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Definition: A strategic business unit, popularly known as 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. Description: A strategic business unit or SBU operates as an independent entity, but it has to report directly to the headquarters of the organisation about the status of its operation. 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. There are several benefits of having an SBU. This principle works best for organisations which have multiple product structure. 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. It will be quick to react when the product market takes a shift or changes start happening before the shift happens.
Product organisational structure is a framework in which a business is organised in separate divisions, each focusing on a different product or service and functioning as an individual unit within the company. What is a product-based structure?In a product-based structure (also known as a divisional structure), you assign employees into self-contained divisions according to:
The structure may have several layers of managers and employees. Each layer (ie division) can have its own marketing team, its own sales team, and so on. A manager typically reports to the head of the company by product type, eg sporting goods, housewares and general merchandise. Certain key functions (eg finance or human resources) may be provided centrally. For example, a computer software business may divide its structure according to its two distinct customer groups - home users and business users. In such an arrangement, all employees working on the development, sales or promotion of business software would be in one division, while everyone working on software for home users would be in another. Product structure advantages and disadvantagesProduct organisation may not suit everyone, but is likely to provide distinct advantages to those businesses that:
Product structure can also help your business:
Product organisational structure does have certain disadvantages, including being difficult to scale and potentially:
Product or divisional structure is mainly suitable for larger companies with two or more key product lines, strategic customers or markets. For businesses operating in different markets or requiring distinct units, see also organisational structure by geographical area and decentralised organisational structure. Which of the following can be defined as the process of dividing an organization according to specific products or services being created?Process departmentalization involves dividing an organization .
Which of the following is the process of dividing an organization to offer products and meet the needs of identifiable buyers?Market segmentation is the process of dividing prospective consumers into different groups depending on factors like demographics, behavior and various characteristics. Market segmentation helps companies better understand and market to specific groups of consumers that have similar interests, needs and habits.
What kind of departmentalization happens when an organization is divided into operations related to different areas of the country?With geographic departmentalization, an organization is divided according to the areas of the country or the world that they serve.
Which of the following is an organizational structure created by superimposing one form of structure onto another?Cards
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Which of the following is the process of dividing an organization according to the areas of the country or world served by a business unit?
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