About Business Units

When a business reaches such a size that a small group cannot effectively handle all of its routine tasks, the leaders may opt to split the company into sections. These sections can be categorized by geography, specialty or product line. Companies may also choose how they split their workforces, casting employees and managers into either subordinate departments or into autonomous strategic business units.

Strategic Business Unit Qualities

Strategic business units have their own complete organizational structure and can function as separate units from the parent company. SBUs produce their own strategic path and can function as self-sufficient businesses, but they still report their actions to the home office. SBUs usually have separate marketing plans, revenue sources and performance expectations, but an SBU may still act as a component of a larger business.

Strategic Business Unit Examples

Businesses develop SBUs to provide their customers with dedicated service in a specific arena, with all the infrastructure of an independent firm. For example, auto manufacturers such as Ford and General Motors have their own SBUs solely responsible for underwriting car loans for potential buyers. In 1933, the CEO of Panasonic divided the company into three SBUs: one for the manufacture and sale of radios, one to create lighting and battery products, and one to develop synthetic resins and electrothermal products.

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