how would you distinguish a Strategic Business Unit (SBU) from normal business units?

An organizational SBU often has the following characteristics:




(i) It has its own set of customers – it must have its own set of customers
because each strategic business unit serves its own strategic customers who are different from other business units.

(ii) It should have a clear set of competitors, which it is trying to outperform.

SBUs are sometimes called strategic competitive units. This is because the unit deals with competition issues related to creation of competitive
advantage for the organization. It must clearly set its competitors because
outperform competitors, competitors must be known and the strategies they are using must also be known.




(iii) It should have its own strategic planning manager responsible for its success. The manager should be a specialist in the area the SBU is set to compete.

(iv) Its performance must be measureable in terms of profit and loss, i.e. it must be a true profit center. Justification is required to confirm the unit is set strategically on general profits. Hence if there are no clear ways of
measuring performance, justification may be difficult.




(v) It must have its own strategic planned performance achievement – there should be clearly set levels of achievement like SMART objective to guide direction of effort and performance for the SBU.