Advantages of Strategic Business Unit (SBU)
1. Focused Strategy: SBUs allow for a more focused approach to different markets or product lines. Each SBU can develop its own strategies in accordance with its target audience.
2. Resource Allocation: SBUs enable efficient allocation of resources based on the individual unit’s needs and priorities, optimising the utilisation of assets and capital.
3. Risk Management: Since SBUs operate somewhat independently, risks in one unit are somewhat contained and may not affect the entire organisation. This risk mitigation can enhance overall corporate stability.
4. Innovation: SBUs can experiment and innovate more freely, as they have greater autonomy. This can lead to quicker product development and adaptation to market changes.
5. Accountability: Each SBU has a manager, who is accountable for his/her SBU’s performance. Similarly, each SBU is accountable to the top-level management.
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