ABSTRACT

Political, economic, social,

Kylee McCluskey
Salt Lake Community College

COTOPAXI PESTLE
MGT 1060: Principles of
International Business Lon
W. Schiffbauer, Ph.D.
March 20, 2023

ANALYSIS
Moving into Israel
Cotopaxi PESTLE Analysis: Moving into Israel

Cotopaxi PESTLE Analysis: Moving into Israel

I Introduction:

Cotopaxi, which sells outdoor gear, was started in Salt Lake City by, avid outdoorsman, Davis

Smith. The company slogan is “Do Good”. Smith and his family created this business to

sustainably give back to the community (Jensen, S, 2022). They do this by importing llama wool

from Bolivia to create their best-selling jackets and donating to local refugees (Jensen, 8 iconic

products and companies that got started in Utah, 2022). They have 10 storefront locations

around the US and plan on opening 10 more in 2023. Internationally, Cotopaxi partnered with

several distributors including Japan, the EU, the UK, Australia, and New Zealand (Where can I

buy Cotopaxi internationally, 2023). Would expanding Cotopaxi further and partnering with

Israel be beneficial? Let’s find out.

II PESTLE Analysis:

Political considerations

Israel’s political system is a parliamentary democracy that consists of legislative, executive, and

judicial branches. Benjamin Netanyahu is the prime minister. Israel’s population is regarded by

Jews (who hold the majority), Christians, and Muslims who all view the land as holy. Each

religion’s bible references the territory to some sort of significance, and this can create political

instability. Israel’s political stability scored a -1.06 in 2021, ranking 166 out of 194 (Political

stability by country, around the world. TheGlobalEconomy.com, 2021).

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Cotopaxi PESTLE Analysis: Moving into Israel

Israel scores 68.9 on the 2023 Index of Economic Freedom which makes it the 34th freest overall,

but it does rank number 2 for regional freedom out of 14 countries. Israel’s economic score has

increased by .9 and its overall score is above average nationally (Israel. Israel Economy:

Population, GDP, Inflation, Business, Trade, FDI, Corruption, 2023). Israel ranks high in

business freedom, trade freedom, and investment freedom which are all great things to consider

upon entering their market.

The first United States Free Trade Agreement with Israel came to be in 1985 and has led to

increased trade between the two. 2,500 U.S. companies are in Israel (Fact sheet U.S. – Israel

economic relationship. U.S. Embassy in Israel, 2018). This shows that Israel embraces the U.S.

when they enter its market.

Property rights are rated 82.3 which is considerably high and has helped with long-term

economic dynamism when mixed with relatively low levels of corruption. Israel’s property rights

are above the world’s average as well as its judicial effectiveness and government integrity (Fact

sheet U.S. – Israel economic relationship. U.S. Embassy in Israel, 2018). Considering Cotopaxi

closed their San Francisco location because of theft.

Economic considerations

They discontinued The World Bank: Doing Business but from the archived 2020 report Israel

landed a 76.7 doing business score and ranked 35th in the economy. That year they made

“starting a business easier by allowing joint registration of corporate tax and value-added tax”,

Getting credit, Paying Taxes, and Trading across borders easier (World Bank, 2020). The Bank

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Cotopaxi PESTLE Analysis: Moving into Israel

of Israel (BoI) is to protect the value of the currency. To combat inflation among other reasons

the BoI raised the policy rate from 3.25 percent to 3.75 percent (Focus Economics, 2023)

Israel has a difficult geopolitical condition because it conflicts with neighboring countries. While

Israel has the most advanced infrastructure in the middle east it is the least connected to its

surrounding regions such as Iraq, Lebanon, and Syria. Israel does most of their regional trade

with Turkey and Palestine. They have the best transport infrastructure overall with an emphasis

on their road network and lack most with its shipping. Israel has agreements with Jordan and

more recently Egypt for zones that are barrier-free that tap into the US market (El‐Anis, I, 2021).

Social considerations

In Israel, they dress business casual, and modestly for business purposes. Expect to arrive on

time for a meeting but don’t be surprised if it starts 10-15 minutes later than planned. Shaking

hands is the formal way of greeting someone in a business setting, but keep in mind that for

religious reasons one would not shake hands with the opposite gender. The work week in Israel

is Sunday through Thursday which varies from America’s Monday through Friday and most

people have 45-hour work weeks. (Journey-Admin, 2022).

Israel has an affluent society that is diverse in lifestyles. Hiking is popular in Israel because

many people’s cultures are taught to love the landscapes from a young age. They have beautiful

scenery and countless hikes to choose from. The climate is good for hiking all year round, but

the summers can get hot. While some of Israel’s population has a strict dress code, the majority

are secular or less conservative Jews who wear Western-style clothing (Israel. Countries and

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Cotopaxi PESTLE Analysis: Moving into Israel

Their Cultures). Israelis prefer to wear casual and bright clothes that I think would suit

Cotopaxi’s brand.

