One of the most widely used portfolio approaches is the Boston Consulting Group (BCG) Matrix. Each business unit or SBU is treated as a standalone profit center.Ī business portfolio approach is commonly followed in a diversified company for corporate strategic analysis.Ī corporate strategy for each SBU is set in such a way that it becomes consistent with the resource capabilities of the overall company.Įach unit is assessed as a separate entity after a portfolio approach is followed.Īs remarked by Hili and Jones, the portfolio approach is a visual way of identifying and evaluating alternative strategies for the generation and allocation of corporate resources. In a diversified company, all the business-units constitute its business portfolio. They, however, work under the Tesla corporate management. Each of these units is treated as an SBU. Generally, an SBU rs independent in business operations has its managerial resources and has all its assets under its control.įor example, PNG has 21 business units for the production of textile products, ceramics, pharmaceutical products, etc.

Crucial operating decisions can be made within the SBU.Īn SBU is responsible for its products, services ‘and markets and, therefore, it is also responsible for developing its strategy.

The SBU strategic manager can make or implement a strategic decision relatively independent of other SBUs.

A division of a company may also be treated as Strategic Business Units (SBUs).Īccording to Pearce and Robinson, Strategic Business Units (SBUs) must have certain characteristics: In a diversified company, each business unit is an SBU.

In the BCG matrix, SBU(Strategic Business Unit) is a company that has a separate mission and objectives and can be planned independently from other company businesses.įor example, a company division, a product line within a division, or sometimes a single product or brand.Ī strategic business unit (SBU) is a relatively autonomous unit of a firm. What is the Strategic Business Unit (SBU)? Setting strategic objectives for each SBU.Comparing each SBU against other SBUs with the help of a matrix (two-dimensional).Determining the prospects of each SBU of the organization.

Companies use the BCG matrix is as a portfolio planning tool. These SBUs form the ‘business portfolio’ of the company. Diversified companies having several SBUs (Strategic Business Units) use the BCG Matrix.

In the BCG matrix, SBU(Strategic Business Unit) is a unit of the company that has a separate mission and objectives that can be planned independently from other company businesses.

Bcg matrix of nestle