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StrategicBusinessUnit (SBU)
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"The bigger a
company gets, the
smaller it's brainsget."
Clark Howard
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1. Introduction A strategic business unit is a significant
organization segment that is analyzed todevelop organizational strategy aimed atgenerating future business or revenue.
Exactly what constitutes an SBU varies fromorganization to organization.
The concept of SBU was developed byGeneral Electric company of USA to manageits multi product business. In, multi productor multi geographical area companies,strategic business divisions are created to
manage effectively each of the products.
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1. Introduction Although SBU's vary drastically in form, they
have some common characteristics. AllSBU's are a single business (or collection ofbusinesses), have their own competitors anda manager accountable for operations, andcan be independently planned for.
A single business or a collection of relatedbusinesses that can be planned for
separately from the rest of the company SBU has its own set of competencies
SBU has a manager who is responsible for
strategic planning and profit performance
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1. Introduction The Strategic Business Unit (SBU) is an
adaptation of the divisional structurewhereby various divisions or parts of
divisions are grouped together based on
some common strategic elements, usuallylinked to distinct product/market differences
The advantages and disadvantages of the
SBU form are very similar to those identifiedfor divisional structures.
Economically distinct business area.
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1. Introduction SBU are defined by product-market
orientation SBU Competes in its strategic group
SBU Takes the form of:
Corporation/company Subsidiary
Division
Distinct organizational unit In larger organizations, an SBU could be a
company division, a single product, or a
complete product line.
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1. Introduction
In smaller organizations, it might be the
entire company.
A SBU can be diagrammatical represented
as follows: -
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2. Divisional Structure Division is a business unit having a clear set of
customers and competitors. A division can beindependently planned within the organization
and has profit and loss responsibility.
When organizations get large, they becomeslow, awkward, unmanageable, inflexible, and
difficult to focus. They distance people from
each other, and consume more energy than
they release
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3. Characteristics of SBU The Characteristics of Strategic Business Units
(SBU's) can be elaborated as follows: -- It is a single business or collection of related
businesses / Independent management.
- It has its own competitors / Intra competition.- It has a manager who is accountable for its
operation.
- It is an area that can be independently
planned for within the organization
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5. Advantages of SBU A firm adopting the concept of SBU can reap
the following benefits:- Intra Competition.
- Effective Management.
- Proper recognition.- Motivation to employees.
- Higher efficiency.
- Better customer service.
- Facilities Innovation.
- Corporate Image.
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COMPETING
CORPORATIONS
THE CORPORATION
THE MARKET
4. Strategic Business Unit
Structure
COMPETITION IN
STRATEGIC GROUP
COMPETITION IN
STRATEGIC GROUP
COMPETITION IN
STRATEGIC GROUP
COMPETITION IN
STRATEGIC GROUP
STRATEGIC
BUSINESS UNIT
STRATEGIC
BUSINESS UNIT
STRATEGIC
BUSINESS UNIT
STRATEGIC
BUSINESS UNIT
TARGET
MARKET
TARGET
MARKET
TARGET
MARKET
TARGET
MARKET