study the problems of setting up and operating a business unit
Answers
Answer:
A business unit, sometimes called a strategic business unit or SBU, is a segmented group or department within a company that focuses on reaching a specific market or client. It may also focus on achieving a specific goal for the organization. While some businesses find success with this strategy, there are concerns and potential problems to consider before trying it at your company.
Explanation:
Problems Meshing Ideas
When you segment your company in this way, you may find it becomes more difficult to get units to combine and work together. Though the separate units have different purposes, there may come a time when they need to convene in order to accomplish a goal for the organization. If your employees become too familiar with working in segmented groups, they may have problems working on joint projects with other units.
Expensive
Establishing business units can also be expensive. For one, you may have to create separate physical departments within the company. You may also need to create separate websites, mailing addresses and, in some cases, entirely new sub-organizations to properly establish these units. Finding a balance between efficiency and cost when maintaining these units can be challenging.
Time-Consuming
Setting up and running business units is also time-consuming. When you establish one, you must create a separate mission statement, budget, marketing plan and general business proposal. You must also set up technology and tools to support the department. You must then evaluate the functionality of the department before repeating the process with another business unit. If you decide to start all of your units at the same time and then determine that the formula isn’t working, you’ll also spend a significant amount of time dismantling or updating all of them.
REFERENCES
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Business Unit Strategies
By
Dana Griffin
Business units rely on self-managed teams to be more flexible.
In an effort to make the traditional business model less bureaucratic and more flexible, some organizations have begun implementing business unit strategy. Instead of forcing a new department into the standard chain of command, companies form differently sized autonomous business units that report directly to top management. Now the role of the corporation is to manage its business units and coordinate their efforts into the overall corporate strategy.
Units
A business unit is a section or department of a business that runs as an autonomous entity. Their profits are usually treated separately than those of the business as a whole. “All SBUs (small business units) are a single business (or collection of businesses), have their own competitors and a manager accountable for operations, and can be independently planned for,” reports Reference for Business.
Objectives
Each business unit must meet five criteria. First, their mission and focus must be different from all other organization SBUs. Second, they should have an easily and clearly defined group of competitors. Third, its planning and development should be carried out quite independently of any other business unity. Finally, each SBU must have a separate manager with decision-making authority who is fully responsible for the operation.
Approach
While there is no generic approach that works best all the time, once you determine an approach that works, it's best to stick with it. A collaborative approach builds business units by relying on employee input combined with corporate strategy. A corporate led approach relies on the executives to plan the unit and the goals focus on growth, profit and market share. Thirdly, the business unit may form its own strategic plan that is approved, edited or disapproved by corporate management.
Analysis
Business unit strategy relies on answering two questions: what are a unit's strengths and what is the best way to improve performance. This analysis allows you to establish “the SBU's mission, setting objectives, and determining strategy to use to meet these objectives,” reports MAB Paradigms Consulting Firm. SBUs require constant analysis through reports and financial projections to determine if they remain productive or if their strategy necessitates alteration to better improve performance.
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