How might Stallion reorganise its many business activities into formal SBUs within a coherent divisional structure? Critique the logic of your proposals. (Conflated question)

Question

What will be an ideal response?

Answer 1

Divisional and subsidiary, business unit structures should be based on a sound logic of synergistic
and coherent activities. Stallion’s portfolio currently contains ‘business lines’ based on disparate
logics. International trading requires specific capabilities of transnational negotiation, infrastructure
development, freight handling and distribution. Economic value added will vary from one
commodity to another and over time, but the operational principles are broadly similar, so a formal
trading division can be coherent. Automobile import and distribution appears to conform to similar
logic; if it merits status independent of other import activities because of size or specific capabilities,
the same may be true of other such activities, now or in future, so various dedicated business units
within the umbrella international trading division could make sense. In manufacturing the required
resources and capabilities may be so different that activities will not necessarily benefit from
inclusion in the same division. Synergies among engineering, packaging and food processing
activities could be hard to realise, in which case distinct divisions for each may be appropriate. The
balance of the current portfolio entails services, at first sight another candidate to be combined into a
single division with business unit subsidiaries. The exception may be freight forwarding, apparently
a logical fit within international trading. In practice, in this conglomerate purist structural logic may
be compromised by incompatible ownership interests, joint ventures or other arrangements that must
be respected. Given the size of the African continent a geographically-determined structure might
also be required, if not now at some future date.