“Growth” is not what typically comes to mind when we hear a company is selling a part of its business. Our natural intuition is to think growth is simply about getting bigger. But growth is about more than expanding – it’s about recalibration. Economies and markets continually change and, at times, contraction may be the best strategy for a company.
Divestment is exactly what DuPont is considering, reports The Wall Street Journal. The company is looking to sell its chemical business, which accounts for approximately one-fifth of its sales. As with acquisition, divestment can be a swift and powerful way to positively reinvest your company to meet new pressures and leverage new opportunities.
In this case, DuPont’s earnings for its chemical business dropped by over 50% from the same quarter in 2012. In response to a changing market, DuPont will shed its chemical business to refocus on more profitable markets such as agriculture and biotechnology. Although the company may be 20% smaller, it will be more focused and may become more profitable in the long term.