On effective corporate strategies in the Arab gulf

On effective corporate strategies in the Arab gulf

Blog Article

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

In a recent study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors discovered that Arab Gulf firms are more likely to make takeovers during periods of high economic policy uncertainty, which contradicts the conduct of Western firms. As an example, large Arab banking institutions secured takeovers during the 2008 crises. Furthermore, the research shows that state-owned enterprises are not as likely than non-SOEs to make acquisitions during times of high economic policy uncertainty. The results indicate that SOEs tend to be more cautious regarding acquisitions in comparison to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to protect national interest and minimising potential financial instability. Furthermore, takeovers during periods of high economic policy uncertainty are related to a rise in shareholders' wealth for acquirers, and this wealth impact is more noticable for SOEs. Certainly, this wealth impact highlights the potential for SOEs just like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in such times by capturing undervalued target businesses.

GCC governments actively promote mergers and acquisitions through incentives such as tax breaks and regulatory approval as a way to solidify companies and develop local companies to be have the capacity to competing 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 environment and increasing the ease of doing business for foreign investors. This strategy is not only directed to attract foreign investors simply because they will add to economic growth but, more most importantly, to enable M&A transactions, which in turn will play a significant role in permitting GCC-based businesses to get 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 attempting to enter and expand their presence within the GCC countries face various difficulties, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. But, if they buy regional companies or merge with local enterprises, they gain instant use of regional knowledge and learn from their local partners. One of the most prominent examples of effective acquisitions in GCC markets is when a heavyweight worldwide e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce firm recognised being a strong competitor. Nonetheless, the purchase not merely removed regional competition but in addition provided valuable regional insights, a client base, plus an already founded convenient infrastructure. Furthermore, another notable example is the purchase of an Arab super app, namely a ridesharing company, by the worldwide ride-hailing services provider. The international corporation gained a well-established manufacturer by having a big user base and extensive knowledge of the local transportation market and customer preferences through the acquisition.