A well known misconception is that Israel is not a target market for a company that is interested in global expansion, whether in regards to setting up a new branch or setting up a new subsidiary. The main reasons for this are the small population number and problematic political issues. However, it should also be notes that Israel's buying force potential and cultural loyalty give it a big advantage when contemplating where to expand to in the world.
When companies are seeking to find new markets for expansion purposes, they plan a strategic line of action based on expected profitability and market control. For this, North America and Asia are usually taken in consideration. This is due to the size of the local populations and also because some of the Asian countries are in fact emerging markets that are starting to grow.
Although Israel is much smaller in population size, the Purchasing Power is about twice its size. This means that Israelis buy more than the citizens of a country that has a population that is twice in size than Israel. Moreover, customers' loyalty is greater in Israel that in most countries. In this regard, the Israeli buyer will tend to buy from the same store that is familiar to him/her, even at another country. That is to say that if Israeli buyers purchase their products in Office Depot at Israel, they are also more likely to do the same when abroad, and buy from Office Depot that is located at the country they are currently visiting.
In essence, this means that there is an increase in profit not only from market expansion to Israel, but also from existing branches of the company around the world, in which Israelis visit.
Up until now we have established that customer's loyalty goes a long way when you are dealing with Israeli costumers and we also agree that Israel's purchasing power is greater than her actual population number. At the same time, it can also be said that the political climate in Israel is dangerous or unsuitable at this moment for a company from abroad. However, if we are to take McDonalds and compare its branches in Israel to those in other countries (including countries with no diplomatic relationship with Israel), we will discover that McDonalds' branches in Israel are leading the chart in terms of profit and revenues. This is a great example for the fact that political issues do not affect profitability.
Cultural differences are also known to deter companies from expanding to other countries. Israel has a distinct business culture that is different from the American or the European one. However, at the same time it should also be noted that companies are willing to go into China, where the cultural differences are much greater than those in Israel.
Local sales representation can make life easier for companies that are interested in setting up a new branch or setting up a new subsidiary in Israel. Although Israel is a small country, its economical stability, combined with Israelis' great love for shopping, make it one of the countries that can actually help increasing profits for a company that wish to expand globally.