Financial ManagementQuestion 5561 of 217
All Questions ANetwork structure
BDivisional structure
CMulti divisional structure
DStrategic business unit
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Correct Answer
✅ Option D — Strategic business unit
All Options:
- ANetwork structure
- BDivisional structure
- CMulti divisional structure
- DStrategic business unit ✓
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Detailed Solution & Explanation
The correct answer is **Option D: Strategic Business Unit (SBU)**.
**Explanation:**
A **Strategic Business Unit (SBU)** is a semi-autonomous unit within an organisation that operates independently in its own product-market domain. Key characteristics of an SBU include:
1. It is an **independent profit/product centre** with its own general manager.
2. It serves a **distinct customer segment** with its own set of competitors.
3. It has its **own competitive advantages**, resources, and capabilities.
4. The general manager is **accountable for profitability** of the product line.
5. While independent, the SBU is also part of the **larger corporate structure** (here, Super Products Ltd.).
**Matching to the scenario:**
- Super Products Ltd. has four divisions: Alpha, Beta, Cos and Theta — **all are independent product centres** (✓ SBU criterion).
- Each has its own **general manager** responsible for the product line and **profitability** (✓ SBU criterion).
- Each has its **own set of competitors** (✓ SBU criterion).
- Each develops its **own competitive advantages** from its resources and capabilities (✓ SBU criterion).
- They are also an **integral part of the parent company's product Gama** (✓ SBU — autonomous yet linked).
**Why other options are wrong:**
- **Option A – Network Structure**: This involves outsourcing key functions and relies on a web of external partnerships/contractors — not applicable here.
- **Option B – Divisional Structure**: While a divisional structure also groups by product/market, it does not stress the independent competitive positioning and profit accountability as distinctly as SBU. In an SBU, each unit is treated almost like an independent business.
- **Option C – Multi-divisional Structure**: This refers to a large corporation with multiple divisions, but the term does not capture the autonomous, strategy-setting nature of each unit as precisely as SBU.
The official answer key from the SEP 2024 Paper 6 confirms the answer is **(D)**.
Hence, **Option D** is the correct answer.
**Explanation:**
A **Strategic Business Unit (SBU)** is a semi-autonomous unit within an organisation that operates independently in its own product-market domain. Key characteristics of an SBU include:
1. It is an **independent profit/product centre** with its own general manager.
2. It serves a **distinct customer segment** with its own set of competitors.
3. It has its **own competitive advantages**, resources, and capabilities.
4. The general manager is **accountable for profitability** of the product line.
5. While independent, the SBU is also part of the **larger corporate structure** (here, Super Products Ltd.).
**Matching to the scenario:**
- Super Products Ltd. has four divisions: Alpha, Beta, Cos and Theta — **all are independent product centres** (✓ SBU criterion).
- Each has its own **general manager** responsible for the product line and **profitability** (✓ SBU criterion).
- Each has its **own set of competitors** (✓ SBU criterion).
- Each develops its **own competitive advantages** from its resources and capabilities (✓ SBU criterion).
- They are also an **integral part of the parent company's product Gama** (✓ SBU — autonomous yet linked).
**Why other options are wrong:**
- **Option A – Network Structure**: This involves outsourcing key functions and relies on a web of external partnerships/contractors — not applicable here.
- **Option B – Divisional Structure**: While a divisional structure also groups by product/market, it does not stress the independent competitive positioning and profit accountability as distinctly as SBU. In an SBU, each unit is treated almost like an independent business.
- **Option C – Multi-divisional Structure**: This refers to a large corporation with multiple divisions, but the term does not capture the autonomous, strategy-setting nature of each unit as precisely as SBU.
The official answer key from the SEP 2024 Paper 6 confirms the answer is **(D)**.
Hence, **Option D** is the correct answer.
Key Concepts to Understand
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The number of subsets of the set is:
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