On successful corporate strategies in the the Arabian Gulf

On successful corporate strategies in the the Arabian Gulf

Blog Article

Strategic alliances and acquisitions offer companies with many perks when entering unfamiliar markets.

In recently published study that examines 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 takeovers during periods of high economic policy uncertainty, which contradicts the conduct of Western firms. For instance, big Arab financial institutions secured takeovers through the financial crises. Moreover, the analysis shows that state-owned enterprises are not as likely than non-SOEs to make acquisitions during times of high economic policy uncertainty. The results suggest that SOEs are more prudent regarding takeovers compared to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, stems from the imperative to preserve national interest and minimising prospective financial uncertainty. Moreover, takeovers during times of high economic policy uncertainty are associated with an increase in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Indeed, this wealth effect highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by capturing undervalued target companies.

GCC governments actively encourage mergers and acquisitions through incentives such as for instance taxation breaks and regulatory approval as a method to consolidate industries and build regional businesses to be capable of compete on a global scale, as would Amin Nasser likely inform you. The need for economic diversification and market expansion drives much of the M&A activities in the GCC. GCC countries are working earnestly to draw in FDI by making a favourable ecosystem and bettering the ease of doing business for international investors. This plan is not merely directed to attract international investors because they will contribute to economic growth but, more crucially, to facilitate M&A transactions, which in turn will play a significant role in allowing GCC-based companies to gain access to international markets and transfer technology and expertise.

Strategic mergers and acquisitions are seen as a way to overcome obstacles international businesses face in Arab Gulf countries and emerging markets. Companies wanting to enter and expand their presence in the GCC countries face different challenges, such as cultural distinctions, unknown regulatory frameworks, and market competition. But, if they buy regional companies or merge with regional enterprises, they gain immediate access to local knowledge and learn from their regional partner's sucess. One of the more prominent cases of effective acquisitions in GCC markets is when a giant international e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce firm recognised as being a strong rival. Nonetheless, the purchase not only eliminated local competition but in addition provided valuable regional insights, a customer base, plus an already founded convenient infrastructure. Furthermore, another notable example may be the purchase of an Arab super app, namely a ridesharing business, by the worldwide ride-hailing services provider. The international company gained a well-established brand having a big user base and considerable familiarity with the area transport market and consumer choices through the purchase.