How do you define your Scope of Extended Enterprise?

English: Coca-Cola - Old bottle opener Deutsch...

Consider for example, when Coca Cola looks into the future and worry about the looming water shortage which is intrinsic to their product. Or when Walmart looks ahead and see the depleting fish reserves in the ocean or when Ikea, wonders where they are going to source their raw materials 20 years from now.

The scope of reach and operations of each of these mammoth global corporations drives home the point that the extended enterprise – its customers, governmental agencies, NGO’s, communities where their business footprint exists, and the biodiversity – is  highly woven in the fabric of their supply chain.

No longer can a company exist as an independent entity and go about doing its ‘business as usual’ – they need to do The Right Thing. Businesses now understand that by not paying appropriate attention to its entire value chain poses a threat to their reputation, brand equity and market capitalization.

That’s the reason why Walmart, the largest purchaser of fish demands to source their fish requirements only from sustainable fisheries, or Coca Cola is now investing heavily into the water management and harvesting projects with the stakeholders support, and Ikea’s call for building furniture only from sustainable forests, like FSC certified, is creating enormous demand for the entire supply chain to be accountable, thereby, extending the scope of these organizations.

“An enterprise view is more complex than just examining the direct production and consumption linkages, processes and activities.” – David L. Rainey

Apple, with its iconic, game changing i-phone has been able to do just that. 90% of all the parts are made by outside manufacturers and all the thousands of i-phone applications are made by third party individuals and small businesses. This is a perfect example of how a corporation can first recognize its stakeholder partners interested in the company’s success and then harness its power of the extended enterprise.

Then there is the wisdom of the internal management’s ability to understand the whole extended enterprise requiring broad knowledge about every facet of the global business environment.

Patagonia, the outdoor company is such an example, where biologists, geologists, scientists, and people from vast array of disciplines work in a fashion that clearly redefines the scope of an enterprse. Or else, why would you expect such diverse backgrounds in a clothing/sports company. Patagonia has only a handful of management professionals and these “others” have kept their core values and just happen to congregate and come together in a business setting rather than adapting themselves to the constructs of the business, which often leads to mismanagement of the wider eco-system.

The Extended Enterprise concept is still evolving as corporation’s world over wrestle with sustainable and competitive advantage. While the businesses have taken a lead in defining the scope of their enterprise, a legal framework becomes an imperative in the long run as issues tend to become more complex due to crossing of boundaries among the different corporations’ extended responsibility.

(Image via Wikipedia)

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Comments

  1. I’m incredibly happy to hear that Walmart, Coca Cola and Ikea are taking these measures, that really does cast some hope for the future. If transnational corporations are beginning to incorporate sustainability principles into their business practise then we are well and truly on the right track! I’m looking forward to seeing this Extended Enterprise concept become the norm. Perhaps the UN conference on Sustainable Development this June will boost the popularity of such a concept, with it’s major theme of the Green Economy…? I hope so! xxx

    • Thanks for your comment! Yeah the onus lie on the bigger companies to take on the leading role to transform how business is conducted. If they do it, then their suppliers are forced to do it, and so on…
      Extended Enterprise is now increasingly becoming an imperative and sustainability automatically springs from that. Yeah, let’s see how Rio +20 turns out this time. In fact, you yourself have written about the summit on your blog – great post. Thnx.

      • Appsolutely! Good point about the supply chains… Even a small decision at the top of the business ladder would send shock waves of sustainability throughout the web that it is based on. I guess this makes environmental consultancy an important job…
        Also thanks for reading my post! Glad you liked it! (:

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