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Course Hero 9 - Once a company has defined its SBUs,...

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3. An SBU has 3 characteristics. Describe each of these. A strategic business unit is a significant organization segment that is analyzed to develop organizational strategy aimed at generating future business or revenue. Strategic Business Unit (SBUs) is necessary when corporation starts to provide different products and hence, need to follow different strategies. To ease its operation, corporate set different groups of product/product line regarding the strategy to follow (in terms of competition, prices, substitutability, style/ quality, and impact of product withdrawal). These strategic groups are called Strategic Business Units (SBUs). Strategic business units (SBUs) have three characteristics: it is a single business or collection of related businesses that can be planned separately from the rest of the company it has its own set of competitors it has a manager who is responsible for strategic planning and profit performance who controls most of the factors affecting profit
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Unformatted text preview: Once a company has defined its SBUs, management hast to decide how the budget needs to be allocated. Each SBU must be therefore evaluated to its value, which is based on potential growth opportunities. A review of opportunities for improving existing businesses can be performed within the framework of the Ansoff's product-market expansion grid. Based on current products and markets, a company must assess whether it could gain a higher market share (market penetration) or needs to explore new markets (market development) for the current products. New markets refer to new customer segments or international markets, for example. The second consideration focuses on new products and whether they can be offered in the existing markets (product development) or need (can) be offered to new markets (as well). Especially other country markets often require a minimum degree of product adjustments to the local context (language, legal issues etc.)....
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