Executive Interviews: Interview with Robert Salomon on Staying on Top, Always
July 2009 - By Dr. Nagendra V Chowdary

Robert Salomon
Associate Professor at the Stern School of Business, New York University.

• Did you find any interesting insights from Chinese companies’ market entry strategies and their international expansion strategies as opposed to let’s say either South Korean or Japanese companies? Do you think Chinese companies are taking the same route as South Korean or Japanese companies followed several years ago or are they chalking out their unique strategies?

  This is an interesting question. When I think about China, Japan, and South Korea, certainly some similarities can be drawn. All three followed an export-led growth path to prosperity. However, once a certain level of prosperity had been achieved through trade, the three countries diverged with respect to international investment. South Korean firms have generally followed a more organic growth strategy – eschewing acquisitions of foreign targets in favor of building businesses from scratch. Japanese firms followed a similar strategy up to a point. While many of Japan’s industrial firms preferred organic growth, Japanese firms acquired a vast portfolio of real estate holdings in the late 1980’s and early 1990’s. Insofar as China is concerned, although we are in the early stages of China’s international expansion, it seems so far that Chinese firms are following a more growth-throughacquisition type of strategy, acquiring foreign firms in both basic materials and high-tech industries.

  My sense is that this has a lot to do with the capabilities of the firms from these countries. That is, by the time Japanese and South Korean firms began to expand, they did so from a position of technological strength. For this reason, they were able to organically extend existing advantages to other countries. China, by contrast, is expanding from a relatively weak technological position not only vis-ŕ-vis Japan and South Korea, but also vis-ŕ-vis the rest of the developed world. In this sense then, Chinese firms are embarking on a strategy of acquisition in order to acquire the technological capabilities their firms currently lack.

• What according to you are the top- 5 companies best known for their market entry strategies and the top-5 companies known for their international expansion strategies? What are the common and unique characteristics you noticed in these 10 companies?
  I am not very good at compiling lists of “best” companies, but I can identify what I think are some “best” practices. As I alluded to in an answer to a previous question, I think that the best companies are keenly aware of the cultural, political, and economic risks associated with entry into given markets. Some companies have even developed country-risk pricing models to help temper revenue growth or cost-saving projections. These companies make far better entry decisions than their competitors.

  Once the market entry decision has beenmade, it is important to select an entry mode that is appropriate to the host country. For example, those companies that discover a potential for profit in extremely volatile, or risky, countries may determine that exporting helps themmitigate the risk of investing and putting physical assets at risk in the host country; or, theymay discover that a joint venture with a powerful, and connected, local firm gives them an advantage. But whatever the entry mode, it is important to match the mode to the risk profile of the host environment.

• If you have tomake a list of top 10 business leaders in the last century and top 10 current business leaders, who would they be and why would they be?
  Again, I’mnot very good at generating lists of “bests”, but there are a few business leaders who I have been impressed with over the years. Steve Jobs comes to mind. I am most impressed at how he and his team were able to revive a fledgling computer company to build what is now a world-class consumer electronics, software, and computer powerhouse. I have also been impressed with Stanley Bergman of Henry Schein. I am impressed with his ability to put the organization before the individual. He has recognized that it is not about any one individual in a corporation that makes it a success, but about a teamof people, working toward the same goal, who can really make a difference. Finally, I have a tremendous respect for Warren Buffett. As with Stanley Bergman, it’s nice to see leaders who genuinely care more about the health of the underlying business (or businesses) than about their personal ego, or the number of zeros at the end of their paycheck.