the unit internally, and liquidation would close down the entire company, which has not happened.

  1. ADivestmentCorrect
  2. BTurnaround
  3. CLiquidation
  4. DCaptive company strategy

Explanation

Selling a division or business unit to another firm, usually to raise funds and refocus, is divestment. Turnaround is internal restructuring to improve performance, and liquidation means winding up and selling off assets of the whole firm, which is not the case here.

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