3. strategic business units (sbu)

7/29/2019 3. Strategic Business Units (SBU)

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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

3. strategic business units (sbu)

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