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Astrategic business unit (SBU) in businessstrategic management, is aprofit center which focuses on product offering and market segment. SBUs typically have a discretemarketing plan, analysis of competition, andmarketing campaign, even though they may be part of a larger business entity.
An SBU may be a business unit within a largercorporation, or it may be a business into itself or a branch. Corporations may be composed of multiple SBUs, each of which is responsible for its ownprofitability. Companies today often use the wordsegmentation ordivision when referring to SBUs or an aggregation of SBUs that share such commonalities.
General Electric (GE) 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. GE has 49 SBUs.[1]
Business writerMichael Porter has developed avalue chain model which focusses on the business unit, i.e. a firm's activities within a particular industry.[2]
A SBU is generally defined by what it has in common,[clarification needed] as well as the traditional aspects defined byMcKinsey: separate competitors; and a profitability bottom line. Four commonalities include:[citation needed]
There are three factors that are generally seen as determining the success of an SBU:[citation needed]
TheBCG Matrix, a chart designed by Bruce Henderson for the Boston Consulting Group in 1968, may help corporations to analyze their business units or product lines. This helps the company allocate resources; brand marketing, product management,strategic management, andportfolio analysis can use it as an analytical tool.
When using this matrix, SBUs can appear within any of the four quadrants (Star, Question Mark,Cash Cow, Dog) as a circle whose area represents their size. With different colors, competitors may also be shown. The precise location is determined by the two axes, market Growth as the Y axis, Market Share as the X axis. Alternatively, changes over or two years can be shown by shading or other differences in design.xx.[3] Star products currently have high growth and high market-share. The Question Mark identifies products with low share but high growth. A Cash Cow has high share but low growth. Finally, Dog labels a product which has low growth and low share.
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