Line of business and strategic business unit (LOB and SBU)

Tareq al-Suwaidan distinguishes the line of business (LOB) from the strategic business unit (SBU): the line of business is the strategic axis — 'what do you sell?' — and the SBU is any part of the work that can stand alone, provided it belongs to the core business ^{1 2}.

He holds that a company's natural state is a single line of business, and it should not exceed three unless they are related — training, consulting and education are related; training, timber and a restaurant are not. He recounts that his company bought a profitable Malaysian timber firm and lost it within a year because it lay outside their core work, selling it at a ten per cent loss (the speaker's experience) ^{3 4}.

He defines it as any part of the work able to stand alone, provided it is of the core business: it has its own plan, management, budget and decisions, without being wholly independent of funding and the master plan ^{5 6}. There is no limit to the number of units under one line of business, provided each is treated as independent; while IT, legal affairs, personnel and accounting are not of the core business and count as 'support units' ^{7 8}. His rule for placing support units: if a service will occupy an employee full-time it is attached to the unit, otherwise it stays shared or central — each service is judged separately, since accounting is daily while legal counsel is occasional ^{9 10}.

He states that whoever wants a business to grow must not subordinate it to another business but grant it independence — its own management, plan, budget and decisions; he recalls that his company Ibda' al-Fikri reached the revenues of Ibda' al-Khaliji within three or four years precisely because it was not made part of it ^{11 12}. He also holds that the organisation chart changes whenever the plan changes — the chart is formed to support the plan — and that fixing the chart while changing the plan is a grave error in many organisations ¹³.