WHAT IS EXTENDED ENTERPRISE: An Extended Enterprise is a

An Extended Enterprise is a loosely coupled, self-organizing network of firms
that combine their economic output to provide products and services offerings to
the market.The term "extended enterprise" represents a new concept that a
company is made up not just of its employees, its board members, and
executives, but also its business partners, its suppliers, and its
customers.Extended Enterprise is the term for the set of windows that describes
the characteristics of a future proof organization anticipating to its environment
and collaborating with its partners and customers by utilizing the technology
According to Browne et al. (1995) the EE concept is close to what Christopher
(1992) calls “co-makership”, “a long-term relationship with a limited number of
suppliers on the base of mutual confidence”. This co-makership allows the
partners to work together on engineering the value of their product, besides
developing simplified means of ordering and invoicing which improve quality and
reduce costs for all parties
Childe (1998) defines an extended enterprise as:
A conceptual business unit or system that consists of a purchasing company and
suppliers who collaborate closely in such a way as to maximise the returns to
each partner.
Wider organization' representing all associated entities customers,
employees, suppliers, distributors, etc. who directly or indirectly,
formally or informally, collaborate in the design, development,
production, and delivery of a product to the end user.The Extended
Enterprise business pattern, which is also known as the Business-to-Business
pattern or B2B pattern, addresses the interactions and collaborations between
business processes in separate enterprises.The notion of extended enterprise
includes many different arrangements such as virtual integration, outsourcing,
distribution agreements, collaborative marketing, R&D program partnerships,
alliances, joint ventures, preferred suppliers, and customer partnership.
Firms in the extended enterprise may operate independently, for example,
through market mechanisms, or cooperatively through agreements and
contracts. Alternatively referred to as a "supply chain" or a "value chain", the
extended enterprise describes the community of participants involved with
provisioning a set of service offerings. The extended enterprise associated with
"McDonald's", for example, includes not only McDonald's Corporation, but also
franchisees and joint venture partners of McDonald's Corporation, the 3PL's that
provide food and materials to McDonald's restaurants, the advertising agencies
that produce and distribute McDonald's advertising, the suppliers of McDonald's
food ingredients, kitchen equipment, building services, utilities, and other goods
and services, the designers of Happy Meal toys, and others.
The Extended Enterprise encompasses the compression of concept to customer
lead-time, working with just-in-time supply chain and logistics support throughout
product/service life. In the manufacturing arena pan-national competitive edge
can be provided by access to creative information processing centres such as
specialist design or component manufacturing houses. It is no longer possible or
even desirable to embrace world class capability in all the key functional areas
wholly within a single company based organization. Class-leading
competitiveness flourishes in an environment of dependency and
interdependency with other providers of components, services and ideas. The
Extended Enterprise offers this functionality; it demands a new organizational
concept. Power via conventional hierarchy is seriously weakened by the flat,
geographically distributed and transient structure of the Extended Enterprise
The notion of the Extended Enterprise has taken on more importance as firms
have become more specialized and inter-connected, trade has become more
global, processes have become more standardized and information has become
ubiquitous. The standardization of business processes has permitted companies
to purchase as services many of the activities that previously had been provided
directly by the firm. By outsourcing certain business functions that had been
previously self-provided, such as transportation, warehousing, procurement,
public relations, information technology, firms have been able to concentrate their
resources on those investments and activities that provide them the greatest rate
of return. The remaining "core competencies" determine the firm's unique value
A supply chain is a customer-supplier chain of individual enterprises, each
operating as an individual enterprise trying to maximize its own corporate goals,
thus sub-optimizing the overall performance whereas an extended enterprise is
a chain of enterprises, which essentially behave as a single enterprise
trying to maximize the corporate goals of the extended enterprise, thus
optimizing the performance of each individual enterprise. A Virtual
Enterprise (VE) is a temporary alliance of enterprises that come together to
share skills or core competencies and resources in order to better respond to
business opportunities, and whose cooperation is supported by computer
networks. It is a manifestation of Collaborative Networks and Distributed
Collaborative working.
The term "extended enterprise" represents the concept that a company is made
up not just of its employees, its board members, and executives, but also its
business partners, its suppliers, and even its customers. The extended enterprise
can only be successful if all of the component groups and individuals have the
information they need in order to do business effectively.
Research indicates that a strategic framework for measuring and
managing performance in extended enterprises does not exist.
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