What is the disadvantages of SBU?

Answer 1

• Excessive fragmentation of strategy-critical processes
• Can lead to inter-functional rivalry and conflict, rather than team-play
• Multi-layered management bureaucracies and centralized decision-making slow response time
• Hinders development of managers with cross-functional experience because the ladder of advancement is up the ranks within the same functional area
• Forces profit responsibility to the top
• Functional specialists often attach more importance to what's best for the functional area than to what's best for the whole business - can lead to functional empire-building
• Functional myopia often inhibits creative entrepreneurship, adapting to change, and attempts to create cross-functional core competencies