On successful corporate strategies in the the Arabian Gulf

On successful corporate strategies in the the Arabian Gulf

Blog Article

Foreign companies attempting to enter GCC markets can overcome local challenges through M&A activities.

Strategic mergers and acquisitions have emerged as a way to tackle hurdles worldwide businesses face in Arab Gulf countries and emerging markets. Companies attempting to enter and expand their presence in the GCC countries face various challenges, such as cultural distinctions, unknown regulatory frameworks, and market competition. But, if they buy regional businesses or merge with regional enterprises, they gain immediate access to local knowledge and study their regional partner's sucess. The most prominent cases of successful acquisitions in GCC markets is when a giant international e-commerce corporation bought a regionally leading e-commerce platform, that the giant e-commerce firm recognised being a strong competitor. Nevertheless, the acquisition not merely removed regional competition but additionally offered valuable local insights, a client base, plus an already founded convenient infrastructure. Moreover, another notable example could be the purchase of a Arab super application, namely a ridesharing business, by the worldwide ride-hailing services provider. The multinational corporation gained a well-established manufacturer having a large user base and extensive familiarity with the area transportation market and customer choices through the purchase.

In a recently available study that examines the connection between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers found that Arab Gulf firms are more likely to make takeovers during periods of high economic policy uncertainty, which contradicts the behaviour of Western businesses. As an example, large Arab financial institutions secured takeovers through the financial crises. Moreover, the study suggests that state-owned enterprises are not as likely than non-SOEs to produce acquisitions during times of high economic policy uncertainty. The results suggest that SOEs tend to be more prudent regarding takeovers in comparison to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, stems from the imperative to preserve national interest and mitigate prospective financial instability. Furthermore, acquisitions during times of high economic policy uncertainty are related to a rise in investors' wealth for acquirers, and this wealth effect is more noticable for SOEs. Indeed, this wealth impact highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by capturing undervalued target businesses.

GCC governments actively encourage mergers and acquisitions through incentives such as for example taxation breaks and regulatory approval as a way to solidify companies and build up regional companies to become effective at competing at an a global level, as would Amin Nasser likely tell you. The necessity for economic diversification and market expansion drives a lot of the M&A activities into the GCC. GCC countries are working earnestly to attract FDI by developing a favourable environment and bettering the ease of doing business for foreign investors. This plan is not only directed to attract international investors because they will contribute to economic growth but, more crucially, to facilitate M&A deals, which in turn will play an important role in permitting GCC-based businesses to achieve access to international markets and transfer technology and expertise.