Strategic alliances and acquisitions offer businesses with several benefits when entering unknown markets.
In a recently available study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the writers discovered that Arab Gulf firms are more likely to make takeovers during times of high economic policy uncertainty, which contradicts the behaviour of Western businesses. As an example, big Arab financial institutions secured takeovers during the financial crises. Also, the analysis shows that state-owned enterprises are not as likely than non-SOEs to create acquisitions during times of high economic policy uncertainty. The the findings suggest that SOEs are far more prudent regarding takeovers compared to their non-SOE counterparts. The SOE's risk-averse approach, based on this paper, emanates from the imperative to preserve national interest and minimising potential financial instability. Furthermore, takeovers during times of high economic policy uncertainty are associated with an increase in shareholders' wealth for acquirers, and this wealth effect 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 opportunities in such times by capturing undervalued target companies.
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 be have the capacity to competing on a international level, as would Amin Nasser likely let you know. The necessity for economic diversification and market expansion drives much of the M&A transactions in the GCC. GCC countries are working earnestly to attract FDI by developing a favourable environment and bettering the ease of doing business for international investors. This strategy is not merely directed to attract foreign investors simply because they will contribute to economic growth but, more crucially, to facilitate M&A transactions, which in turn will play an important role in allowing GCC-based companies to gain access to international markets and transfer technology and expertise.
Strategic mergers and acquisitions are seen as a way to overcome obstacles international businesses face in Arab Gulf countries and emerging markets. Companies attempting to enter and expand their presence within the GCC countries face different difficulties, such as for example cultural distinctions, unfamiliar regulatory frameworks, and market competition. Nevertheless, when they acquire local companies or merge with local enterprises, they gain instant usage of local knowledge and learn from their local partner's sucess. One of the most prominent examples of effective 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 a strong contender. However, the acquisition not only removed regional competition but additionally offered valuable local insights, a customer base, and an already founded convenient infrastructure. Additionally, another notable instance could be the purchase of an Arab super application, namely a ridesharing company, by the worldwide ride-hailing services provider. The multinational company gained a well-established brand having a big user base and substantial familiarity with the local transport market and consumer choices through the purchase.