On successful corporate strategies in the the Arabian Gulf

On successful corporate strategies in the the Arabian Gulf

Blog Article

International businesses attempting to enter GCC markets can overcome regional challenges through M&A activities.

In a recent study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers found that Arab Gulf firms are more inclined to make acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western firms. As an example, large Arab finance institutions secured acquisitions during the 2008 crises. Moreover, the analysis demonstrates that state-owned enterprises are more unlikely than non-SOEs to produce takeovers during periods of high economic policy uncertainty. The results indicate that SOEs are more prudent regarding acquisitions in comparison to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to preserve national interest and minimising prospective financial uncertainty. Moreover, takeovers during times of high economic policy uncertainty are associated with a rise in investors' wealth for acquirers, and this wealth effect is more noticable for SOEs. Indeed, this wealth impact highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by capturing undervalued target companies.

GCC governments actively encourage mergers and acquisitions through incentives such as tax breaks and regulatory approval as a way to consolidate companies and build up local companies to be have the capacity to competing on a international level, as would Amin Nasser likely inform you. The necessity for economic diversification and market expansion drives a lot of the M&A deals in the GCC. GCC countries are working earnestly to bring in FDI by creating a favourable environment and bettering the ease of doing business for foreign investors. This strategy is not only directed to attract international investors because they will contribute to economic growth but, more critically, to enable M&A deals, which in turn will play a significant role in permitting GCC-based businesses to gain access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions are seen as a way to tackle obstacles international businesses face in Arab Gulf countries and emerging markets. Companies attempting to enter and grow their reach into the GCC countries face different problems, such as for example cultural differences, unfamiliar regulatory frameworks, and market competition. Nevertheless, once they acquire regional businesses or merge with local enterprises, they gain instant usage of regional knowledge and study their regional partner's sucess. One of the most prominent examples of effective acquisitions in GCC markets is when a giant international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce corporation recognised as being a strong rival. But, the acquisition not only eliminated regional competition but additionally offered valuable local insights, a customer base, as well as an already founded convenient infrastructure. Furthermore, another notable example may be the acquisition of an Arab super application, particularly a ridesharing business, by the international ride-hailing services provider. The multinational company obtained a well-established brand name by having a large user base and substantial knowledge of the area transport market and client choices through the acquisition.