Importance of Strategic Business Unit

The strategic business unit (SBU) is an often talked about topic, especially when it comes to strategic management. It is actively adopted by numerous companies in order to grow and produce more products.

A strategic business unit represents an independent, specialized department or a sub-unit that is focused on a given objective. It has its own mission which could be very different from the parent organization.

The Main Focus of the Strategic Business Unit

The strategic business unit is mostly concentrated on long-term business goals. SBU manufactures and delivers its own products and makes all the decisions related to them, while the head office is tracking income and profits.

For example, Panasonic and Coca-Cola are great examples of SBU. Panasonic has separate divisions to manage different products. While Coca-Cola shows very effectively how multiple subsidiary products that exist in the same industry can be managed.

Characteristics of Strategic Business Units

A strategic business unit that the organization will adopt should be well suited for the strengths and benefits of the company and should be able to use all the opportunities that will be in the industry. Also, each SBU has specific products and services.

A good strategic business unit will be a separate unit of business or a group of businesses, that can plan everything independently. They are dealing with all the responsibilities related to their environment, like profits, strategic planning, and general performance.

Types of Strategic Business Units

There are several different types of strategic business units, the first one is Stars. Stars are SBUs that are dominant players in the market and are characterized by high growth and market share. Cash Cows are the kind of SBUs that grow more slowly.

Sometimes organizations have difficulty deciding where they should invest their money, time, and resources. In this case, they have to decide finally, if they are going to invest in a specific business or just get rid of it, that is what Question Marks are about.

While Dogs are underachievers, they have a low market share, and their profits most of the time are only enough for their unit. In any case, most companies don’t invest in these kinds of units and prefer to search for more promising options.

How SBU Can Help you with Marketing Strategy

Marketing strategies are all about achieving the company’s goals, understanding customers, and creating a distinct competitive advantage. It is essential to understand the needs of organizations and what they need for improvement.

Information that you can get from here will help you to understand what kind of business strategic unit you need, how you can implement this unit in your organization, and how you can benefit from it. With a suitable strategic business unit, you can be more profitable and have numerous advantages. You can become more successful and visible on the market.

Factors That You Have to Consider

The importance of SBU is great for your marketing strategy, but there are several factors that you have to consider in order to take successful steps in the future. First of all, look through your industry and determine carefully what kind of products or services should be and should not be related to your strategic business unit. Make favorable choices.

Define generally how to choose SBU and understand its potential. Look through current SBU and try to understand more about potential SBUs. Define what kind of business models you would implement for your SBUs and how you are going to monitor those business models. 

How to Set up a Strategic Business Unit

When you are setting up a strategic business unit, you need to understand more about specific requirements. The very first one that you have to consider is adapting the organizational structure. You have to pay specific attention to this aspect when planning what you want to do for the business unit. Also, understand how your company could generally react to those changes.

You should carefully choose the managing team as well who will have a great understanding of your strategic business unit. You have to adjust the corporate culture as well. Generally, try to make your employees feel from the beginning that they are involved in a very important process and they are being appreciated by you for their effort.

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