Israel

Presentation by:Abhishek Das (02)Khitish Kakar (28)Ruchir Shukla (42)

Israel: Evolution as a Nation

Israel: Evolution as a Nation

Israel: Culture

• Heterogeneous

• Low – Context (Straight talk)

• Monochronic Time

• Low Power distance

• Individualism

• High uncertainty avoidance

• Gender Equality

Implications for MNE in Israel

Pride in culture and history Do not openly criticize Show interest in their culture & history

Relationship oriented Build relationships in business

Business commitment Business deals tend be detailed and contracts are strictly adhered to. Less scope of later change

Gifts & Bribes Advisable to not offer gifts in initial business meets

Implications for MNE in Israel

Pace of Negotiation Expect deals to be slow

Decision Making: Individualistic Individual decision makers are appreciatedPersonal feeling and opinion are considered rather than set rules only

Group membership : Acquired Appreciate education and achievement of people

Gender equality Not much problem for visiting businesswoman

Demographics

Population 74,73,052 Jerusalem 7,47600 Urban population 92%

Age Distribution

Pop. growth rate 1.58% Birth rate 19.24 births/1000

populationDeath rate 5.47 deaths/1000

population

Demographics

Religions Total pop. 7.5 millionJewish 5.7 million

Languages Hebrew (official),

Arabic, English

Demographics

Sex ratio 1.05 male/female

Infant mortality rate 4.12 deaths/1000 live births

Life expectancy at birth 80.96 yrs

Literacy Rate 97.1%

Israeli system of government

• Parliamentary Democracy

• 11 Basic Laws

• Israel does not have a written constitution.

• The Legislative Branch: Knesset is Israel's unicameral legislature and is seated in Jerusalem.

-It has 12 standing committees. -Knesset elects the prime minister and also

holds power to remove the president.

Political Risks

• Since its establishment in 1948, Israel has been in almost constant conflict with its Arab neighbors.

• These conflicts, particularly the conflict over the Gaza Strip and the West Bank, have had a negative impact on the country’s stability and its international relations.

• This social unrest has brought about a decline in investor confidence in much of the region.

Legal System

Israel's legal system combines • English common law• Civil law• Jewish law

Marriage & divorce are under the jurisdiction of the religious courts: Jewish, Muslim, Druze, and Christian

Jewish/Israeli Influence on US

• Jews & the Jewish religion has a great influence on US

• It’s often said that the fundamentals of US are Jewish and not Christian

• American Israel Public Affairs Committee (AIPAC) is an important influence

• A large number of Jews hold important offices in the US

Major Economic Indicators

World Vs Israel GDP (Growth %)

GCI Rankings

Economic Sectors

• Hi–Tech Industries: Highly qualified labor

force, scientific institutes, and R&D centers.

• Diamond Industry: Multi-faceted, world leader in both cutting-edge technologies and craftsmanship.

• Agriculture: Intensive system of production, close cooperation between researchers, farmers, and agriculture-related industries.

Economic Sectors

• Construction: Residential building accounts for 84 percent of total construction output, necessary to meet the demands of renewed immigration.

• Transport & Communications: Contributes 7 percent to GDP and employs 5 percent of the country's labor force.

• Tourism: Tourists attracted by Israel's geographical diversity, its archeological and religious sites.

Foreign currency added value of 85 percent export and employs some 80,000 persons.

ISRAEL: Exports

Export of Commodities: Exports to Regions:

ISRAEL: Imports

Major Highlights

• Market Economy: Technologically advanced Market Economy

• Silicon Wadi: High concentration of High-Tech industries & strong venture capitalist industry

• Berkshire Hathaway, Intel & Microsoft

ISRAEL’S FREE TRADE AGREEMENT

International Organization Membership

Some MNE’S in Israel

ISRAEL: High IPR Compliance

ISRAEL'S COMPETITIVE EDGE

Israel : Relative Advantage

Hi Tech Industries• Relative advantage : No. 2 after Ireland. • Grew by 100 % between 1995-2000• Skilled workforce Highest % of population as

researchers and scientists in the world• Capital Large VC and government investments in

Hi Tech industry since late 80’s• Investment as % of GDP in R&D 4.7 %, highest in

the world

• 50 % Israeli exports are Hi Tech Products• Microsoft & Intel opened their first outside R&D

centres in Israel

Israel : Relative Advantage

Chemical Industry• Chiefly due to pharmaceutical companies• Teva, world’s leading pharma company, $16

bn annual sales

Reason• Favorable government policies for Pharma

companies• Relative abundance in minerals• High capital availability• Skilled workforce: researchers, scientists

Recent Achievements

• Year 2000 – Zero inflation rate.• Year 2009 – Balance of Trade deficit less

than 1% of total trade • Industrial exports grew almost six-fold in

the past two decades, from $6 billion in 1985 to $34.6 billion in 2009.

• Foreign debt was eliminated, from being 1.6 times the GDP in 1985 down to zero by 2003 with Israel since then becoming a creditor .

Recent Achievements

• With a GDP per capita of $29,500 (PPP) in 2009, it ranked 24 out of 34 OECD members

• Ranked higher - 15 out of 169 countries (in 2010) - on the United Nations Human Development Index

• Growth of exports from $175 million in 1987 and $16.9 billion in 2009

• Achieved positive growth (0.7 percent) in 2009(Recession)

• Country's civilian labor force, from 1.65 million in 1990 to 3 million in 2010

Challenges for Israel

• Maintaining national security

• Absorbing large numbers of immigrants

• Establishing a modern economic infrastructure

• Providing a high level of public services (health, education, welfare, etc.)

Country’s Future Transformations

• First is a political settlement of the Israeli-Palestinian conflict

• The second transformation needed is in the field of education

• The third transformation needed: a long-term investment policy that centers not only on high-tech and finance, and not only in the Tel Aviv area

• Israel’s most significant failure is the poor public image which she portrays in the international community

ATTRACTIVENESS OF ISRAEL

Maximize Commitment

Collaborations

Individualized Strategies

Individualized Strategies

Minimize Commitment

HIGH

MEDIUM

LOW

HIGH MEDIUM LOW

Cou

ntr

y

Att

ract

iven

ess

Competitive Strength

GE Country Attractiveness Matrix