- A strategic business unit (SBU) is part of an organization for which there is a distinct external market for goods or services that is different from another SBO.
- Meaning – The SBUs are the natural grouping of part of a corporation. The SBU has a range of related products/ services which has similar technological and production processes. The products/ services are sold in similar or related market segments. The production/ services are sold against a well-defined set of competitors. An SBU is managed by an SBU manager, largely as an independent unit. The SBU has its own set of goals and strategies. Each SBU in a particular organization should be able to operate independently of any other SBU. Each SBU in a particular organization should be able to operate independently of any other SBU.
What is the portfolio strategy?
- From viewpoint of strategic management, the corporations are collection of different products, market, consumer, resources packages. These are the SBU’s as portfolio.
- It combines the assessment of business position with market attractiveness evaluation which emerges from external analysis in general and market analysis, in particular.
- It includes multiple SBUs in the same analysis and addresses the SBU investment decision- which organisational units should receive resources, which should have resources with held, and which should be resource generator.
- It offers baseline recommendations concerning the investment strategies for each SBU based on an assessment of business position and market attractiveness.