International sequential

advantages
and
network flexibility
By Kogut, B., (edited by Bartlett, Doz and
Hedlund) in Managing the Global Firm

Done by: Xiaolian

Framework
 Overview of article
 Introduction
 Multinationality and Competitive Advantage
 Sequential Strategy and Organizational
Evolution
 Conclusion
Introduction
 Initial motivations for FDI vs Sequential
advantages of co-ordinated multinational
system
 Initial motivators:
 Access to raw material
 Exploit cost & skill differentials across countries
 Markets penetration
 Int’l sequential advantages
 The subsequent advantage generated over time due to
establishment of int’lly dispersed assets thru
co-ordination of individual subsidiary
Introduction
 Convergence of technological capabilities
among countries
 Expanding use of subsidiaries to gain strategic
leverage
 US firms:
 From transfer of technology & superior organizational
abilities to overseas market to strengthening already
established subsidiary positions
 What is the competitive advantage of a MNC in a mature
market?
 Multinationality
Multinationality and
Competitive Advantage
 Strategy of firm shifts increasingly to the
exploitation of country differences thru 4 sources
of competitive advantage:
 Economies of scale
 Canon AE-1 Camera
 Economies of scope
 Honda Motors Can be found in
p.49 to 56 of
 Learning article
 P&G
 Operating flexibility
 General Motors
Sequential Strategy and
Organizational Evolution
 Persistence of traditional organizational structures may
impaired creation of multinational flexibility

 The organizational capability of MNC to exploit the

sequential advantages can be impaired by structural
changes and differences in management system
 E.g. Moving from domestic to international firm

 MNCs move from hierachical control to a more co-

operative relationship between HQ and subsidiaries
Sequential Strategy and
Organizational Evolution
 Organizational structure does not only channel
information and delegate authority, in fact, it
should provide a system by which information and
organizational knowledge are created

 To achieve sequential advantages thru network

co-ordination
 Duplication
 Differentiation
Conclusion (1)
 How much value a firm can benefit from an
international network depends heavily upon the
integration of functions across border
 US and European MNCs can no longer depend
on their technological and organizational skills to
dominate world market as previously
 Central source of advantage lies in the cumulative
experience of operating dispersed multinational resources
Conclusion (2)
 I agree.
Whether or not a firm are able to make use of
their multinationality as a competitive advantage
usually depend on how efficient it can tap on to
the strengths of each subsidiary and achieve
int’l sequential advantages thru learning,
experiencing each unique operation that take
place in each context.