Question

What is a Strategic Business Unit? Using an example, explain how the BCG approach to SBU analysis can be used to assess the viability of different products within a company’s portfolio of products?

Answer 1

Strategic business unit is always a profit centre which will be focusing upon maximisation of the profit and making of various strategies in order to acquire higher market share and it is often an autonomous division of a large company which is having its own management and they are trying to take all such decisions in order to maximize their rate of return so these strategic business unit will always be highly growth oriented units which are focusing upon profit making.

strategic business unit can be determined using BCG approach and it is helpful in order to determine the attractiveness of various product and brand through determination by related market share and growth share matrix.

it has a tendency of determining various types of companies in four specific ways which are question marks along with cats along with dogs and cash cows, so it will be determining the level of growth and profit making of various companies by segregating them into these four categories which will be helpful for maximization of the rate of return.