Analyzing Your Business Units

A business unit (often called a strategic business unit and abbreviated as ‘SBU’) is essentially a ‘business within a business’ (although the degree of autonomy varies) that offers a certain portfolio of products and services to certain target markets (which may or may not overlap with target markets of other SBU). Also, an SBU may or may not have a separate brand. If it does not, it operates under an ‘umbrella’ corporate brand. In some companies, SBU are referred to as ‘divisions’ or ‘segments’.

Therefore, a business that has such a ‘divisional’ structure (not all companies do) is essentially a portfolio of SBU. As usual, whenever we are talking about a portfolio of objects, we want these objects to maximize their synergy. In this case, the synergy between SBU.

General Electric (GE) has 49 SBU; while Ben & Jerry or Starbucks have just one. Examples of GE divisions are Consumer Finance, Aviation, Energy, Oil & Gas, etc. The most well-known examples are U.S automobile manufacturers. Ford has Ford proper, Mercury and Lincoln; GM has Chevrolet, Cadillac and others.

As the SBU is essentially a separate business (often called a ‘profit center’), you analyze it in a way very similar to analyzing a business. Starting with the corresponding corporate objects map (this time for the SBU in question).

You must keep in mind, however, that the SBU objects map has much fewer objects than the map for your whole business entity, because SBU always use some of the shared services provided by corporate headquarters (‘the company in general’). 

Specifically, SBU has its own history, some strategies (usually general, operational and marketing), target markets, maybe a separate brand, definitely products and services, its own risk management system, stakeholders, projects, processes and tools, obviously a functional organizational chart and personnel. Everything else is provided by headquarters.

Oh, and because these SBU objects are supposed to be tightly integrated with corporate ones, you can expect that you will have to analyze your SBU concurrently with your whole business system.

In addition to asking the usual questions related to business analysis, you will have to find answers to several specific questions that you will find on the next page.