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

economic output In economics, output is the quantity and quality of goods or services produced in a given time period, within a given economic network, whether consumed or used for further production. The economic network may be a firm, industry, or nation. Th ...

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 A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distri ...

" or a "

value chain A value chain is a progression of activities that a business or firm performs in order to deliver goods and services of Value (economics), value to an end customer. The concept comes from the field of business management and was first described ...

", 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, doing business as McDonald's, is an American Multinational corporation, multinational fast food chain store, chain. As of 2024, it is the second largest by number of locations in the world, behind only the Chinese ch ...

", for example, includes not only

McDonald's Corporation McDonald's Corporation, doing business as McDonald's, is an American Multinational corporation, multinational fast food chain store, chain. As of 2024, it is the second largest by number of locations in the world, behind only the Chinese ch ...

, but also franchisees 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 risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acce ...

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 generall ...

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 Chain store#Restaurant chain, 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 b ...

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 tra ...

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 a ...

exchange or participation in public

tariff A tariff or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...

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 Enterprise architecture (EA) is a business function concerned with the structures and behaviours of a business, especially business roles and processes that create and use business data. The international definition according to the Federation of ...

. 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 performed by people or equipment in which a specific sequence produces a service or product (that serves a particular business g ...

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 Core or cores may refer to: Science and technology * Core (anatomy), everything except the appendages * Core (laboratory), a highly specialized shared research resource * Core (manufacturing), used in casting and molding * Core (optical fiber), t ...

" determine the firm's unique

value proposition In marketing, a company’s value proposition is the full mix of benefits or value (economics), economic value which it promises to deliver to the current and future customers (i.e., a market segment) who will buy their Product (business), product ...

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

knowledge economy The knowledge economy, or knowledge-based economy, is an economic system in which the production of goods and services is based principally on knowledge-intensive activities that contribute to advancement in technical and scientific innovation. ...

References

{{reflist Enterprise architecture Supply chain management