What is a strategic business area? (DAS)

A strategic business area (often abbreviated as DAS, from the English “strategic business unit) is a term used to describe an entity or unit managed independently within a large company. These strategic business units often have their own vision, mission, and goals. In addition, their planning is done separately from other businesses of the parent company and their objectives are also different.

In other words, a strategic business area is a subset or sub-part of a large corporation that is responsible for its own strategic and business planning. No matter how these DAS are organized, they all target a specific group of customers or a geographic area. 

Although it operates independently, the strategic business area should still report directly to the head office of the parent organization regarding the state of its work processes and performance. 

Being a sub-group within a main company does not mean that DAS are small businesses. The areas of strategic activity can independently control the management of their human resources, training, business development and marketing strategy. 

It is extremely important for certain types of companies to have the opportunity to create strategic business areas, as these structures offer them many advantages. This makes it possible, for example, to allocate or withdraw resources independently, without affecting the activity of the rest of the organization. With one or more DAS, a company also has the means to react quickly to market developments and to reorient its commercial strategy in a short time.

A typical example of a DAS structure is provided to us by the famous brand LG. They produce a huge and varied amount of consumer products, such as refrigerators, televisions, air conditioners, etc. Each of these products is manufactured by different areas of strategic activity. Each division is not only responsible for manufacturing and delivering products, but must also make strategic investment decisions and manage its budget independently. This in turn allows LG executives to devote more time and attention to tracking costs, revenues and profits in each of its strategic business areas. 

The strategic segmentation of DAS-type activities is however fundamentally different from marketing segmentation, because the latter consists in segmenting predefined markets that correspond to strategic thinking, and not the activities of the company. Marketing segmentation thus aims to identify segments of these markets.

The main characteristics of a strategic business area 

How to define a SAR? Although each DAS may have its own attributes, it is generally considered that a strategic activity area represents a subset of activities that has the following characteristics:

  • A specific market
  • A specific clientele
  • A specific cost structure 
  • Specific distribution networks 
  • Specific competitors
  • Specific skills 

As we can see, a strategic activity area is like a subset of activities that can be associated with a specific value chain and which corresponds to a particular combination of key success factors.

In fact, it is quite possible to consider that a DAS could very well exist as an independent organization.

The pros and cons of strategic business areas

While strategic business areas are essential for many businesses, they also have certain drawbacks. 

Let’s start with the advantages:

  • Strategic business areas simplify the overall strategic management process of companies
  • DAS facilitate the accounting process of very large companies
  • DAS implementation enables leaders of large companies to make better overall strategic decisions
Now here are the main drawbacks:
  • The creation of strategic business areas is a complex process to achieve
  • The creation of DAS can lead to competition and internal tensions which are directly caused by access to funding sources.

Examples of areas of strategic activity

Here are some simple and different examples of types of strategic business areas:

Product-based SAR

A large company can split into DAS which correspond to the different categories of products it offers. This is, moreover, the most common type of creation of strategic business areas. For example, a ski manufacturer may decide to create two strategic business units because it has two divisions, which are fashion and equipment.

The fashion division and the equipment division, however, keep the same brand name. 

Service-based SAR

As with products, companies also create strategic business areas based on their services. For example, a telecommunications company can create a data center division. This division will help the parent company to provide various services, including rental of infrastructure (Housing).

Location-based SAR

This location category is used when a business targets customers from different countries or regions. For example, a French fashion brand will launch distribution and promotion capabilities in Japan and view them as a strategic business area to help the company sell more products to Japanese consumers.

DAS based on customer segment

Regarding the customer segment, a company may have a separate division to serve, for example, customers with high purchasing power. Banking is a typical example of a sector that is familiar with the implementation of DAS according to the customer segment.

DAS based on innovation

The innovation category is used in particular in the case of products or devices with high technological value. For example, a large IT company may create a strategic business area to launch its innovative new products.


A strategic business area is an ideal tool to help businesses better target their customer groups. While this process remains difficult to implement, companies that adopt it wisely are more likely to survive and compete in the long term. 

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