Question

•Identify, discuss and analyze one or more strategic business units (divisions) of any company that you choose.

•Are these divisions Stars, Cash Cows, Problem Childs or dogs? Provide a rationale for your answer.

Answer 1

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A strategic business unit is a fully operational unit that has its own vision and direction and is popularly known as SBU. A strategic business unit typically functions as a distinct unit, but is also a key component. It reports its operational status to the headquarters.

As an independent entity operates a strategic business unit or SBU, but it must report the status of its operations directly to the headquarters of the organization. It works autonomously and focuses on an objective market. It's sufficiently large to have its own support features, like HR, training, etc. The advantages of an SBU are several. This principle operates best for multi functional organizations. Companies such as Proctor and Gamble, LG etc are the finest instance of SBU. They have distinct categories of products under one roof. As a business, LG makes consumers sustainable, for instance.

It consists of cooling facilities, washing machines, air conditioning systems and TVs. These tiny units are created into individual SBUs, which enable the independent monitoring of sales, expenses and revenues. After a SBU is granted, it can decide itself, investments, budgets etc. When the product market changes or modifications begin before the change occurs, it will respond quickly.

The SBU structure is made up of operating units in which the units act as an independent company. The top company officer entrusts the management, periodic business and company unit approach with the accountability of the company. Therefore, the business manager is responsible and manages SBU through strategic and fiscal checks for the formulation and execution of the extensive policy.This incorporates the associated company divisions into a strategic business unit, and empowers senior management to decide each unit. The Senior Manager is headed by a Chief Executive Officer.

In a strategic business unit, there are three levels where the company head office is at its top. SBUs stay in the center of the company and similar divisions stay at the bottom of each company unit. Consequently, the SBU divisions are interconnected and the SBU organizations are autonomous. Each SBU is an independent company from a strategic perspective.

As a company center and governed by corporate officers is a unique strategic business unit. Instead of operational command it emphasizes strategic planning, so that the distinct divisions of SBU can react to the evolving company setting as quickly as possible. SBU promotes co-operation between the business departments with comparable activities, improved strategic management, improved billing, simpler business planning.

They are present in the organisation's organisational framework, they are organisational groups with no separate legal personality, they employ a product-market approach, the type of activities carried on by these organizations are of vital significance to the entire business.

High-growth markets are dominated by stars. Stars are growing quickly and thus use big money quantities. Stars also have a strong market share, generating huge quantities of money. The product's development will slow over time. So if a star has a large market share, it ultimately turns into a cash cow. Otherwise, it's a dog.
Because cash covs are market leaders in a low-crop industry, they involve high profit and low investment. Growth is slow and the money consumption is therefore small, and market share is large. Dividends, interest, overhead and development of stars and question marks are used to produce cash cows.

Question Marks are gambling and money traps. Question Marks are growing quickly and use big quantities of money therefore. But they have no dominant position on the market and therefore produce little money.
Dogs produce very little money due to low market share on a low-growth market. These products are called money traps by BCG. Although Dogs are net money users, they can be purchased profitably on the market. BCG points out that they are basically useless in terms of helping development.

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