Strategic alliances and acquisitions offer companies with several advantages when entering unfamiliar markets.
Strategic mergers and acquisitions are seen as a way to overcome obstacles international businesses encounter in Arab Gulf countries and emerging markets. Businesses planning to enter and grow their reach into the GCC countries face different challenges, such as cultural differences, unfamiliar regulatory frameworks, and market competition. Nonetheless, if they buy regional companies or merge with regional enterprises, they gain immediate access to local knowledge and learn from their local partners. One of the most prominent examples 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 as being a strong rival. But, the purchase not merely removed regional competition but additionally offered valuable local insights, a customer base, and an already established convenient infrastructure. Furthermore, another notable example could be the purchase of a Arab super application, specifically a ridesharing business, by an international ride-hailing services provider. The multinational corporation gained a well-established manufacturer having a large user base and substantial understanding of the local transportation market and consumer choices through the purchase.
In a recently available study that investigates the relationship between economic policy uncertainty and mergers and acquisitions in GCC markets, the authors discovered that Arab Gulf firms are more inclined 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 throughout the financial crises. Moreover, the study suggests that state-owned enterprises are more unlikely than non-SOEs to make takeovers during periods of high economic policy uncertainty. The results suggest that SOEs tend to be more prudent regarding acquisitions when comparing to their non-SOE counterparts. The SOE's risk-averse approach, in accordance with this paper, emanates from the imperative to preserve national interest and minimising potential financial instability. Furthermore, acquisitions during periods of high economic policy uncertainty are connected with an increase in shareholders' wealth for acquirers, and this wealth impact is more pronounced for SOEs. Indeed, this wealth impact highlights the potential for SOEs like the people led by Naser Bustami and Nadhmi Al-Nasr to exploit possibilities in such times by buying undervalued target companies.
GCC governments actively promote mergers and acquisitions through incentives such as for instance tax breaks and regulatory approval as a method to solidify industries and develop regional businesses to become effective at competing at an a international level, as would Amin Nasser likely let you know. The need for financial diversification and market expansion drives a lot of the M&A deals in the GCC. GCC countries are working seriously to draw in FDI by creating a favourable ecosystem and increasing the ease of doing business for international investors. This plan is not merely directed to attract foreign investors since they will contribute to economic growth but, more crucially, to facilitate M&A deals, which in turn will play a significant part in allowing GCC-based businesses to achieve access to international markets and transfer technology and expertise.