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Asked by dhodges4 - 3 years ago
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Richard Level 78 / Retired Dentist
Answered 3 years ago
In essence, the SBU is a profit making area that focuses on a combination of product offer and market segment, requiring its own marketing plan, competitor analysis, and marketing campaign. A Strategic Business Unit emerges at the cross-over between:

A product offering that the company could make and
A reachable market segment that has a high value profit potential.

That is to say, if there's a big enough market niche for a product we can supply, then we may want to create a SBU that focuses on that opportunity. 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 smaller size of the SBU can help make it nimble to adapt to profit potential.

However, it is an established principle that an overall strategic plan is essential for success. Companies that lack this may suffer from 'deworseification' as one money manager put it.
The same principle is important in playing Chess.

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