Marketing Short Notes on 'strategic business unit'

A strategic business unit (SBU) is an organizational subunit that acts like an independent business in many major respects, including the formulation of its own strategic plans and its own marketing strategy. An SBU may share its parent organization’s corporate identity or develop its own brand identity, depending on the degrees of freedom allowed to the management of the division.

A one-fit-all strategic approach would be inadequate in large, diversified organizations and multinational companies. Dividing the corporation’s operations into SBUs increases efficiency and market focus and efficiently organizes the business portfolio of a broadly diversified company.

SBUs are found to be a viable form of organizational sectioning because they ensure that products and product lines are given specialized focus, as if they were developed and marketed by an independent company. Products with smaller sales volumes and profit margins than a corporation’s top performers would still be nurtured and promoted by its SBU. The division would focus on a market sector that may be small in comparison but still constitutes a profitable market niche.