RESULT OBTAINED
Canonical method
Strategic business areas (SBA): splitting the company in order to decide
What must be established
A useful analysis keeps its controls visible.
- 01
Define the customer groups, the functions served and the technologies or know-how mobilised.
- 02
Compare competitors, success factors, economics, value chain and risks before separating two activities.
- 03
Check that a strategy, resources and a review rule can be assigned to the proposed scope.
Decision reference
Make the next choice more explicit.
DECISION SUPPORTED
When do two activities require genuinely distinct strategies and allocations?
DELIVERABLE TO KEEP
An SBA map with boundaries, separation criteria, shared dependencies and associated allocation decisions.
NEXT ELEMENT TO EXAMINE
Marketing segmentationExplore →Define the playing field in three dimensions
The starting point distinguishes who is served, which function is fulfilled and by which technology or combination of capabilities. The current product is not enough to define the playing field if several solutions address the same need.
- Customer groups
- Functions served
- Technologies and capabilities
- Substitutes
Test separation or grouping
Two activities deserve distinct SBAs when their competitors, success factors, value chains or economics impose incompatible choices. Strongly shared critical assets can, on the contrary, make the separation artificial.
- Competitors
- Success factors
- Economic structure
- Shared assets
Link the split to a decision
Each proposed SBA must make it possible to formulate options, commit or withdraw resources and track performance over a comparable scope. A split that changes no decision only adds a label.
- Distinct option
- Resources
- Accountability
- Review rule
Example: deciding whether two activities form a single SBA
Two offers sold to the same customers do not necessarily belong to the same SBA. If their technologies, competitors, success factors and critical investments diverge, the grid tests a separation. A shared platform, brand or critical capability can, on the contrary, justify common steering.
- Comparable customers
- Distinct technologies
- Success factors
- Shared dependency
DECISION ASSET
Boundary test of a strategic business area
The grid compares two activities on their playing field, their success factors and their decision autonomy before proposing a separation.
Playing field
- Input
- Customers, functions, technologies
- Control
- Do the three dimensions diverge?
- Output
- Proposed scope
Competition
- Input
- Actors and substitutes
- Control
- Do customer trade-offs differ?
- Output
- Competitive universe
Success
- Input
- Costs, access, capabilities
- Control
- Do the key factors change?
- Output
- Economic logic
Autonomy
- Input
- Resources and accountability
- Control
- Is an independent decision possible?
- Output
- Separation test
- Abell, Defining the Business, 1980 (opens in a new tab)Founding book on defining a business by customers, functions and technologies.
- Day, Strategic Market Analysis and Definition, 1981 (opens in a new tab)Article linking market definition to the units relevant for strategic planning.
MOVE FROM ANALYSIS TO YOUR DECISION
Build a segmentation that makes it possible to choose
MOVE FROM ANALYSIS TO YOUR DECISION
Build a segmentation that makes it possible to choose
RETURN TO THE DECISION SYSTEM
See the canonical definition of marketing strategy→