Strategic business units are the smallest units of an enterprise to which you can assign certain markets and the capital used to supply these markets.

Keep the following aspects in mind when you select organizational units in the R/3 System to represent the strategic business units of an enterprise:

• How is the value-added process of the enterprise organized?
• What is the relationship between the strategic business units?
• Which reporting requirements exist for strategic business units?
• To what extent are core processes in Logistics (customer order processing, procurement, and so on) or Financial Accounting (payment transactions, credit control, and so on) separated according to strategic business units?

The type of value added and the relationship between the strategic business units can provide information on the future strategic development of an enterprise.

You should anticipate future strategic development and choose the appropriate organizational structure in the R/3 System. You have to clearly define each strategic business field and determine to what extent each field is independent of the others.

When you portray strategic business areas, you may choose from the following options in the R/3 System:

If companies in a group are loosely linked, you can use clients instead of the company code to represent strategic business fields. You can also use a client-specific concept to portray groupwide scenarios, for example, e-commerce.

You can choose aggregation levels for the above-mentioned organizational units (basic organizational units).

These basic organizational units control business application functions and business processes for business-area-specific accounting in the R/3 System.

For the purpose of reporting and consolidation, you can consolidate the basic organizational units at aggregation level.

The R/3 System contains the following organizational units to control operative functions in the Logistics component:

• Plants
• Sales organizations
• Purchasing organization

When you decide on an organizational concept for the R/3 System, the strategic business units can be of similar importance as the legal entities of the enterprise.

The segmenting of these business units is of considerable importance for the strategic and operative management of the company. Critical success factors, core competence factors, and market segments are specific characteristics of each strategic business unit.

Reporting requirements and business processes are often set uniformly within a strategic business unit in order to reduce the complexity of the business procedures. If this is the case, the companies within a group only supply services, for example, to support the operative running of the strategic business units and fulfill the requirements for external rendering of accounts in the respective company location.

Capital yield plays a special role in the strategic management of the business units. It is usually not enough to manage the business units based on sales or turnover quantity since interest on the capital used is not taken into account, that is, the long-term revenue and investment potential of the company is not necessarily guaranteed.

Alternatively, you may use software products such as the Business Warehouse to calculate expected product-specific income.