Final answer:
Firms use a extranet to securely share business information and coordinate activities with external entities like suppliers and partners, enabling better collaboration and operational efficiency.
Step-by-step explanation:
Firms utilize a extranet to coordinate their activities with other firms. An extranet is a private network that allows companies to securely share part of their business information or operations with suppliers, vendors, partners, customers, or other businesses. Unlike an intranet, which is a network solely for internal communication, an extranet extends access to designated users outside the company.
Therefore, a firm's collaboration with external entities often relies on an extranet for functions such as supply chain management, project tracking, customer portals, and information exchange. This fosters better inter-organizational communication, efficiency, and partnership.