Structure of Strategic Business Unit (SBU)
The SBU structure is composed of operating units where each unit represents a separate business to which the corporation delegates responsibility for day-to-day operations. By such delegation, the corporate office is responsible for formulating and implementing overall corporate strategy and managing SBUs through strategic and financial controls. The SBU structure groups similar products into strategic business units and delegates authority and responsibility for each unit to a senior executive who reports directly to the chief executive officer. This change in structure can facilitate strategy implementation by improving coordination between similar divisions and channeling accountability to distinct business units. A Strategic Business Unit (SBU) structure consists of at least three levels, with a corporate headquarters at the top, SBU groups at the second level, and divisions grouped by relatedness within each SBU at the third level. This enables the company to more accurately monitor the performance of individual businesses, and control problems.
For example,
- Aditya Birla Group’s corporate headquarters are at the top of the whole structure of SBUs. The corporate office provides overall strategic direction, governance, and oversight for the entire structure.
- Further, at the second level, Aditya Birla Group has several major SBUs, each operating in a distinct industry. Some of the SBUs are Aditya Birla Capital Limited, Aditya Birla Fashion & Retail Limited, Aditya Birla Chemicals Limited, and Aditya Birla Group’s Metals Business.
- Within each SBU, there are further divisions that are grouped based on relatedness to the industry. For instance, within Aditya Birla Chemicals SBU, there are SBUs set up for India, Thailand, etc.