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.
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 agreements, or by open market exchange or participation in public tariffs.
[2] 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.
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.