Israel
Preface

Israel is a country with a rich history and very prominent future ahead of them. The current on going political and territorial battles have not prevented the country to excel in their quest to build a strong economic infrastructure. Throughout all the turmoil in the country Israel has been able to establish a name for them in the global market. The way the world see Israel in the media is not the culture in which they live. This image that the media has placed on Israel put them at a disadvantage in gaining the attention of multinational corporations to do business in Israel. Though out the course of this paper we will explore the history, culture, geography, social, political, and economics aspects of the country. The growth and strides that Israel has made within the last 62 years of the formal existence proves that they are a contender to be a power player in the world. History
The government recognition of Israel date back to the year 1948, but Israel through the Jewish faith existed long before this date. Many would say that Israel was their land through the biblical teaching according to the Torah. The Torah states that “ The Lord appeared to Abraham and said, To your offspring I will give this land. So he built an alter there to the Lord, who had appeared to him”. (Torah Genesis 12:7) The land in which Israel reside currently was occupied by the Palestine’s. This was the origin of many of the wars that take place in Israel past as well as their current battles. The land of Israel and Jerusalem was always populating with members of the Jewish faith, but was never under their rule.
Fast-forwarding in history in 1901 Theodor Herzl envisioned the state of the Jewish followers to all populate in the land in which the Torah stated was theirs. The immigration movement was known as the Aliyah. This movement came about in five stages. During the first through the third movement nearly over 200,000 Jews populated the land of Israel. It was not until the rise of Nazism in which an influx of a quarter of a million Jews migrated to the lands to raise their total population on the Palestinee land to 33% of the population. (wikipedia 6of 43) On may 14, 1948 the Jewish Agency proclaimed independence naming the country Israel (wikipedia 6 of 43)

Geography
The History of Israel shape the geographical make up of the land that it is today. Through all the wars that have taken place in the land before and after independence. Israel is located in a region East Asia in the area known as the Middle East.( Israel country briefing Lund) Israel is surrounded by the previous owners of the land in which they have taken. In the words of Nir Yatziv “ We are surrounded by everyone who wants to kill us”. Israel is borded by Lebanon to the north, Syria to the northeast, Jordan to the east, Egypt to the southwest, and the Mediterranean Sea to the west. Many Israeli that I have spoken with state that for vacation travel can only be taken outside of Israel only if you fly. Driving to another country is not possible due to the neighbors that border them.

Major Cities
There are four major cities in Israel that host a large percentage of the population of Israel. Majority of the Israelis live in the center of the country in the capital/ largest city in Israel Jerusalem. Jerusalem hosts the Israeli government as well as the history that can be related back to biblical times. The next most populated city in Israel is Tel Aviv. Many people that have been to Tel Aviv compare it to a smaller version of New York City. Tel Aviv hosts many of the country industrial, commercial, financial, and cultural life (doing business fahn). Haifa, Israel is the major Mediterranean port where most of the countries import and exports are brought in through their own Israeli steamship line ZIM shipping. Beer Sheba, Israel provides administrative, economic, health, education, and cultural services to the southern region.

Political Environment
Israel political and legal system is made up of a democratic republic operating under a parliamentary system and consisting of legislative executive and judicial branches. (Fahn kanne) Elections are held at least every four years. Votes from the Knesset and offset this 4 year rules and elections can be held earlier. The institutions in the political arena are the President, the Knesset (parliament), Government (headed by the prime minister), the Judiciary and the state comptroller. The Knesset is the 120-member parliament of the State of Israel and a parliament member supported by majority will become the Prime Minister. The government is the executive authority of the state. They are responsible for the domestic and foreign affairs and security matters.

Legal environment The judiciary system is comprised of and evolved from the English common law, British mandate, Jewish, Christian, and Muslim legal systems. Israeli law is “Human Dignity and Liberty seeks to defend human rights and liberties in Israel”. The multicultural environment in Israel requires that the judiciary law is culturally aware of the background from its various members There is a three-tier court system in Israel. The magistrate courts are situated in majority of the cities. The second tier of courts is the district courts are only located in five cities. Finally you have the Supreme Court, which reside in Jerusalem. The Supreme Court is the highest court of appeals in Israel.

Israel original economic structure was previously based on agriculture, light industry and labor-intensive production. Israel’s newfound independence in the 40’s created better opportunities forward thinkers. Israel has the second largest number of startup companies in the world (after the United States) (wikipeida 17 of 43). These start up companies has lead the way in the change of thinking. Israel is now focused on a knowledge- base economy with a focus on telecommunications, high-tech and information technology industries. The Israeli advancement leads to the country having a Gross Domestic Product (GDP) higher than most developed western nations (Lund). Even with all the geopolitical issues that Israel faces. They are still able to maintain steady growth. A high contribution to the steady growth in Israel is due to the exports and foreign investments.

