Overview

A multi-business organization (MBO) refers to a company comprising multiple businesses organized into different strategic levels: corporate level, business level, and functional level. In this structure, the organization is divided into various strategic business units (SBU) that focus on specific products, customers, or geographic areas. The corporate level serves as the central entity of the organization, housing top management responsible for overseeing the SBUs (business level) and their respective departments (functional level). SBUs operate somewhat independently, offering their own products or services, possessing unique competencies, targeting specific markets, and serving distinct customer bases. They function as autonomous entities, formulating their own strategies and objectives, and being accountable for their operational performance, profitability, investments, and strategic development. However, SBUs are partially managed by the corporate level, which handles overall corporate strategy, governance, and coordination, acting as intermediaries to represent shareholder interests. Supporting the business level is the functional level, which comprises various operating units (OU) within each SBU. OUs are functional departments responsible for implementing the strategies established by the business level. Unlike SBUs, OUs do not establish their own strategic objectives but rather execute and accomplish the objectives and goals set by the higher organizational levels.

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