Which type of organizational structure is followed in the organization with multiple strategic business units?
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Definition: 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. Description: A strategic business unit or SBU operates as an independent entity, but it has to report directly to the headquarters of the organisation about the status of its operation. It operates independently and is focused on a target market. It is big enough to have its own support functions such as HR, training departments etc. There are several benefits of having an SBU. This principle works best for organisations which have multiple product structure. The best example of SBU are companies like Proctor and Gamble, LG etc. These companies have different product categories under one roof. For example, LG as a company makes consumer durables. It makes refrigerators, washing machines, air-conditioners as well as televisions. These small units are formed as separate SBUs so that revenues, costs as well as profits can be tracked independently. Once a unit is given an SBU status, it can make its own decisions, investments, budgets etc. It will be quick to react when the product market takes a shift or changes start happening before the shift happens.
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Which form of organizational structure are strategic business units created?Organizational structure based on strategic business units (SBUs) is one of the types of formal organizational structure. They are usually used for large enterprises operating in various fields - such as corporations operating in many markets in many countries.
What type of organizational structure do most businesses follow?Functional organizational structures are the most common. A structure of this type groups individuals by specific functions performed. Common departments such as human resources, accounting, and purchasing are organized by separating each of these areas and managing them independently of the others.
What is organizational structure in strategic management?Organizational structure is the method by which work flows through an organization. It allows groups to work together within their individual functions to manage tasks.
Which type of organizational structure is used when a company has locations in multiple cities?Product organizational structures are primarily used by retail companies that have stores in various cities.
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