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 unknown markets.

GCC governments actively promote mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a way to solidify companies and build up local businesses to become capable of contending at an a global scale, as would Amin Nasser likely inform you. The need for economic diversification and market expansion drives much of the M&A deals into the GCC. GCC countries are working earnestly to entice FDI by developing a favourable ecosystem and bettering the ease of doing business for international investors. This strategy is not only directed to attract foreign investors simply because they will add to economic growth but, more most importantly, to facilitate M&A transactions, which in turn will play an important role in permitting GCC-based businesses to get access to international markets and transfer technology and expertise.

In a recent study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors found that Arab Gulf firms are more inclined to make takeovers during times of high economic policy uncertainty, which contradicts the conduct of Western businesses. As an example, big Arab financial institutions secured acquisitions during the financial crises. Moreover, the research demonstrates that state-owned enterprises are not as likely than non-SOEs in order to make takeovers during times of high economic policy uncertainty. The the findings suggest that SOEs are far more cautious regarding takeovers when compared 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 prospective financial uncertainty. Furthermore, takeovers during times of high economic policy uncertainty are connected with a rise in investors' wealth for acquirers, and this wealth effect is more pronounced 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 similar times by buying undervalued target businesses.

Strategic mergers and acquisitions are seen as a way to overcome obstacles international companies encounter in Arab Gulf countries and emerging markets. Businesses attempting to enter and expand their presence in the GCC countries face various problems, such as for example cultural distinctions, unknown regulatory frameworks, and market competition. Nevertheless, when they acquire regional companies or merge with local enterprises, they gain immediate access to local knowledge and study their regional partners. One of the most prominent examples of effective acquisitions in GCC markets is when a heavyweight international e-commerce corporation acquired a regionally leading e-commerce platform, that the giant e-commerce firm recognised being a strong competitor. However, the purchase not merely eliminated local competition but in addition provided valuable local insights, a customer base, plus an already founded convenient infrastructure. Also, another notable example could be the purchase of an Arab super app, particularly a ridesharing business, by an international ride-hailing services provider. The international business obtained a well-established manufacturer having a large user base and extensive familiarity with the local transportation market and client preferences through the purchase.