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Extended Enterprise
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. 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.
Previously
organizations have been thought of as linear entities, each
with a linear value chain that consisted of all the
activities required to design, market, sell, produce,
deliver and support products and services. Suppliers and
customers were thought to be "outside" the organization's
domain. And the organization was depicted as a hierarchy of
reporting relationships, primarily functionally aligned.
The new economy,
with high-tech companies rapidly evolving and "old economy"
enterprises embracing new ideas, brought tangible reality
and urgency to new organizational forms. With globalization
of markets, productivity pressures, scarce resources,
intensifying competition, blurred industry boundaries and
rapid technology change, new relationships and structures
have emerged in all sectors of the economy. Modern
organizations create new ways of delivering value to
customers, new approaches to collaborating with suppliers
along with critical thinking about organizational structure
and purpose.
Technology plays a
strategic role in the extended enterprise - in some cases
driving the opportunity for change and in others
facilitating collaborative relationships and
inter-organizational operation. IT enables the openness,
immediacy, information sharing, flexibility and adaptability
that the extended enterprise demands. Information technology
also enables customer responsiveness, speedy decision
making, superb inventory control and greater visibility
across the extended organization for demand planning.
(Source: IDC)
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