In business, a strategic business unit (SBU) is a profit center which focuses on product offering and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even though they may be part of a larger business entity.
An SBU may be a business unit within a larger corporation,
or it may be a business unto itself. Corporations may be composed of multiple
SBUs, each of which is responsible for its own profitability. General Electric is an example
of a company with this sort of business organization. SBUs are able to affect
most factors which influence their performance. Managed as separate businesses,
they are responsible to a parent corporation.General electric has 49 SBUs.
Companies today often use the word segmentation or division when referring to SBUs or an
aggregation of SBUs that share such commonalities.
A
SBU is generally defined by what it has in common, as well as the traditional
aspects defined by McKinsey: separate competitors; and a
profitability bottom line. Four commonalities include:
- Revenue SBU
- Like Marketing Cost SBU
- Like Operations/HR
Profit SBU
- Like sales judged on
net sales not gross
There
are three factors that are generally seen as determining the success of an
SBU:
- the degree of autonomy
given to each SBU manager,
- the degree to which an
SBU shares functional programs and facilities with other SBUs, and