Israeli Business Culture

Be Bold … Be Direct … Be Casual … Be Israeli

a. Export Plan Memo Part 1:

A concise written brief for your first visit to the country you have targeted. Your briefing should include cultural aspects of doing business in that country; political, economic, and social risk as it may relate to your export plan;

Finally, you should provide well-thought-through market segmentation for the product and country you have chosen to study. This first paper is limited to 2000 words plus appendices and a list of citations. No reference should be more than five years old.

Israel is considered one of the most advanced countries inSouthwest Asiain economic and industrial development. The country is ranked 3rd in the region on theWorld Bank'sEase of Doing Business Indexas well as in theWorld Economic Forum'sGlobal Competitiveness Report. It has the second-largest number ofstartup companiesin the world (after the United States) and the largest number ofNASDAQ-listed companies outside North America.

In 2007, Israel had the 44th-highestgross domestic productand 22nd-highest gross domestic productper capita(atpurchasing power parity) at US$232.7 billion and US$33, 299, respectively.

Despite limited natural resources, intensive development of theagriculturaland industrial sectors over the past decades has made Israel largely self-sufficient in food production, apart from grains and beef. Other major imports to Israel, totalingUS$47.8billion in 2006, includefossil fuels, raw materials, and military equipment. Leading exports include fruits, vegetables,pharmaceuticals, software, chemicals, military technology, anddiamonds; in 2006, Israeli exports reached US$42.86 billion.

Politics of Israeltakes place in a framework of aparliamentaryrepresentative democraticrepublic, whereby thePrime Minister of Israelis thehead of government, and of amulti-party system.Executive poweris exercised by the government.Legislative poweris vested in theKnesset. TheJudiciaryis independent of the executive and the legislature. The political system of theState of Israeland its main principles are set out in 11Basic Laws.

Israel was established as a homeland for theJewish peopleand is often referred to as theJewish state. The country'sLaw of Returngrants allJewsand those of Jewish lineage the right toIsraeli citizenship.Just over three quarters, or 75.5%, of the population are Jews from adiversity of Jewish backgrounds. Approximately 68% of Israeli Jews areIsraeli-born, 22% are immigrants from Europe and theAmericas, and 10% are immigrants from Asia and Africa (including theArab World).

Israel is a true melting pot, with a diverse population comprised of people from all over the world. Israel is comprised of multi level cultures and ethnic groups. Therefore, not all businesspeople behave under the same codes of business etiquette. In many sections of the Israeli economy, you will find the European or American behavior codes. On the other hand, you might face Middle Eastern customs in some places. Israel has a large Arabic population that behaves in a traditional Middle Eastern ways.

English is the language of Israeli business culture. Israel's official languages are Hebrew, Arabic, and English. Nearly everyone you meet speaks some amount of English.Promotional material does not need to be translated into Hebrew.Given the diverse nature of the population, business practices may reflect North American, European, Russian, or other cultural influences.Expect business to be straightforward and emphasize the "bottom line."

“Israelis are very open and direct. In fact, they have a lot of chutzpah [nerve],” says Davids. “Don't be put off by the bold, aggressive attitude.” One thing that Dollinger has learned is that sometimes Israelis - not known for their patience -- become “frustrated” at the pace of the negotiation process. They are ready to forge ahead, but the U.S. company is more thoughtful and methodical. On the other hand, he observes, when the U.S. company has a request, the Israeli company may not “be sensitive to the sense of urgency to respond quickly and completely.”

“Israel's very casual atmosphere,” according to Davids, “can also be surprising.” There is a tendency among Israelis to downplay their professional titles even at c-level professions. This casualness extends to dress as well. In Israel, “business casual” means jeans, especially in start-ups and in the software/IT industries. Israelis enjoy talking about technology and innovations, but are equally as comfortable talking about their family, the last vacation they took, their “after the army trek,” and other interests.

Army service for girls and boys 18 to 21 year old is mandatory, which accounts for the numbers of young people in uniform. Groups of soldiers can often be seen clustered at bus stops or traveling on the train. Because the country is so small, many soldiers spend the weekends at home, and take their weapons with them.

Israelis “live” on their cell phones. They are connected wherever they go; in fact, the country has one of the highest rates of cell phone penetration in the world. It is not unusual for cell phones to ring during business meetings.

Innovative ideas abound in Israel. Davids comments that many foreign visitors are bowled over by the “flexibility and wide variety of technologies.” Dollinger agrees: “The U.S. business community views Israelis and Israeli innovation in a very positive light. It is predisposed to believe that Israelis will bring innovation to the table.” There is deep respect for “the Israeli entrepreneurial spirit".

While many elements of international business permeate the country, one unusual aspect of Israel's business culture is its work week: Sunday to Thursday. If you arrive on Saturday, you can hit the ground running on Sunday! Mark Dollinger, president of Trendlines America, assists Israeli businesses with their U.S. marketing efforts and is a frequent visitor to Israel. “Considering the Israeli work week,” he explains, “there is only a four-day overlap between the work weeks [between Israel and the United States]. There is a very different holiday cycle too.”

▪ Government offices and a large number of businesses are closed on Friday and Saturday.
▪ Retailers, supermarkets, and many bank branches are open on Friday but close by early afternoon.
▪ Public transportation -- buses and trains - stops from mid-Friday afternoon to Saturday night (but taxis are usually available).

The Jewish Sabbath begins on Friday at sundown and ends Saturday evening. Be mindful that observant Jews refrain from any doing any type of work on the Sabbath, including driving, using electricity, talking on the phone, or conducting business.

In some parts of the world, the major gift-giving holiday falls in December; in others, February. In Israel, however, there are two main gift-giving holidays -Rosh Hashanah in the fall and Passover in the spring. Looking beyond their religious significance, these holidays include traditions that are important elements of Israel's business culture.

For these and all religious and national holidays, the government, businesses, financial institutions, and schools are closed. Traveling (both domestic and international), eating special foods, and wearing new clothes, especially for the New Year, are just a few common traditions associated with the holidays

In fact, employee gifts are big business. Annually, Israeli companies spend about 3.5 billion shekels (NIS) ($847 million) on gifts to employees. (Note: All dollar amounts in this article are approximate.)

Rosh Hashanah and Passover not only represent important gift-giving opportunities for Israeli society in general, but for the Israeli business community too. Giving holiday gifts (shay l'chag in Hebrew) to employees for Rosh Hashanah and Passover is as much a part of Israeli business culture as wishing people a shana tova (Happy New Year).
A Federation of Israeli Chamber of Commerce survey conducted in March revealed that 78% of small businesses (up to 30 employees) give gifts valued between NIS 200 and NIS 500. ($47-$119). Approximately 90 companies from various sectors (finance, real estate, consulting and business services, electronics, food) participated in the survey. According to the survey, 66% of the businesses distribute gift certificates, 17% give household products, and the remaining 17% give gift baskets to their employees.

Israel is a global leader inwater conservationandgeothermal energy,and its development of cutting-edge technologies in software, communications and the life sciences haveevoked comparisonswith Silicon Valley.IntelandMicrosoftbuilt their first overseasresearch and developmentcenters in Israel, and other high-tech multi-national corporations, such asIBM,Cisco Systems, andMotorola, have opened facilities in the country.

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