Boundaries of the enterprise

We can distinguish following forms of boundaries of the enterprise:

• limits to the integration of up-stream flows (upstream integration boundary) is tied up to decisions to make or buy materials or resources, which are used by the unit to carry out the tasks in the manufacturing process,
• limits to integration in down-stream flows (downstream integration boundary) is related to the scope of services offered to the customer (both to the ultimate purchaser, as well as the next link in market flow),
• limit of integration in diversification of products (product integration boundary) - concerns ranges and types of products, which company intends to produce,
• limits to infrastructure integration (infrastructure integration boundary) - managers must decide on allocation of infrastructure elements on which the company will invest, which will be made available by other cooperating entities,

You should also pay attention to a different approaches to the boundaries of the enterprise:

• vertical boundaries - within the enterprise, between levels in the organizational structure and between the ranks of individual posts and persons involved,
• horizontal boundaries - within the enterprise, between functions and activities,
• external boundaries - between company and suppliers and customers,
• geographical boundaries - between locations, between companies and markets, cultural boundaries

'See also:

• Boundaryless enterprise

Examples of Boundaries of the enterprise

• Physical Boundary: This refers to the physical location or area of the enterprise. It is the physical space where the activities of the organization take place. For example, a retail store would have a physical boundary that is limited to the area within the building, parking lot, and other areas of the shop.
• Operational Boundary: This refers to the operational limits of the enterprise. It includes the activities, processes, and functions which the enterprise is involved in. For example, a high-end restaurant may have operational boundaries that limit the type of cuisine they serve and the range of services they offer.
• Organizational Boundary: This refers to the organizational structure of the enterprise. It encompasses the legal and organizational entities that are part of the enterprise, such as its subsidiaries, divisions, and branches. For example, a retail store may have an organizational boundary that includes its head office, regional offices, and individual stores.
• Technological Boundary: This refers to the technological capabilities of the enterprise. It includes the hardware and software used by the enterprise to achieve its goals. For example, a manufacturing company may have a technological boundary that encompasses the use of specialized equipment and software to produce its products.
• Financial Boundary: This refers to the financial resources of the enterprise. It includes the capital, investments, and other resources used by the enterprise to finance its operations. For example, a software company may have a financial boundary that encompasses the funds used to develop and market its products.

Advantages of Boundaries of the enterprise

Boundaries of the enterprise provide numerous advantages for the company, including:

• Improved efficiency: By establishing clear boundaries and roles, organizations can improve the efficiency of their operations. This includes setting clear expectations for employees, and providing resources and support to ensure that goals are met.
• Reduced risk: By establishing boundaries, organizations can reduce the risk of potential conflicts, misunderstandings and disputes. This can also help to ensure that resources and assets are used in a way that is compliant with regulations, laws and standards.
• Greater control: By establishing boundaries, organizations can have greater control over their operations. This includes providing guidance and direction to employees to help ensure that tasks and responsibilities are completed in a timely and effective manner.
• Improved communication: By establishing boundaries, organizations can improve the communication between different departments and teams. This can help to ensure that everyone is on the same page, and that resources and information are shared in a timely and efficient manner.
• Improved decision-making: By establishing clear boundaries and roles, organizations can improve their decision-making process. This includes providing clear guidance and direction to employees and teams, and ensuring that decisions are made in a timely and effective manner.

Limitations of Boundaries of the enterprise

The following are some of the limitations of boundaries of the enterprise:

• Legal Boundaries: Legal boundaries refer to the limits imposed by the law or legal system. These boundaries are related to the type of business, the services it can deliver, and the areas of operation.
• Financial Boundaries: Financial boundaries refer to the financial resources available to the enterprise. This can include capital, cash flow, and other resources such as human capital.
• Social Boundaries: Social boundaries refer to the norms and values of the society in which the business operates. This can also include the values and expectations of the stakeholders.
• Geographical Boundaries: Geographical boundaries refer to the physical boundaries of the enterprise, including the areas where it can operate and the physical locations of its facilities.
• Time Boundaries: Time boundaries refer to the temporal limitations that the enterprise has to operate within. This includes the hours of operation, the deadlines for projects, and other time-based restrictions.

Other approaches related to Boundaries of the enterprise

In addition to the traditional forms of boundaries of the enterprise, there are other approaches related to boundaries of the enterprise. These approaches include:

• Internal Boundaries: Internal boundaries refer to the various divisions and departments of the enterprise, along with the processes and procedures that are needed to maintain them.
• External Boundaries: External boundaries refer to the various external factors that can affect an enterprise, such as suppliers, customers, competitors, and regulations.
• The Dynamic Boundary: This refers to the changing environment of an enterprise, including the changing needs and demands of customers, the evolving technologies, and the ever-changing economic conditions.
• The Strategic Boundary: This refers to the overall strategy of the enterprise and how it is able to adapt to the changing environment.
• The Organizational Boundary: This refers to the organizational structure of the enterprise, as well as the roles, responsibilities, and relationships within it.

In summary, there are various approaches related to boundaries of the enterprise, including internal, external, dynamic, strategic, and organizational boundaries. Each of these approaches is important in order for an enterprise to remain competitive and successful.

Boundaries of the enterprise — recommended articles

Strategic business unit — Characteristics of organization — Market environment — Resource plan — Functional dependence — Principles and features of organizational structure — Holding — Beam of objectives theory — Project environment

References

• Ashkenas R., Ulrich D., Jick T., Kerr S. (1998), Boundaryless Organization. Behind the Chains of Organizational Structure, Jossey - Bass Inc. Publishers, San Francisco
• Philpott E., Hamblin D. J., Baines T., Kay G. (2004), The use of models and methods of strategic planning: Towards a holistic view of strategy, International Transactions in Operational Research, vol. 11, International Federation of Operational Research Societes, Blackwell Publishing Ltd.
• Rajan, R. G., & Zingales, L. (2000). The governance of the new enterprise (No. w7958). National Bureau of Economic Research.
• Stace, D., & Dunphy, D. C. (2001). Beyond the boundaries: Leading and re-creating the successful enterprise. McGraw-Hill.