Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What is a strategic business unit (SBU)?

1. A department focused solely on finances

2. A subsidiary company under a holding company

3. A cost-centre within a larger company

4. A unit with its own objectives within a larger company

The correct answer is: A unit with its own objectives within a larger company

A strategic business unit (SBU) is defined as a unit within a larger organization that operates independently, with its own distinct mission, objectives, and strategies. This autonomy allows an SBU to respond swiftly to market changes and make decisions that align with its specific goals, which often can differ from the overarching corporate strategy. This structure empowers the unit to focus on its target market or product line, enabling specialized management and operational strategies that are best suited for its particular environment. SBUs are commonly found in large organizations that operate in diverse sectors, allowing them to effectively allocate resources and develop strategic initiatives that enhance overall performance. In contrast, options that describe a department solely focused on finances, a subsidiary company, or a cost-centre do not capture the essence of an SBU, which is characterized by its independence and distinct strategic focus within the larger corporate framework. This independence is a key feature that allows SBUs to act almost like small companies within the context of a larger business.