Philosophy of SBU/ Why the strategic management used?
There are three types of philosophies
1. Portfolio management of diversified firm: it is difficult to manage the organization or business through a single management, for that business is divided into units and assigned separate management for each business unit. Like cost center, profit center, revenue center etc. and the performance review of each center will be conducted separately.
2. Separate strategy form separate SBU: for different diseases, diagnosis is also different like that for different SBU’s unit the strategy will be different. The nature and the task of all business units is not same for that reason the strategy will be different.
3. Proper allocation of corporate resource: it is important for every organization to properly allocate the corporate resources among SBUs for this proper management. Every unit will not require equal resources for their operations. So it is the task to identify, how much resources is required for each unit. Over and under allocation of resources may hamper sound operation as well as it may increase the cost also.
