Strategic Management: Formulation and Implementation

Strategic Business Units

The term business strategy (or business-level strategy) refers to the managerial plan for a single business.

Therefore, the simplest way to think about business strategy is its application to a "single specific line company". A single-line company sells a closely related group of products or services to a recognized class of customers. Many companies plan their strategies on the basis of the strategic business units (SBU). The SBU is an organizational concept defined by the products offered to a market segment or strategic segment.

"A strategic business unit (SBU) is a grouping of business subsidiaries based on some important strategic elements common to each. The related elements could be an overlapping set of competitors, a closely related strategic mission, a common need to compete globally, an ability to accomplish integrated strategic planning, common key success factors, and technologically related growth opportunities" (Arthur A. Thompson, Jr., and A. J. Strickland III).

Some companies have only one SBU, in which case SBU strategy is the same as that for the company as whole. Others, have many different SBU.