Business – must be viewed as a customer-satisfying process and not a goods-producing process.
Three dimensions to define business: (a great example, a business designing incandescent lighting systems)
1. Customer groups – [the people] = Television groups
2. Customer needs – [the benefit] = lighting
3. Technology – [new ideas to expand] = incandescent lighting
STRATEGIC BUSINESS UNITS (SBUs) – a business unit that can benefit from separate planning faces, specific competitors, and is managed as a profit center.
Three Characteristics:
1. It is a single business of collection of related businesses that can be planned separately from the rest of the company
2. It has its own set of competitors
3. It has a manager who is responsible for strategic planning and profit performance and who controls most of the factors affecting profit.
* The purpose of identifying the company’s strategic business units is to develop separate strategies and assign appropriate funding. *
BOSTON CONSULTING GROUP MODEL (BCG) developed the growth-share matrix matrix, which is used for classifying businesses by profit potential.
THE GROWTH MATRIX:
• 8 Circles – represents the current sizes and positions of 8 business units in a hypothetical company.
Dollar – Volume size of each business is proportional to the circle is area.
• Market Growth Rate (on vertical axis) indicates the annual growth rate of the market, which the business operates.
• Relative Market Share (on horizontal axis) refers to the SBU’s market share relative to that of its largest competitor, it serves a s a meas ...