Strategic Management: Formulation and Implementation

Decentralized Business Units

The decentralized business units was pioneered in the 1920s by General Motors and DuPont. Each unit or divisionis generally autonomous, with a division manager responsible for performance and holding complete strategic and operational decision making authority. A typical line of business organizational structure isshown in Figure 34.

Strategic Business Units

Organizational growth may ultimately require that related product lines be grouped into division and that the division themselves then be grouped into strategic business units (SBU). A strategic business unit is agrouping of business units based on some important strategic elements common to each: a closely related strategic mission, a common need to compete globally, and ability to accomplish integrated strategic planning, common key success factors, and technologically related growth opportunities. Figure 35 illustrates the SBU form of organization, along with its strategyrelated pros and cons.