How to Define a Business Unit

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A business unit does not duplicate the work of other units in the organization.
A business unit does not duplicate the work of other units in the organization. (Image: Digital Vision./Photodisc/Getty Images)

One way to define a business unit is to look at its core competencies. These are the activities that distinguish the business unit within a larger organization from the other units. The business unit performs these activities at a superior level according to the level of customer satisfaction, sales volume or other business indicator.

Definition

A business unit consists of the manager and employees and their core business activities. One way to understand the distinct characteristics of their unit within a larger organization is by analyzing how its manager organizes the unit around business goals and how those are aligned with the organization's central goals. Every employee within the unit contributes somehow to the core business activities and indirectly supports the mission of the organization.

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