Posted tagged ‘Commerce’

Israeli economy: victim of its own success?

January 14, 2011

Who would have believed that the shekel would turn into one of the most powerful currencies in the world.

Thus spoke PM Netanyahu this week. Over the past 12 months, the Israeli currency has appreciated 6% against the dollar and double that against the Euro. Thus, exports have become that more expensive to zones that import over 70% of Israel’s tradeable items. Can that last?

The head of the Israeli Manufacturers’ Association summed up the delicate situation very well, when he observed:  “Over the past three quarters, exports have weakened and job creation has come to a halt. We are very concerned about activity in 2011 and are urging decision makers to take the necessary steps to strengthen the dollar.”

As with most things in the Middle East, nothing is simple. The problem has been caused by success. The fundamentals of the Israeli economy are very good.

This week’s press release from the Bank of Israel is full of glowing predictions for 2011. Unemployment down to 6%. The debt ratio falling below 80%. Growth is set for just under 4%.

Here’s a specific example of what I mean. The Israel tourism industry in 2010 broke the 3 million visitors figure for the first time. As for 2011, the hope is to host 4 million overseas guests, which will add another 15,000 jobs to the sector.

The 2011 budget for capital investment and infrastructure development stands at NIS 375 million, of which about NIS 205 million will be allocated to encouraging investment in tourism and increasing the hotel supply: construction, expansion and conversion of hotels mainly in Jerusalem, around the Sea of Galilee and the Galilee region. A further 3000 hotel rooms are expected to open around the country by the end of 2011. About NIS 170 million will be allocated to infrastructure development including the development of tourist cities, trails, national parks, boardwalks etc.

As with more traditional parts of industry, many of the multinational tourism groups are realising that Israel offers potential rich pickings and becomming involved.

2011 offers many challenges to the Israeli economy; achieving a competitive rate of exchange, finding a suitable tax base for an emerging energy industry, a stock market that shows no sign of cooling down, etc. Above all, the bureaucrats will need to ensure that those often-praised fundamentals remain true and transparent.

So what inspires you?

November 17, 2010

I was pleasantly surprised at the positive reaction to my previous two postings on what inspires different people. Maybe it is one of those themes that people are just waiting to be directed towards.

And he subject came up in conversation earlier this week. I was trying to establish with a client what motivates their agents. Within 60 seconds, several answers had been thrown around, yet nobody could be sure what was the definitive reason.

This morning, I was caught by an internet posting on what or who encourages London entrepreneurs. Apparently, women look for guidance from Harry Potter creator, Ms. J.K. Rowling. However, menfolk go in a totally different direction, preferring the gruff Mr. Alan Sugar.

Consider power point presentations – whose main aim is to convince or inspire people to carry out new actions. A business acquaintance, Siu Ling Hui, recently directed her twitter followers to a site with 33 brilliant  and dynamic slide shows. My own favourite is “steal the presentation“, but again each to their own.

One thing that these anecdotes show is that inspiration is very much a trait that is specific to the individual. Be it for academic or environmental or whatever reasons, each one of us responds in our own different way.

What is important is to find a way which allows you to believe in yourself and then allow that method to come through for you.

How some socialist kibbutzes are making big bucks

November 15, 2010

My latest client is a very decent sized manufacturing concern situated in the heart of an agricultural kibbutz. The members own 50%.

Yup – the remaining shares are in the hands of a private group. Long gone are the days when the kibbutz movement, now celebrating its 100th anniversary, was a bastion of socialism.

I have no intention of knocking kibbutz and what it stands for. Over the past two decades, the 273 communities have evolved. For most, debts have been paid off, the next generation has stopped leaving, European volunteers are returning; etc, etc. Good times are returning.

Commercially, success stories abound. In the past 12 months, there have been at least 3 major “exits”.

  • Materna, baby milk supplement from Kibbutz Ma’aborot, sold to Osem/Nestle for 268m shekels ($70m)
  • Shamir Optical from Kibbutz Shamir, sold to Essilor for 130m shekels ($35m)
  • Tivoll, soya based foods from Kibbutz Lohamei Hagetaot, sold to Osem / Nestle for 500m shekels ($135m) 

Only a few weeks ago, it was announced that the listing of the number of kibbutz owned firms on the Tel Aviv Stock Exchange is set to double. The movement may account for less than 2% of the overall population, but its 127,000 members drive over 8% of Israel’s GNP. Impressive.