Part II

Briefing of the Business Culture

The business culture in Israel is not specifically defined to follow one set of guidelines. The Israeli business culture covers language, education, Do’s and taboos and many other variables. The official language that is spoken in Israel is Hebrew, Arabic and English as the first foreign language. Nir Yatziv states “English is required from early grade school through your high schools years. It is stress to us how important it is to learn English, because it is the primary language of the business world”. (interview) In order to be admitted into the college system you must be able to read and write English. Many of the text and lecture material are created in English language. Nir states that it is encouraged to obtain a master degree or higher to make yourself look marketable to companies on a global scale.

Guidelines There are many rules that can affect a business relationship. Respect of one religion is most important. When hosting a business dinner you should avoid getting any pork products. You also have an awareness of the environment that you are in such as a kosher environment versus a non-kosher environment. Be aware of the working hour and times. The Israeli workweek is from Sunday to Thursday 8 to 5. When setting up a business in Israel do not intend for the workweek to be Monday to Friday. Many employees leave exactly at five on Thursday in order to honor the Sabbath of the Jewish Faith. Hierarchy and Protocol in Israel are not as strict as we hold in the US. Speaking with Nir he expressed that it is not uncommon to find a lower level employee to be debating with the President of the company.( Interview) The titles and address of all employees / manager are on a first name bases .

Appointment and Meetings Appointment and Meetings in Israel are not arranged too far in advance. A notable practice that I have witnessed is the Israelis utilize a fast pace environment where time is of the essence to them. A meeting can be schedule for a specific time and it is not unusual for the Israeli participant to run late for the meeting. The content of the meeting should be straight and to the point highlighting the major issues. The content of the meeting should also show short-term achievable goals. There may be times in the meeting where the tone increases this is in no way a form of disrespect; this however is a notion that healthy debate is warranted. Here in the US we find it offensive if someone is performing multiple tasks in a set meeting. This is a normal practice in the Israeli culture.

US MNC Entering into the Market

The Israeli population of 7.6 million, in an area roughly the size of New Jersey, many magazines ranked Israel in the top five among emerging markets in 2009, as well as, top ranks in the world for U.S. patents per capita, following Japan and Taiwan. Leading sectors for Israeli export and investments are primarily hi-tech and defense with U.S. imports for defense accounting for approximately $4 billion. (www.export.gov.il) The hi- Tech sectors in which are the main focus for Israel is communication, semiconductor, aerospace and defense, water technologies, and life sciences. Majority of Government spending is solely spent on the Military in Israel. There are also promising market opportunities for safety and security equipment and services, medical equipment & biotechnology products, as well as educational services.

The United States is currently Israel's largest single country trade partner, despite heavy European competition with $9.2 billion in U.S. exports recorded in 2008. Moreover, Israel's commercial relationship with the United States has developed rapidly since the signing the Free Trade Area Agreement (FTAA) in 1985 and since 1995, nearly all tariffs on trade between U.S.-Israel have been eliminated. Creating a better trade environment. ( export.gov.il).

The best way to enter a business relationship in Israel is to identify the appropriate distribution and sales channels. Many distribution agents will often insist on exclusivity due to the small size of the country. The exclusivity of the small country can have both operation of vertical and horizontal integration. Vertical integration can be implemented where the quality of the product that is produced will be from one manufacturing plant. Even though cost will be a little higher the product in which you produce will be end to end. Horizontal integration allow the different distribution centers to engage in a pricing war in which the cost to an US MNC will be favorable. Increasingly large retail chains and department stores import directly, helping in the relationship strength between the US and Israel.

Method of Entry

An entering MNC has multiple ways in which business can be conducted once inside the country. The best entrant way in Israel would be Exports and Imports, Franchising, and mergers and acquisitions. The Israeli culture has a domestic mentality where they go with what they are familiar with. New entrants entering into the market will have a hard time understanding how to provide marketing and product placement in order to not offend any of the different religious backgrounds in Israel. One of the best methods that can be used is Franchising. Franchising allows a company to enter into the market and pick up from a brand name that is already establish. This franchise will allow the company to place their own spin on what they feel can boost profits. A secondary method that is encouraged by the Israeli government is joint ventures and licensing where a five year agreement with an automatic renewable clause is generally sought. (export.gov.il) Mergers and acquisitions will allow entry into the market. This is an acceptable practice due to the security that it provides in the generation of revenue and the keeping the unemployment rate at a steady level. Venture Capital investment in Israel has risen greatly in the last 10 years with multiple major acquisitions of Israeli companies by multinational corporations.