Strategic Business

Unit
MBS 1st Semester
Unit-2
Presented by:
Mohan Bhandari
(HOD- RMC/GMMC)
 1. SBU Model
Corporate
Organization
Level

Business
SBU SBU
Level
Operational Business Business
Level Activities Activities
……contd
• SBU, is a fully-functional unit of a business that has its own
vision and direction.
• 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. 
• SBU operates as an independent entity.
• 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.
• This principle works best for organizations which have
multiple product structure.
…..contd
• Distinct unit of business that develops its own
strategic vision and direction.
• Concentration on market segmentation.
• SBU have discrete marketing plan, analysis of
competition.
• Concentration on target audience and provide cost
leadership to the company.
• The unit which stands alone from the rest of the
firm, has its own competitors and its own manager,
and is responsible for strategic planning and profit.
……contd
• The best example of SBU are companies like Proctor
and Gamble, LG etc. These companies have different
product categories under one roof. For example, LG
as a company makes consumer durables. 
• It makes refrigerators, washing machines, air-
conditioners as well as televisions.
• These small units are formed as separate SBUs so
that revenues, costs as well as profits can be tracked
independently. Once a unit is given an SBU status, it
can make its own decisions, investments, budgets
etc.
…..contd
• Home Entertainment Company
The business unit focusing on technology related to televisions,
PDP (programmed data processor) modules and audio-video
products.
• Home Appliance Company
The HA unit focus on refrigerators, washing machines,
kitchenware and other domestic appliances.
• Air Conditioning Company
Commercial and residential conditioning, home network
(HomNet) business and building management system.
• Business Solutions Company
hardware, software, content and systems
• Mobile Communications Company
Mobile Communications unit, a critical part of the company’s
future strategy.
 Levels in SBU
• Corporate headquarters remain at the Top
• Middle
• Divisions clustered

Divisions are independent of each other