On successful corporate strategies in the the Arabian Gulf

On successful corporate strategies in the the Arabian Gulf

Blog Article

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

Strategic mergers and acquisitions have emerged as a way to tackle obstacles worldwide companies face in Arab Gulf countries and emerging markets. Businesses wanting to enter and grow their reach within the GCC countries face different challenges, such as for instance cultural differences, unfamiliar regulatory frameworks, and market competition. But, when they acquire regional businesses or merge with regional enterprises, they gain instant access to local knowledge and study their regional partners. The most prominent cases of successful acquisitions in GCC markets is when a giant worldwide e-commerce corporation acquired a regionally leading e-commerce platform, which the giant e-commerce company recognised as being a strong rival. However, the acquisition not merely removed regional competition but also offered valuable local insights, a customer base, as well as an already founded convenient infrastructure. Additionally, another notable example may be the purchase of a Arab super app, specifically a ridesharing business, by the international ride-hailing services provider. The multinational firm obtained a well-established brand name having a big user base and considerable knowledge of the local transport market and consumer choices through the acquisition.

GCC governments actively encourage mergers and acquisitions through incentives such as for instance taxation breaks and regulatory approval as a method to solidify industries and build regional businesses to become effective at compete on a global scale, as would Amin Nasser likely inform you. The need for financial diversification and market expansion drives much of the M&A transactions into the GCC. GCC countries are working earnestly to entice FDI by creating a favourable environment and increasing the ease of doing business for foreign investors. This strategy is not only directed to attract foreign investors simply because they will contribute to economic growth but, more critically, to enable M&A transactions, which in turn will play an important part in enabling 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 writers discovered that Arab Gulf firms are more inclined to make takeovers during times of high economic policy uncertainty, which contradicts the behaviour of Western firms. For example, large Arab financial institutions secured acquisitions during the financial crises. Moreover, the study shows that state-owned enterprises are less likely than non-SOEs to produce takeovers during times of high economic policy uncertainty. The the findings suggest that SOEs are far more cautious regarding takeovers compared to their non-SOE counterparts. The SOE's risk-averse approach, according to this paper, emanates from the imperative to preserve national interest and mitigate prospective financial instability. Moreover, acquisitions during times of high economic policy uncertainty are connected with a rise in investors' wealth for acquirers, and this wealth impact is more noticable for SOEs. Indeed, this wealth effect highlights the potential for SOEs like the ones led by Naser Bustami and Nadhmi Al-Nasr to exploit opportunities in similar times by buying undervalued target businesses.