Strategic Business Unit or SBU is understood as a business unit within the overall corporate identity which is distinguishable from other business because it serves a defined external market where management can conduct strategic planning in relation to products and markets. The unique small business unit benefits that a firm aggressively promotes in a consistent manner. When companies become really large, they are best thought of as being composed of a number of businesses (or SBUs).
In the broader domain of strategic management, the phrase “Strategic Business Unit” came into use in the 1960s, largely as a result of General Electric’s many units. These organizational entities are large enough and homogeneous enough to exercise control over most strategic factors affecting their performance. They are managed as self contained planning units for which discrete business strategies can be developed. A Strategic Business Unit can encompass an entire company, or can simply be a smaller part of a company set up to perform a specific task.
The SBU has its own business strategy, objectives and competitors and these will often be different from those of the parent company. Research conducted in this include the BCG Matrix. SBU is an operating unit or planning focus that groups a distinct set of products or services, which are sold to a uniform set of customers, facing a well-defined set of competitors. The external (market) dimension of a business is the relevant perspective for the proper identification of an SBU. Therefore, an SBU should have a set of external customers and not just an internal supplier.
A SBU is generally defined by what it has in common, as well as the traditional aspects defined by ‘hary, of separate competitors and a profitability bottom line. The commonalities are five in number: Success factors There are three factors that are generally seen as determining the success of an SBU the degree of autonomy given to each SBU manager, the degree to which an SBU shares functional programs and facilities with other SBUs, and the manner in which the corporation is because of new changes in market.