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.

Strategic mergers and acquisitions have emerged as a way to tackle hurdles worldwide companies encounter in Arab Gulf countries and emerging markets. Businesses planning to enter and grow their reach into the GCC countries face different problems, 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 regional partner's sucess. The most prominent cases of successful acquisitions in GCC markets is when a giant international e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce corporation recognised as being a strong rival. But, the purchase not merely removed local competition but also offered valuable regional insights, a client base, plus an already founded convenient infrastructure. Also, another notable example is the acquisition of a Arab super software, specifically a ridesharing company, by an international ride-hailing services provider. The international firm gained a well-established brand having a large user base and considerable familiarity with the area transportation market and customer choices through the purchase.

In a recently available study that examines the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers discovered that Arab Gulf firms are more likely to make acquisitions during times of high economic policy uncertainty, which contradicts the conduct of Western companies. For example, big Arab finance institutions secured acquisitions during the 2008 crises. Also, the research shows that state-owned enterprises are more unlikely than non-SOEs to help make acquisitions during periods of high economic policy uncertainty. The the findings indicate that SOEs are more cautious regarding acquisitions compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems from the imperative to preserve national interest and minimising prospective financial instability. Furthermore, 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 effect highlights the potential for SOEs just like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by capturing undervalued target businesses.

GCC governments actively encourage mergers and acquisitions through incentives such as for example tax breaks and regulatory approval as a method to consolidate companies and build local businesses to be have the capacity to competing at an a international level, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives a lot of the M&A deals in the GCC. GCC countries are working seriously to invite FDI by making a favourable environment and bettering the ease of doing business for foreign investors. This plan is not only directed to attract international investors since they will contribute to economic growth but, more most importantly, to facilitate M&A deals, which in turn will play a significant part in allowing GCC-based companies to get access to international markets and transfer technology and expertise.