Morey Manor International Marketing & Management

(9/2003)

The field of foreign trade plays a significant role in Israeli economic activity. Nearly every business in Israel has some sort of connection with activities abroad. Therefore, it seems natural to me that small businesses also have some international involvement at various levels.

International activities can categorized:

• Exporting products manufactured by the company.
• Importing products for the use of the company itself (raw materials, equipment, etc.)
• Importing products for commercial re-sale to others
• Exporting services.
• Importing services.

The field of services in world trade has been continually developing in recent years.

The advantage of international activities

• The global market is much larger than the local market
• Provides an additional source of income for the business.
• Adds to the personal development of the company’s owners and managers.
• Affords the opportunity to keep abreast of what is happening in the world.
• Enables the import of products or services that are unavailable in Israel, and provides the opportunity to learn from the experience of others.

The risks of international activities

• Like in all business activities, there is a possibility of failure.
• The need for fluency in foreign languages or dependence on others who are fluent in these languages.
• The need to organize and invest in the appropriate infrastructure.
• The dangers of international currency fluctuations.
• International shipping risks.
• Low payment ethic of the other side.
• Political risks abroad.
• Activities from afar.

We’ll try to briefly examine the characteristics and methods used in each of the categories.

Exporting products:

The world market is gigantic, while the Israeli economy accounts for only about 0.5 percent of international trade.

The decision on whether to begin exporting should be made cautiously, after careful consideration.

There are companies that were established from the outset with the goal of achieving a substantial proportion of exports in their business activities and there are companies that regard exports as a secondary activity.

It is advisable to start with small steps and low expenditures, and to develop slowly. This mainly applies to small manufacturers whose product has a relative advantage in the world market.

Importing products:

A distinction can be made between:

• Importing raw materials and equipment, directly or via a local agent.
• Commercial importing – the company acts as the importer, storing and marketing the product in Israel in accordance with the characteristics of the product and market.

Importing and exporting services

This field is expanding and currently accounts for about 10 percent of world trade. (We’re far below this figure in Israel.) There are many businesses in Israel that export their services, either directly or indirectly.

There are also many Israeli businesses that purchase various services abroad, importing them to Israel.

Information sources:

In the Internet age, one can generalize and say that everything can be found on the Web. Still, there are many additional sources of information.

• The Export Institute – including the marketing and information divisions, and the library.
• Israeli trade representatives abroad.
• The Industry and Trade Ministry.
• Consular officials of foreign countries in Israel.
• Israeli ministry representatives abroad – Tourism, Defense and Agriculture ministries.
• Chambers of commerce in Israel.
• Bi-lateral chambers of commerce.
• Libraries of other economic and professional organizations in Israel.
• International professional publications.
• International exhibitions and conferences.
• Customs and cargo agents.
• International shipping companies.
• Travel agents.
• Commercial banks.
• And more.

In summary, each business needs to decide where it wishes to focus and then to act accordingly. The field is large and it is possible to succeed or fail in a big way. Consultation and follow-up with someone experienced in the field can help the business make strides forward.