Mutual Trigger to Rise- Strategic Business Unit & the Brand

Posted in Marketing & Strategy Articles, Total Reads: 691 , Published on 06 March 2017
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The ecstatic moment for a business is when it’s ‘Brand ‘ image zooms and the sound amplifies. The motive remains to reach up to the desired segment of market whom it is focused to cater. Once a business establishes a stand in the market and a healthy image in the minds of it’s customers a major examination of it’s speculated success is cleared.

Looking at the recent trends of business to cut short the competition – we can see a numerous strategies have got up to make it excel in the long run , one such being the strategic business units (SBU’s). SBU , according to ‘The Principles of Management’ by Philip Kotler is defined to be a separate unit of business that has a separate mission and objective and can be run independently. The implementation of this strategy has led to the availing of various opportunities that could be used for obtaining better gains. The areas that are kept in purview before taking strategic decisions are majorly – the market sensing , the customer links and the strength of bonding channels.


Image: pixabay


It is said that tremendous opportunities and threats are often sensed as weak signals at the periphery of any business. The business who pays attention to these and keeps an optimal ‘risk- responding’ inclination is said to perform well in terms of strategy planning.


The strategies are usually defined based on the opportunities that could be availed. E.g. The Amazon.com availed its diversification opportunity that led the company to penetrate into markets worldwide and obtain a brand image. Amazon ,when established was missioned to incorporate technology into it’s business processes ,but once they established a strong hold in the customer linking with technology, their focus shifted to formulate strategies which could zoom in their brand . From online book store it diversified it’s business to online store , then to large scale e-commerce which are today one of the sole reasons for it’s developed bright image in the minds of people of countries at international level. Looking at the financial reports of Amazon it could be viewed that the e-commerce segment is merely for developing a reliable image in the minds of customers , cause the major revenues are obtained from the web services segment of the company. Hence, the focus to work on such SBU helped it to obtain a healthy image and therefore it penetrated into the markets. Same kind of situation goes for Wipro which developed it’s brand image at an international level by getting into the IT services sector aside the FMCG segment.


Numerous such instances could be seen where SBU’s developed a brand image on a wider scale but it’s not only a single sided effect, the reverse is also equally true. A multiple diversified businesses are working in the name of brand name that the base company has developed in the minds of the customers like- the Maruti finance , Mahindra finance , sublets of the Reliance industries and many more. A strong bond exits between the two (brand and SBU) as the strategy keeps the potential of a win-win situation.


It’s also required to be kept at the back of the mind that the relation not shows a glossy image all the times . To acquire something usually a loss also has to be faced. Apart from these strategies even if we look into the ‘intensive strategic approach’ of companies to get a brand image , various losses are faced by them before they cut short the competition and obtain a reliable tag. E.g recent study on the Uber Inc showed that the company has been dealing with huge losses just to cut short the competition faced cause of the rental cars, e-friendly cars, public transportation etc. which is letting it’s customers to be attached to the brand and to avail it’s services. A like story goes on with the SBU initiation , either during the growth phase or during the initial run phase ,the company usually face losses unless and until it’s having a huge market share of a monopolistic approach. Once invested into the SBU , a separate division is set which works in the favour of the unit irrespective of the base company’s work and plans. The mission and vision are also established with a different scope and prospect. The indifferent behaviour of the SBU towards the primal company usually leads to efficient results and outcomes giving rise to better return potential.


Strategies have now become the blood of any business, there is no more any concept of fate or happy for lucky prospect. They have led the businesses from ‘zilch to zenith’, only after they have been planned , executed and reviewed properly. The SBU concept has altogether been an out of the box concept which seems extraneous to the business but lies at it’s very heart and hence has been a success in majority of cases.

The bond between SBU and brand is exemplary and seeks for more inputs and brains to come up with modified versions for better benefits.


This article has been authored by Lavanya Gautam from UBS Chandigarh


References:

- Strategic Business Units Sbus - Marketing Planning - ZABANGA Marketing. 

- Strategic Business Units: Examples & Definition - Video & Lesson Transcript | Study.com.

- Principles of Management – Philip Kotler

- Strategic Business Units: Examples & Definition - Video & Lesson Transcript | Study.com.


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