Hofstede’s framework for Israel’s cross-cultural communication is unique in the sense that they

are the only country where immigrant groups are large enough to influence dominant values. All

values are estimated. The power distance is 13 and they have an egalitarian mindset and power is

decentralized. Individualism scored 54, putting them at an equal balance of both self and

collective. Masculinity is at 47 meaning they are not masculine nor feminine in society. The

highest score, uncertainty avoidance, at 81means that they prefer rules and are expressive. Long-

term orientation scored 38 which means the people prefer normative thought. They do not have a

score for indulgence as of right now (Israel. Hofstede Insights, 2023).

Israel has the highest percentage of engineers and scientists per capita with a high-quality

educational system making it one of the most educated societies in the world. It is also

mandatory to serve in the military making young adults more responsible (Key Contacts Idan

Adler Innovation Practice Leader, 2023).

Technological considerations

Israel’s economy is dominated by high-tech industrial and entrepreneurship and is nicknamed

‘The Startup Nation’. Multinational companies like Microsoft, Google, Apple, etc. have chosen

Israel as their ideal investment opportunity (Key Contacts Idan Adler Innovation Practice

Leader, 2023). “In terms of its technological readiness, venture capital availability, and the

quality of their research organizations. The country ranks 1st in the availability of scientists and

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Cotopaxi PESTLE Analysis: Moving into Israel

engineers, number of start-ups per capita, and venture capital investments per capita.”

(Embassies, 2023).

Israel is considered one of the world's most resilient market economies and the most

technologically advanced. Their strict fiscal policies and regulations help keep them out of

recessions and when they do present themselves, they are short-lived (Embassies.gov.il).

Legal considerations

The legal system in Israel is mostly based on common law but there are some aspects of civil law

as well. Due to Israel’s small size, they do not have a federal or jury system in place nor a formal

constitution. However, they do have basic laws that are the foundation of their legal framework.

There are a few limitations when dealing with foreign investment. The only rules in place are no

connections with certain hostile nations and the state must issue some control permits. Those

nations as previously stated are Syria, Lebanon, and Iran. This law extends to anyone living

within or conducting business in any of those countries (Doing Business in Israel, 2023).

Israel offers at least one Business Ethics class at universities and many large corporations now

have a code of ethics that they follow. There has been improvement but still could use a lot more

especially when it comes to cases that involve nepotism/favoritism (Schwartz, M. S, 2012).

Environmental considerations

Israel ranks low in environmental policies. They are towards the bottom ranking 37 in

environmental policies but are making choices and taking action to improve their rank. Israel has

signed, ratified, and acceded to 20 environmental conventions. They were not acting of their own

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accord but more from global pressure to have better standards. They have a high population and

low-density territory. Israel has signed 20 environmental conventions. Their strong department

includes sustainable water, energy, and environmental technologies (Stiftung, B, 2022).

In terms of sustainable development, Israel ranks 73.5 as an Organization for Economic

Cooperation and Development (OECD) member. Israel is on track to meet the sustainable

development report (SDG) for no poverty, industry, innovation, infrastructure, and clean water

and sanitation. They need work in several areas, but none are trending downwards.

III. Reflection

Recommendations

This PESTLE analysis recommends that Cotopaxi expand into Israel if they do not plan on doing

business with any surrounding hostile states. Israel ranks high in property rights and respect

which would be appealing to Cotopaxi.

Generic Strategies: Broad market/Differentiated.

Cotopaxi serves a broad market of individuals with their outdoor brand. They sell backpacks,

gear, and apparel for men, women, and kids. They differentiate by creating sustainable products.

Value Discipline Strategies: Product innovation.

Cotopaxi is most focused on creating the best up-to-date products that are ethically sourced.

These values go in line with Israel’s push for environmental standards.

Grand Strategies: Market share

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Cotopaxi PESTLE Analysis: Moving into Israel

Cotopaxi offers products that already have a saturated market, but they do have differentiation

with their bright-colored brand, lower prices than other large outdoor brands, and that all

products are ethically sourced. Having a decentralized marketing organizational structure would

benefit Cotopaxi’s expansion into Israel because of language and cultural differences.

International Strategy: International strategy

Cotopaxi’s brand has grown tremendously over the last couple of years, the products don’t need

to be altered very much in any new economy and are very inclusive. Most Israelis wear Western-

style clothes which are in line with what Cotopaxi offers. No/low customization needed.

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References

El‐Anis, I. (2021). Transport infrastructure and regional integration in the Middle East. The
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Embassies.gov.il. (n.d.). Retrieved January 26, 2023, from https://embassies.gov.il/san-

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Focus Economics (2023, March 3). Bank of Israel Hikes for seventh straight meeting in January.
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2023, from

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https://www2.deloitte.com/il/en/pages/innovation/article/the_israeli_technological_eco-
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