Strategic business unit
A strategic business unit (SBU) is a self-contained division with its own products, market and strategy, run and judged as a profit or investment centre separate from the rest of the organisation.
See it move
A cleaning-products SBU reports revenue of €2,000,000 and costs of €1,700,000, a profit of €300,000. Against €1,500,000 of capital invested in it specifically, that is a 20% return on investment, comparable with other SBUs. A central IT department, by contrast, has no external market and no strategy of its own — it is a cost centre, not a strategic business unit, however large its budget.
Check yourself
A cleaning-products group has three parts to its organisation: (1) the Household division, which designs, markets and prices its own branded products against named competitors and is judged on its own profit; (2) the Central IT department, which builds and maintains systems used by every division and has no external customers of its own; (3) the Regional Sales Offices, which simply execute the prices and promotions decided by the Household division. Which of the three best qualifies as a strategic business unit?