What is SBU (Strategic Business Unit)?

Strategic business unit undoubtedly play an important role in today’s business environment comprising varied scenarios and transactions.

A strategic business unit (SBU) could be defined as a section, within a larger organization, which is responsible for planning, developing, producing and marketing its own goods or services.

 Management of the strategic business unit (SBU) will be responsible for captivating customers’ satisfaction, feedback and support and defeating rivals in its particular market. Therefore, at this level that competitive strategy is generally formulated.

 The considerations at this level may include:

_ various marketing issues such as Research and development, product development, pricing, promotion and distribution, market analysis;

_ decisions on production technology, production environment;

_ staffing decisions, hiring and firing issues.

A business strategy should be formulated within the broad framework of objectives laid down by the enterprise to make sure that each strategic business unit (SBU) plays its part. The extent to which the management of the strategic business unit (SBU) is free to make competitive strategy decisions varies from enterprise to enterprise and reflects the degree of centralization in the management culture of the firm.