The Strategic Business Unit

If so, how they manage all their products or the branches spread all over the world? 

Essentially, they have to strategically group the products/businesses into manageable and related business units and then take them up for strategic planning.

Now, the main concern is, What is the best way of grouping the products/businesses of the large enterprises?

Actually, this is a question which innovates the concept of SBU. 

Then, what is Strategic Business Unit (SBU)?

An SBU is a grouping of related businesses for the composite planning treatment. As per this concept, a multi-business enterprise groups its large number of businesses into a few distinct strategic business units. The purpose is to provide effective strategic planning treatment to each one of its products/businesses. 

It focuses to group the businesses into an appropriate number of strategic business units before the firm takes up the strategy formulation task.

The principle underlying the grouping is that all products which related from the standpoint of function should fall under one SBU. 

In other words, the SBU helps a multi-business corporation in grouping its businesses into integrated units accordingly strategy is formulated

Characteristics of Strategic Business Unit

Let’s point out the common characteristics that a SBU has…

• It is a scientific method of grouping the businesses of a multi-business corporation which helps the firm in strategic planning.
• It formulates the strategic planning based on territorial units.
• It helps in integration of related business units for strategic planning priorities.
• Unrelated products/businesses in any group are separated.

The Strategic Business Unit(SBU) provides the right direction to strategic planning by removing the uncertainties and confusion that often happened in such multi-business enterprises in the matter of grouping of the businesses.

If you have any queries, please feel free to comment.

Thank You.