An extended enterprise is a loosely coupled, self-organizing network of firms that combine their

economic output Output in economics is the "quantity of goods or services produced in a given time period, by a firm, industry, or country", whether consumed or used for further production. The concept of national output is essential in the field of macroecono ...

to provide products and services offerings to the market. Firms in the extended enterprise may operate independently, for example, through market mechanisms, or cooperatively through agreements and contracts. They provide value added service or product to the OEM (Original Equipment Manufacturer). Alternatively referred to as a " supply chain" or a "

value chain A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product (i.e., good and/or service) to the end customer. The concept comes through business management and was fir ...

", the extended enterprise describes the community of participants involved with provisioning a set of service offerings. The extended enterprise associated with "

McDonald's McDonald's Corporation is an American multinational fast food chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hambur ...

", for example, includes not only

McDonald's Corporation McDonald's Corporation is an American multinational fast food chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hamburger s ...

, but also

franchisee Franchising is based on a marketing concept which can be adopted by an organization as a strategy for business expansion. Where implemented, a franchisor licenses some or all of its know-how, procedures, intellectual property, use of its busine ...

s and

joint venture A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and economic risk, risks, and shared governance. Companies typically pursue joint ventures for one of four rea ...

partners of McDonald's Corporation, the 3PLs that provide food and materials to McDonald's restaurants, the

advertising agencies An advertising agency, often referred to as a creative agency or an ad agency, is a business dedicated to creating, planning, and handling advertising and sometimes other forms of promotion and marketing for its clients. An ad agency is generally ...

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 A Happy Meal is a kids' meal usually sold at the American fast food restaurant chain McDonald's since June 1979. A small toy or book is included with the food, both of which are usually contained in a red cardboard box with a yellow smiley fac ...

toys, and others. ''Extended enterprise'' is a more descriptive term than supply chain, in that it permits the notion of different types and degrees and permanence of connectivity. Connections may be by contract, as in partnerships or alliances or

trade agreement A trade agreement (also known as trade pact) is a wide-ranging taxes, tariff and trade treaty that often includes investment guarantees. It exists when two or more countries agree on terms that help them trade with each other. The most common tr ...

s, or by

open market The term open market is used generally to refer to an economic situation close to free trade. In a more specific, technical sense, the term refers to interbank trade in securities. In economic theory Economists judge the "openness" of markets ...

exchange or participation in public

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and pol ...

s. How an extended enterprise is organized and structured and its policies and mechanisms for the exchange of information, goods, services and money is described by the enterprise architecture. 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 process A business process, business method or business function is a collection of related, structured activities or tasks by people or equipment in which a specific sequence produces a service or product (serves a particular business goal) for a parti ...

es has permitted companies to purchase as services many of the activities that previously had been provided directly by the business entity. 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 proposition In marketing, a company’s value proposition is the full mix of benefits or economic value which it promises to deliver to the current and future customers (i.e., a market segment) who will buy their products and/or services. It is part of a co ...

. Recently, the notion of extended enterprise has been updated by Alguezaui and Filieri (2014) who have reconceptualized the extended enterprise in the knowledge economy.

References

{{reflist Enterprise architecture Supply chain management