And if you think that all I am talking about is a few large factories tagged on to a massive agricultural ego trip, you are wrong. Venture south towards Eilat, and stop off at Ketura. You will find some of the most sophisticated solar power units in the world. No surprise that Siemens has been investing heavily in the venture.

What next? Simple. Raise your glasses to the next 100 years of commercial success for these communities and then join in the boom.

How to curtail the risk element in your decisions.

November 12, 2010

“How do I know it will work? Why should I take on the client?”

As a mentor, I am asked this question repeatedly under different guises, and it came up again twice this week going around Israel. An alternative version to the same problem: “Why should invest valuable resources on this client when I can be looking for others?”

The bland answer is nobody can predict the future. But that is not a response I can offer when faced by a very concerned CEO. Fortunately, there is help at hand with a growing academic literature on the subject.

For example, the latest posting at “Guerrilla Consultant” observes that in managing sales process, there are at least 5 perceived challenges:

  • Handling the perceived risk
  • Responding to new decision makers
  • Creating a persuasive “win theme”
  • Understanding how your clients operate
  • Not making a fool of yourself

The article is definitely worth reading in full. One point stood out for me:

Resist the urge to cover every base. Use your interviews and sales meetings to pinpoint your buyer’s perception of risk. Be candid about your views on the potential risks your buyer faces and, chances are, your buyer will reciprocate.

 Then, create a communication approach that provides compelling evidence for how you will address each specific risk.

That means you have to understand the buyer’s perception of risk, whether you think those views are valid or not.

The theory is great, but what about the practice? Are there any actual tools out there to help our CEOs?

For the past few months, I have been associated with Wyndarra Solutions, a small and growing Australian outfit. Applying knowledge learnt from clients, they have developed a web-based software, which offers practical support to senior decision makers.

The market for their technology is evident. Wyndarra has now extended its operations into Europe.  A press release explains why. 

Leading market research companies, including Gartner, Forrester and McKinsey all provide coverage of these new Risk Management tools and its International Standards and compliance methodologies.

Using Wyndarra or a similar application, management can now evaluate risk in a more secure manner.

Is oil a friend or enemy of Israel?

September 19, 2010

Spot the contrast.

On one side of the page, Israel is reducing its dependence on oil. For example, Better Place is the world’s foremost company in the electrical car revolution. It has alrady secured commitments from over 55,000 owners, who are seeking to replace their oil guzzling vehicles.

And a ministerial committee is promoting a joint public and private sector initiative worth a billion dollars. The aim is to seek commercially viable oil alternatives. Impressive, at least on paper.

But in the other column, we find that vast chunks of Israel’s countryside are being cut up and replaced with oil wells. Yes, Israel is in the middle of a speculation boom in the search for black gold.

A typical story emerged at the end of last week, concerning one of the country’s leading tycoon’s, Yuri Ofer.

(His) new oil exploration venture hasn’t struck oil yet, but after numerous announcements and hullabaloo, it finally struck its first deal in the industry. TheMarker has learned that Ofer bought 10% of the Sarit drilling license for offshore Ashdod last night from Jacob Luxenburg’s Lapidoth Heletz.

The Israeli government has voiced its concern at the prospect of a shares bubble. There is to be a temporary halt in the granting of new gas and oil licenses. Prices of stocks in the sector  plunged on the news.

Who was effected by the fall? Market analysts believe that it is mainly speculators, who are involved in the trading. The “average person” is seen as reluctant to get his hands dirty. This feeling was confirmed, when one Hebrew newspaper reported that the local mafia was connected to some of the exploration companies.

If oil was to be discovered in commercial quantities, the country’s economy will quickly take on a different appearance. I fear that Dubai will have a strong rival in the opulence stakes. 

And now for irony number two. Yesterday, Israel recalled the anniversary of the 1973 Yom Kippur war, which led to a quadrupling of oil prices on the world market. The economic power of her enemies soared beyond belief. 

