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Simple and complex structures - SBU-based structures

4 important questions on Simple and complex structures - SBU-based structures

What are the 3 characteristics of the SBU's according to G&C?

1 Market focused: responsible for serving specified customer segments

2 Autonomous: having a general manager with substantial autonomy to make decisions that impact the results of the unit

3 Profit-accountable: generating revenues and costs from serving the target segment, able to measure profitability of the SBU

SBU's are market-focused. What does it mean?

They are creating products and services of their target segments. Putting together a value chain that will effectively deliver. This encourages special skills and resources. Coordination and allignment of all the components of the value chain.

SBU's are largly autonomous in the decisions that they make. What does this mean?

It's a strong form of decentralization. Few responsibilities are shared with other units. SBU managers are in the best position to make quickly detailed decisions. It reduces inference (bemoeienis) from senior managers and voids consensus-building which slows down or contaminate (besmet) decisions. Incentives to coordinate difficult links. Strongly accountable for results when they are given autonomy.

Whats the consequence of a simple structure?

The structure makes for clear responsibilities and leads to rapid decision-making, with SBUmanagers handling the vast majority of issues on a self-managing basis.

The question on the page originate from the summary of the following study material:

Designing effective organizations : how to create structured networks | 9780787960643 | Michael Goold, et al

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