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Strategic Business Unit - SBU

BY: Raja Vikram | Category: Sales-Marketing | Submitted: 2010-05-26 22:00:01
 
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The companies are expanding their business line once they are good at their core sector. They are diversifying their activities into different categories. Hence it becomes a difficult task for them to manage the things. Hence management takes a step to identify the key business area from which they are getting profits. These are called as SBU or Strategic Business Units. In other words "A Strategic Business Unit (SBU) is a separate unit of a company with different mission and Vision, and the planning for it also gets different from the other units of company. Sometimes it may be a product line, Division, Single product or Brand. It is all depend upon the companies that how they break up a SBU.

This concept came into picture in the year 1960 from the initiation of General Electrics. SBU will have their own competitors in the market. It is a different branch working under one tree. Management works on different platforms to increase the attractiveness of SBU. Depending upon the analysis they check up with the promotions and other supports if anything required for the SBU. It is added to manage the things well on the core business. The SBU will have a similarity with the core business which in fact helps the company to perform better in both the divisions. A SBU for HUL can be its different product line like detergent, dish wash, soaps and shampoos and so on. Hence here the product line plays as unit for HUL as SBU.

The theme of a SBU is to utilize the strengths of company and to tap the market. They look at two things one is the attractiveness of SBU and other one is to check with the branding of the company and the opportunity in the market. Hence to find the portfolio methods there is a matrix structure developed by Boston Consulting Group Known as BCG Matrix. By which the company can easily identify the role of their SBU in market.

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Reference : Philip Kotler and Wikipedia

Comments on this article: (2 comments so far)

Comment Comment By Comment Date
Thank you very much, good explanation for a Spanish boy :) Javi 2010-10-26 04:40:04 388
Mr.Javi Gracias, for any other marketing related queries feel free to ask me. Raja Vikram - Author 2010-10-26 10:21:54 391

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