STRATEGIC BUSINESS UNIT - SBU

A

abhishreshthaa

Abhijeet S
INTRODUCTION :

  • A SBU is a business unit within the overall corporate identity which is distinguishable from other businesses because it serves a defined external market where management can conduct strategic planning in relation to products and markets.

  • The SBU has its own business strategy and objectives, and these will often be different from those of the parent company.

  • A strategic business unit (SBU) is an organizational subunit that acts like an independent business in all major respects, including the formulation of its own strategic plans.

WHY DO WE NEED SBU:

  • To ensure that a certain product or product line is promoted and handled as though it were an independent business.

  • To ensure that each product or product line of the hundreds offered by the company would receive the same attention as if it were developed, produced and marketed by an independent company.

  • To provide assurance that a product will not get lost among other products (usually those with larger sales & profits) in a large company.

CONDITION FOR A SBU:

To be called a SBU, a business unit must meet specific criteria. An SBU for example must: :
  • Have its own mission, distinct from the mission of the other SBUs.

  • Have definable groups of competitors.

  • Prepare its own integrative plans distinct from those of other SBUs.

  • Manage its resources in key areas and

  • Have a proper size- neither too large nor too small.


BENEFITS

  • Provides a strategically relevant way to organize the business-unit portfolio of a broadly diversified company

  • Facilitates the coordination of related activities with a SBU, thus helping to capture the benefits of strategic fits in the SBU

  • Allows strategic planning to be done at the most relevant level within the total enterprise.

  • Makes the task of strategic review by top executives* more objective and more effective

  • Helps allocate corporate resources to areas with greatest growth opportunities


DRAWBACKS:

  • It is easy for the definition and grouping of businesses into SBUs to be so arbitrary that the SBU serves no other purpose than administrative convenience

  • If the criteria for defining SBUs are rationalizations and have little to do with the nitty-gritty of strategy coordination, then the groupings lose real strategic significance

  • The SBUs can still be myopic in charting their future direction

  • Adds another layer to top management
 
Hello guys, here is the meaning and Definition of STRATEGIC BUSINESS UNIT - SBU..

Strategic business unit (SBU) is a profit center which focuses on product offering and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even though they may be part of a larger business entity.
 
abhishreshthaa said:
INTRODUCTION :

  • A SBU is a business unit within the overall corporate identity which is distinguishable from other businesses because it serves a defined external market where management can conduct strategic planning in relation to products and markets.

  • The SBU has its own business strategy and objectives, and these will often be different from those of the parent company.

  • A strategic business unit (SBU) is an organizational subunit that acts like an independent business in all major respects, including the formulation of its own strategic plans.

WHY DO WE NEED SBU:

  • To ensure that a certain product or product line is promoted and handled as though it were an independent business.

  • To ensure that each product or product line of the hundreds offered by the company would receive the same attention as if it were developed, produced and marketed by an independent company.

  • To provide assurance that a product will not get lost among other products (usually those with larger sales & profits) in a large company.

CONDITION FOR A SBU:

To be called a SBU, a business unit must meet specific criteria. An SBU for example must: :
  • Have its own mission, distinct from the mission of the other SBUs.

  • Have definable groups of competitors.

  • Prepare its own integrative plans distinct from those of other SBUs.

  • Manage its resources in key areas and

  • Have a proper size- neither too large nor too small.


BENEFITS

  • Provides a strategically relevant way to organize the business-unit portfolio of a broadly diversified company

  • Facilitates the coordination of related activities with a SBU, thus helping to capture the benefits of strategic fits in the SBU

  • Allows strategic planning to be done at the most relevant level within the total enterprise.

  • Makes the task of strategic review by top executives* more objective and more effective

  • Helps allocate corporate resources to areas with greatest growth opportunities


DRAWBACKS:

  • It is easy for the definition and grouping of businesses into SBUs to be so arbitrary that the SBU serves no other purpose than administrative convenience

  • If the criteria for defining SBUs are rationalizations and have little to do with the nitty-gritty of strategy coordination, then the groupings lose real strategic significance

  • The SBUs can still be myopic in charting their future direction

  • Adds another layer to top management
Click to expand...

Hey abhi, thanks for sharing the information about SBU. As we know that SBU is a comparatively independent department of a huge company that functions as an independent business. Well, i am also uploading a document for the better explanation of SBU.
 

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