On effective corporate strategies in the the Arabian Gulf

On effective corporate strategies in the the Arabian Gulf

Blog Article

Foreign businesses wanting to enter GCC markets can overcome regional challenges through M&A transactions.

In recently published study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors discovered that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the conduct of Western companies. For instance, large Arab finance institutions secured takeovers throughout the financial crises. Additionally, the research shows that state-owned enterprises are less likely than non-SOEs to make takeovers during times of high economic policy uncertainty. The results suggest that SOEs tend to be more prudent regarding acquisitions when 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 instability. Moreover, acquisitions during times of high economic policy uncertainty are related to an increase in investors' wealth for acquirers, and this wealth effect is more pronounced for SOEs. Certainly, this wealth impact highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by capturing undervalued target companies.

Strategic mergers and acquisitions have emerged as a way to overcome hurdles international companies encounter in Arab Gulf countries and emerging markets. Companies planning to enter and expand their reach into the GCC countries face different problems, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nonetheless, when they buy local businesses or merge with local enterprises, they gain immediate usage of local knowledge and study their local partner's sucess. The most prominent cases of successful acquisitions in GCC markets is when a heavyweight international e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce firm recognised as a strong rival. Nevertheless, the purchase not only removed local competition but additionally offered valuable local insights, a client base, as well as an already founded convenient infrastructure. Moreover, another notable instance is the purchase of a Arab super application, particularly a ridesharing company, by the international ride-hailing services provider. The multinational firm obtained a well-established brand with a large user base and considerable understanding of the area transportation market and client choices through the acquisition.

GCC governments actively encourage mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a way to solidify industries and build up regional businesses to be effective at compete on a international level, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives a lot of the M&A transactions into the GCC. GCC countries are working earnestly to bring in FDI by creating a favourable environment and bettering the ease of doing business for international investors. This strategy is not only directed to attract international investors since they will add to economic growth but, more crucially, to facilitate M&A deals, which in turn will play a substantial role in permitting GCC-based companies to achieve access to international markets and transfer technology and expertise.