3) Describe the possible roles that corporate management might play in the strategic planning and management process within individual SBU's in its portfolio. Discuss also the tensions between corporate and SBU management over these issues.

 

The Strategic Business Unit (SBU) includes an independently operated subsidiary of a multinational corporation with its own vision, purpose and goals, the preparation of which is carried out separately from the other companies of the company. The vision, mission and goals of the division are both distinct from the parent undertaking and elementary to the long-term success of the undertaking.

The Chief Corporate Officer assigns the responsibility of the company to the managers for routine activities and the strategy of the business unit. The Corporate Officer is also responsible for formulating and executing a holistic plan and manages the SBU by strategic and financial controls.

In this way, the arrangement integrates the relevant business units into the strategic business unit and the senior executive is empowered to make decisions for each unit. The Senior Executive shall function under the direction of the Chief Executive Officer. A single strategic business entity shall be known as a profit center and shall be regulated by corporate officers.

A larger corporation is likely to be divided into divisions to break the management of the company into smaller, organizationally linked sections. In that situation, the headquarters would still be in direct charge of the branches. Strategic Business Units are organizationally complete autonomous organizations that create and execute their own strategies. They still report on their results to headquarters, but they work entirely independently and are structured in a manner that suits their business. Units are also big enough to have their own internal management systems in place.

Switching a larger organization to these strategic divisions means a totally new management structure and business strategy. The division of the company represents how best the operations of the company can be carried out. Divisions emerge from analyzes of business practices, while strategic units should be set up to respond to the external market. Instead of looking at themselves and evaluating themselves, businesses should observe and research the market. The key difference between the divisions and the Strategic Business Units (SBUs) is that the divisions have an internal orientation, whereas the strategic units have an external focus to the market.