Strategic Business Unit (SBU)

"The bigger a company gets, the smaller it's brains get." Clark Howard

1. Introduction
A strategic business unit is a significant organization segment that is analyzed to develop organizational strategy aimed at generating future business or revenue. Exactly what constitutes an SBU varies from organization to organization. The concept of SBU was developed by General Electric company of USA to manage its multi product business. In, multi product or multi geographical area companies, strategic business divisions are created to manage effectively each of the products.

1. Introduction
Although SBU's vary drastically in form, they have some common characteristics. All SBU's are a single business (or collection of businesses), have their own competitors and a manager accountable for operations, and can be independently planned for. A single business or a collection of related businesses 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

1. Introduction
The Strategic Business Unit (SBU) is an adaptation of the divisional structure whereby various divisions or parts of divisions are grouped together based on some common strategic elements, usually linked to distinct product/market differences The advantages and disadvantages of the SBU form are very similar to those identified for divisional structures. Economically distinct business area.

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.

1. Introduction
In smaller organizations, it might be the entire company. A SBU can be diagrammatical represented as follows: -

2. Divisional Structure
Division is a business unit having a clear set of customers and competitors. A division can be independently planned within the organization and has profit and loss responsibility. When organizations get large, they become slow, awkward, unmanageable, inflexible, and difficult to focus. They distance people from each other, and consume more energy than they release

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

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.

4. Strategic Business Unit Structure THE CORPORATION

STRATEGIC BUSINESS UNIT STRATEGIC BUSINESS UNIT STRATEGIC BUSINESS UNIT STRATEGIC BUSINESS UNIT

COMPETITION IN STRATEGIC GROUP

COMPETITION IN COMPETITION IN COMPETING STRATEGIC GROUP STRATEGIC GROUP

CORPORATIONS

COMPETITION IN STRATEGIC GROUP

TARGET MARKET

TARGET MARKET

TARGET MARKET

TARGET MARKET

THE MARKET