Nearly 4 decades later, Israel has yet to learn if she wants to copy her neighbours or find an alternative way to economic and social achievement.

10 tips to deal with venture capitalists, told by a venture capitalist

September 6, 2010

The Jerusalem Business Networking Forum is a unique meeting place, allowing pushers and pullers to find each other. Running monthly events for the past 3 years, it has provided a launch pad for many future contracts.

So when Ted Nehmad, the Director of investment group “C Capital” was scheduled to give a talk, you can understand why there was a quality attendance. Now, Ted sees too-many-to-count requests for seed money or investment funding every month. His list of successes is wide ranging.

Ted’s presentation detailed 10 “must dos” for those seeking to raise capital, and several in the audience were taking copious notes.

  1. Just go for it. A good idea is not enough for success. You need to get out there.
  2. Do not rely on a one-person show, but a team.
  3. Define a justifiable business model, based on real market values and focused on final users. (Exit is not a model).
  4. Create a hook – a cool elevator pitch.Essential! Your personality can make the difference.
  5. If you work with angels, remember they can be devils. Sell your company, but not your soul.
  6. Preserve your funds.
  7. Learn to dance with investors. They are always one step faster, looking for an exit, before you have thought about it.
  8. As the grip of angels and VCs may be diminishing, multinationals are setting up incubators; HP and Cisco are 2 examples, with Amdocs in Israel.
  9. Another alternative is to “go east”. This February, after nearly a decade of probing China, Israel’s Pegasus Technologies was purchased by Yifang for US$60m.
  10. Don’t forget – be determined. Your success will not come without some pain.

Just words? Not true in reality? I have recently finished mentoring a client, where we spent much time working on their pitch. They are now busy making sales.

Too simple? Look at the headlines in today’s Israeli financial press.

German electronics giant Siemens is considering investing considerable capital in Israel, according to recent meetings in Germany between representatives of the Federation of Israeli Economic Organizations and Siemens. The meetings were held to find ways of increasing cooperation in R&D and investment in Israel.

Not a one-off statement:

Intel Corporation (Nasdaq: INTC) has acquired the assets of Israeli PC virtualization start-up Neocleus Inc. for a few hundred thousand dollars. The company’s 15-20 employees will join Intel Israel’s R&D center.

Why do we ignore prospective customers?

September 3, 2010

Unbelievable! Two clients of mine have been ignoring easy-to-reach new clients. Meanwhile, they are stressed out over poor cash flow and the fact that they are very busy with other projects.

Absurd, but scratch the surface of many companies, large and small, and it seems to be a common issue. People talk about preventing churn of client base through CRM software or using social media platforms to reach out to new guys.

However, once it comes to some basics of picking up the phone and making a sales pitch to somebody round the corner or that you know, everything goes kapput.

It’s only a few days ago that I wrote about the value of “sales coaches” . Let me tell of one CEO, who has been prepared to listen to ours truly.

They explained to me very determindly that there was no point in following up samples that had been sent out, in some cases months previously. Why? The small staff was too involved in preparing new proposals for others. Anyway, the prospects would have responded by now if they were serious.

“Go on. Give it a try. Let me call, ” I urged. And thus it was agreed. As for the results of an hour of phoning.

  • Prospect No 1: Their comments directed my CEO to a glitch in the production process. This was ironed out. It is expected that after tests on a new sample batch, a first order can be discussed.
  • Prospect No 2: Not interested but they passed on 2 solid leads, who will be contacted soon.
  • Prospect No 3: They intend to complete tests shortly and appreciated the concern of the call.
  • Prospect No 4: Their company is about to embark on a new project, where the material will be applicable. Now that my CEO has shown renewed interest, they will be considered as a supplier.

4 golden possibilities / probabilities that had been written off 7 days previously are back on the radar screen. And the added bonus of an improved production base for better sales flow.

This week, I received a blog on “how to find your first customer“. It is worth reading. And I would add one more suggestion; sometimes the low hanging juicy fruits are right in front of you – you just have to open your eyes and act to bring them home.