Business Segment Analysis – What it Really Involves

The Business segment has disclosed management information as the primary operating segment. Two or more people may share the responsibilities and authorities of a business segment president or company segment leader as decided by the Board of Directors if required. The name of the business segment typically includes the words “business,” “operating,” or “service.” It may also include the abbreviated form of the word, “biz.” In short, a business segment is the portion of a company that performs a specific type of operation.

  • A business segment usually provides the following services to customers: manufacturing, research and development, distribution, sales, or marketing. The name of a segment usually indicates which business functions perform these functions. Some examples of business segments are the following: Finance, Consumer, Real Estate and Technology. The operating segments provide customers with operating information such as: accounting, financing, and order processing.
  • The Marketing segment provides customers with information regarding products, services, and pricing. Marketing is part of the Business segment, just as operations and distribution are components of the Business segment. Marketing is one of the three major business functions that are performed by a company. Other business segments are service, consumer, and dedicated business or special interest groups.
  • Some companies use the term enterprise in relation to the Business segment, but that’s generally reserved for larger corporations that have more than one business segment. A separate segment could be a subsegment of an operating segment or it might be a separate building or plant-based business. For instance, manufacturers of automobiles would have a separate segment (autos) and product lines (in the case of automobile parts) apart from the other components of the automobile manufacturer. Separating a business segment from a subsegment is sometimes very difficult because some business units are integral to the health and growth of the company while some are peripheral.
  • Web segmentation refers to the way a business segment gets its information together. One example is CPA networks that are segmented according to content and offerings, versus geographic location. Web widgets are another example of segmentation that is applied on a global basis. Companies like Yahoo! have made great use of segmentation to provide search results that are relevant to users based on what they’re looking for.

Different segments in a business have different needs and different ways of getting those needs filled. Some segments require more active participation from users while others may just need basic, mechanical support. Segmentation helps business owners keep tabs on how their resources are being utilized. It is also a vital first step in developing and implementing new strategies and making required adjustments. Keeping track of which segments are performing well and which ones are not is a crucial part of any successful organization. This is why the proper use of segmentation can mean the difference between success and failure, especially for smaller organizations.

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