On effective corporate strategies in the Arab gulf

On effective corporate strategies in the Arab gulf

Blog Article

Foreign companies wanting to enter GCC markets can overcome local challenges through M&A transactions.

In recently published study that investigates the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the researchers discovered that Arab Gulf firms are more inclined to make acquisitions during periods of high economic policy uncertainty, which contradicts the behaviour of Western firms. For example, big Arab finance institutions secured takeovers throughout the financial crises. Moreover, the study shows that state-owned enterprises are less likely than non-SOEs to produce acquisitions during periods of high economic policy uncertainty. The results suggest that SOEs are far more cautious regarding acquisitions in comparison 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 mitigate prospective financial uncertainty. Furthermore, takeovers during periods of high economic policy uncertainty are associated with a rise in investors' 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 possibilities in similar times by capturing undervalued target companies.

Strategic mergers and acquisitions are seen as a way to overcome obstacles worldwide businesses face in Arab Gulf countries and emerging markets. Businesses planning to enter and expand their reach into the GCC countries face different difficulties, such as for instance cultural differences, unknown regulatory frameworks, and market competition. Nevertheless, when they buy regional businesses or merge with local enterprises, they gain instant use of local knowledge and study their local partner's sucess. The most prominent examples of successful acquisitions in GCC markets is when a giant worldwide e-commerce corporation bought a regionally leading e-commerce platform, which the giant e-commerce firm recognised being a strong contender. But, the purchase not only removed regional competition but also provided valuable regional insights, a customer base, as well as an already founded convenient infrastructure. Moreover, another notable example is the purchase of an Arab super software, specifically a ridesharing business, by an international ride-hailing services provider. The international company obtained a well-established manufacturer with a big user base and extensive familiarity with the area transport market and client preferences through the acquisition.

GCC governments actively promote mergers and acquisitions through incentives such as taxation breaks and regulatory approval as a means to solidify industries and develop regional businesses to be capable of contending on a worldwide scale, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives much of the M&A transactions in the GCC. GCC countries are working seriously to entice FDI by making a favourable environment and bettering the ease of doing business for foreign investors. This strategy is not merely directed to attract foreign investors simply because they will add to economic growth but, more critically, to enable M&A deals, which in turn will play a significant part in enabling GCC-based businesses to achieve access to international markets and transfer technology and expertise.