Establishing Strategic Business Units

Last Updated on Sat, 24 Dec 2022 | Sales Force

A business can be defined in terms of three dimensions: customer groups, customer needs, and technology.6 For example, a company that defines its business as designing incandescent lighting systems for television studios would have television studios as its customer group; lighting as its customer need; and incandescent lighting as its technology.

In line with Levitt's argument that market definitions of a business are superior to product definitions,7 these three dimensions describe the business in terms of a customer-satisfying process, not a goods-producing process. Thus, Xerox's product definition would be "We make copying equipment," while its market definition would be "We help improve office productivity." Similarly, Missouri-Pacific Railroad's product definition would be "We run a railroad," while its market definition would be "We are a people-and-goods mover."

Large companies normally manage quite different businesses, each requiring its own strategy; General Electric, as one example, has established 49 strategic business units (SBUs). An SBU has three characteristics: (1) It is a single business or collection of related businesses that can be planned separately from the rest of the company; (2) it has its own set of competitors; and (3) it has a manager responsible for strategic planning and profit performance who controls most of the factors affecting profit.

Continue reading here: The Nature and Contents of a Marketing Plan

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Readers' Questions

  • Alison
    How to establish strategic busines unit?
    1 year ago
  • elizabeth
    How to establish strategic business units?
    1 year ago
  • IOLANDA
    How to established strategy bussines unit?
    1 year ago
    • A business unit strategy should be established by analyzing the company's current standing and objectives, and determining the best course of action for achieving the desired outcome. This includes considering the company's resources, competitive environment, and goals. It is also important to consider the customer's needs, market trends, and the various options available in order to develop a strategy that meets the company's objectives. After the strategy is determined, the business unit should set goals, create action plans, and track progress in order to ensure that the strategy is implemented correctly.
    • ODOVACAR
      How to eadtablish strategic business unit?
      1 year ago
    • DIANA
      How to establish strategic business unit?
      1 year ago
    • Josephine Hart
      How to establish sbu in marketing?
      1 year ago
      • Starting an SBU in marketing can be both exciting and challenging. Here are a few steps to consider when establishing an SBU in marketing:
      1. Define the Objectives: Establish clear and measurable objectives for the SBU. This will help you define areas in which the SBU should focus and any desired outcomes.
      2. Analyze the Audience: Identify and analyze target audiences for the SBU. Consider their current needs and preferences, as well as potential new ones.
      3. Develop a Strategy: Use the data gathered in step two to create a strategy for the SBU. Consider the budget, staffing requirements, and the channels you plan to use to reach the target audiences.
      4. Allocate Resources: Once the strategy is in place, allocate the necessary resources to implement it. Do this in a way that maximizes the ROI of the SBU and creates a sustainable, profitable model.
      5. Track and Analyze Performance: Monitor and analyze the performance of the SBU. Use the data to make any necessary adjustments to the strategy and optimize performance.