Organizational structure based on strategic business units (SBUs) is one of the types of formal organizational structure. They are usually used for large enterprises operating in various fields - such as corporations operating in many markets in many countries.
To avoid any decision making concentrated only in the central management, there are created separate strategic business units - SBUs. They have quite a considerable flexibility in management and decision making, only at the level of global strategy the corporation must coordinate its activities with the top management. Arrangement of large corporations into SBUs is an example of decentralization.
How we can use SBUs in practice?
Spliting a corporation into SBUs we choose where the reasons such as geographic, technological, marketing (customer and cultural) help us to split the corporation into smaller, autonomous, manageable units which are governed by common (centralized) policy and strategy.
Other types of the formal organizational structure: