Strategic Management

Strategic business unit

.
• Strategic Business Unit (SBU) implies
an independently managed division of a large
company,
• having its own vision, mission and objectives,
• whose planning is done separately from other
businesses of the company.
• The vision, mission and objectives of the
division are both distinct from the parent
enterprise and elemental to the long-term
performance of the enterprise.
• the company engaged in a diversified range of
businesses, categorises its multitude of
businesses into a few separate divisions, in a
scientific way.
• It can be a business division, a product line of
the division or even a specific product/brand,
targeting a particular group of customers or a
geographical location.
 Characteristics of Strategic Business Unit
• Separate business or a grouping of similar
businesses, offering scope for autonomous
planning.
• Own set of competitors.
• A manager who is accountable for strategic
planning, profitability and performance of the
division.
• A strategic business unit is specially formed to
target a particular market segment, which
requires expertise in production or management,
not present in the parent company.
• The structure of SBU consist of operating units;
wherein the units serve as an autonomous
business.
• The top corporate officer assigns the
responsibility of the business to the managers,
for the regular operations and business unit
strategy.
• So, the corporate officer is accountable for the
formulation and implementation of the
comprehensive strategy and administers the
SBU by way of strategic and financial controls.
• In this way, the structure combines related divisions of
business into the strategic business unit and the senior
executive is empowered for taking decisions for each unit.
• The senior executive works under the supervision of a
chief executive officer.
– There are three levels in a strategic business unit, wherein
the corporate headquarters remain at the top, 
– SBU’s in the middle and
– divisions clustered by similarity, within each SBU, remain at the
bottom.
– Hence, the divisions within the SBU are associated with each
other, and
– the SBU groups are independent of each other. From the
strategic viewpoint, each SBU is an independent business.
• A single strategic business unit is considered as
a profit centre and governed by the corporate
officers.
• It stresses over strategic planning instead of
operational control so that the separate
divisions of the SBU can respond as fast as they
can, to the changing business environment.
• NESTLE SBU s
• Food products, like maggi
• Dairy products like Nestle milkmaid,
• Chocolate products like Kitkat
• Beverages like nescafe, nestea
 SONY SBUs
• electronics,
• game,
• music,
• pictures,
• finance services
• communication network