QS Study

Strategic Business Unit (SBU)

Strategic business unit (SBU) is an autonomous division within some large companies that are responsible for crafting and executing a strategic plan for their own unit separately: That is, in the Strategic business unit (SBU) every unit works as if it is a distinct organization. Typically, a strategic business unit operates as a separate unit, but it is also an important part of the company. It reports to the headquarters about its operational status. There are some advantages and disadvantages of the Strategic business unit (SBU). It operates independently and is focused on a target market. It is big enough to have its own support functions such as HR, training departments etc.

Characteristics;

  • 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.

Advantages:

  • Division of work;
  • Increasing workers efficiency;
  • Co-ordination;
  • Proper utilization of resources;
  • Reduction of cost;

Disadvantages:

  • Inadequate use of resources;
  • Mismanagement;
  • Time-consuming.