Vadim Kotelnikov    

Strategic Business Unit (SBU) Case Studies

A Major Product Line Within Your Company


Vadim Kotelnikov, founder of 1000ventures - personal logo   Business e-Coach  


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Characteristics of Strategic Business Units (SBUs)

  • It is a single business or collection of related businesses

  • It has its own competitors

  • It has a manager who is accountable for its operation

  • It is an area that can be independently planned for within the organization


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Strategic Business Units Defined

 A strategic business unit is a significant organization segment that is analyzed to develop organizational strategy aimed at generating future business or revenue. Exactly what constitutes an SBU varies from organization to organization. In larger organizations, an SBU could be a company division, a single product, or a complete product line. In smaller organizations, it might be the entire company.

Although SBUs vary drastically in form, they have some common characteristics. All SBUs are a single business (or collection of businesses), have their own competitors and a manager accountable for operations, and can be independently planned for.

Why Divisional Structure?

"The bigger a company gets, the smaller it's brains get." ~ Clark Howard

When organizations get large, they become slow, awkward, unmanageable, inflexible, and difficult to focus. They distance people from each other, and consume more energy than they release.



Problem to Address

Divisions can create internal competition that ruins cooperation, cross-pollination of ideas, and learning within your firm.

Division Defined

Division is a business unit having a clear set of customers and competitors. A division can be independently planned for within the organization and has profit and loss responsibility.

Business Unit Level Strategy

A strategic business unit may be any profit center that can be planned independently from the other business units of your corporation. At the business unit level, the strategic issues are about both practical coordination of operating units and about developing and sustaining a competitive advantage for the products and services that are produced... More

Case Studies Hewlett-Packard

Hewlett-Packard set the pattern for a divisional structure of an innovative organization long ago. Divisions aggregated into units such as Test and Measurement Organization are the core dominant organizational entities of the company. When John Chambers, President and CEO of Cisco Systems looked around for large-scale organizational models that sustained innovation, customer intimacy and satisfaction, he found Hewlett-Packard to be the best... More