Future Business Leaders of America (FBLA) Business Management Practice Test

What is the definition of divestiture in a business context?

1. When a company decides to expand its operations

2. When a company is dissolved or sold

3. When a new product line is introduced

4. When a company merges with another

The correct answer is: When a company is dissolved or sold

Divestiture in a business context refers to the process of a company selling off a portion of its assets, divisions, or subsidiaries. This decision is often made to streamline operations, raise capital, or refocus on core business activities. By selling or spinning off parts of the business, a company can shed underperforming assets or reduce its scale of operations. In this particular case, the definition accurately aligns with the concept of a company being dissolved or sold. This can involve selling an entire division or simply exiting a particular line of business. The other options reflect actions related to growth or collaboration rather than the specific act of divesting assets or operations, making them unsuitable definitions for divestiture.