In recent months, there has been a changed in the way sovereign money is managed by the investment funds of the rich countries of the middle east. There have been some of the huge investment by the oil rich countries some of the brands with global operations. Abu Dhabi buys stack in Advanced Mico Devices (AMD), Citi Group and Dubai buys stakes in EADS. Now It is reported that Merryll Lynch is also seaaking money from Middle east to operate after its huge write down after the subprime crisis. It is interesting to watch all these developments. After the crisis that started last year, share prices of most of these companies are going down and now they become quite affordable to be bought by the oil rich countries.
Though it is fine and there is nothing wrong in doing so but in long run America is losing its supremacy as the world leader. Now on one side America is fighting some of the countries in the middle east and claiming them to the danger for the world peace and democracy etc and on the other side all the major companies are getting more and more dependent on the money coming from the countries in the same reason. It is a paradox. It is not only Middle East, China is also heavily investing in the USA but America does not see China as front enemy in the war of democracy. After getting substantial hold in the share market of the American companies, many of these countries would ask for management seat and they will also dictate or influence the investment and business decisions. Nothing is wrong in that but America was able to play big political power in world forum that will not be possible without having strong corporations on its side.
Some of the biggest companies of the America will have to shift their base in other countries, particularly in Asia. Challenge for the management of these companies will be to learn these realities and response to them accordingly. These global corporations will have to work for their shareholders and they can be anywhere and not mainly in America. Management will also learn to adopt management practices of other countries, Islamic banking will one of them. So by solving one problem of credit crunch, management is creating roots for another challenges, power shift, practice changes, shareholder changes, cultural changes. Only time can tell how management will react to these changes.
Though it is fine and there is nothing wrong in doing so but in long run America is losing its supremacy as the world leader. Now on one side America is fighting some of the countries in the middle east and claiming them to the danger for the world peace and democracy etc and on the other side all the major companies are getting more and more dependent on the money coming from the countries in the same reason. It is a paradox. It is not only Middle East, China is also heavily investing in the USA but America does not see China as front enemy in the war of democracy. After getting substantial hold in the share market of the American companies, many of these countries would ask for management seat and they will also dictate or influence the investment and business decisions. Nothing is wrong in that but America was able to play big political power in world forum that will not be possible without having strong corporations on its side.
Some of the biggest companies of the America will have to shift their base in other countries, particularly in Asia. Challenge for the management of these companies will be to learn these realities and response to them accordingly. These global corporations will have to work for their shareholders and they can be anywhere and not mainly in America. Management will also learn to adopt management practices of other countries, Islamic banking will one of them. So by solving one problem of credit crunch, management is creating roots for another challenges, power shift, practice changes, shareholder changes, cultural changes. Only time can tell how management will react to these changes.
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