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An Enterprise is split into various Business Units (BUs). Primary Business Units (PBUs) equate to those Business Units that perform the main role of the Enterprise such as Sales, Banking, Drilling oil wells, etc. Supporting Business Units (SBUs) are those which support the PBU's, usually supporting multiple PBU's

Each BU (be it Primary or Support) can be split into two fundamental notional parts.

      What they do - This relates to the business function they perform - be it selling things, drilling for oil, recruitment, training people, providing financial reports and auditing, etc.

      How they do it - This relates to how they perform their business function and with what.

Figure 1.

Here the Enterprise has one department - PBU1.

100% of the How is work is carried out, is carried out by PBU1.

Figure 2.

In a larger more complex Enterprise there may be another department - SBU1.

While PBU1 is still responsible for 100% of the What, it is now only performs 80% of the How - as the other 20% of the How is now carried out by SBU1.

Figure 3.

An even more complex Enterprise may be structured as follows:

      60% of What work is done by PBU1

      40% of What work is done by PBU2

Considering PBU1

      20% of How it does what it does, is done by SBU1

      10% of How it does what it does, is done by SBU2

      The remaining 70% of the How, it does itself.

Considering PBU2

      30% of How it does what it does, is done by the SBU1

      20% of How it does what it does, is done by SBU2

      The remaining 50% of the How, it does itself

Considering SBU1

      5% of How it does what it does, is done by SBU2

      The remaining 95% of the How, it does itself.

Considering SBU2

      10% of How it does what it does, is done by the SBU1

      The remaining 90% of the How, it does itself.

If we work out How each of the BUs contributes to doing the work necessary for the Enterprise, we can see that:

      PBU1 is actually responsible for 42% of the How.

      PBU2 is actually responsible for 20% of the How.

      SBU1 is actually responsible for 24.3% of the How.

      SBU2 is actually responsible for 13.7% of the How.

 

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