Strategic business unit

Strategic Mgt

1. STRATEGIC BUSINESS UNIT A Assignment of STRATEGIC MANAGEMENT Submitted To: Submitted By: Dr. Pinki Mam Pooja Dahinwal Roll No:180010501015 M.com2year(4 th sem) Department Of Commerce INDIRA GANDHI UNIVERSITY, MEERPUR 2020

2. What I s Strategic Business Unit ?  A  strategic business unit  ( SBU ) is a profit center  which focuses on product offering and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even though they may be part of a larger business entity. An SBU may be a business unit within a larger corporation, 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 own profitability. General Electric 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. 

3. Definition of 'Strategic Business Unit '   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. 

4. Example of (SBUs)

5. Commonalities A SBU is generally defined by what it has in common, as well as the traditional aspects defined by  McKinsey, separate competitors; and a profitability bottom line. Four commonalities include : Revenue SBU Like Marketing Cost SBU Like Operations/HR Profit SBU Like sales judged on net sales not gross

6. FACTORS There are three factors that are generally seen as determining the success of an SBU. 1. The degree of autonomy given to each SBU manager. 2. The degree to which an SBU shares functional programs and facilities with other SBUs. 3. The way in which the corporation handles new changes in the market.

7. Levels of Strategy

8. CORPORATE LEVEL Corporate level strategy defines the business areas in which your firm will operate. It deals with aligning the resource deployments across a diverse set of business areas, related or unrelated. Strategy formulation at this level involves integrating and managing the diverse businesses and realizing synergy at the corporate level. The top management team is responsible for formulating the corporate strategy. The corporate strategy reflects the path toward attaining the vision of your organization. For example, your firm may have four distinct lines of business operations, namely, automobiles, steel, tea, and telecom. The corporate level strategy will outline whether the organization should compete in or withdraw from each of these lines of businesses, and in which business unit, investments should be increased, in line with the vision of your firm.

9. BUSINESS LEVEL Business level strategies are formulated for specific strategic business units and relate to a distinct product-market area. It involves defining the competitive position of a strategic business unit. The business level strategy formulation is based upon the generic strategies of overall cost leadership, differentiation, and focus. For example, your firm may choose overall cost leadership as a strategy to be pursued in its steel business, differentiation in its tea business, and focus in its automobile business. The business level strategies are decided upon by the heads of strategic business units and their teams in light of the specific nature of the industry in which they operate .

10. FUNCTIONAL LEVEL Functional level strategies relate to the different functional areas which a strategic business unit has, such as marketing, production and operations, finance, and human resources. These strategies are formulated by the functional heads along with their teams and are aligned with the business level strategies. The strategies at the functional level involve setting up short-term functional objectives, the attainment of which will lead to the realization of the business level strategy.