Under a management contract, licensors try to minimize transporting their technologies to the licensees. Also, licensees can be limited to a particular country. Licensing represents low-cost global expansion without full benefits of the upside growth that could materialize. Acquisition is acquiring a company that already has stores and a distribution network. Acquisitions can expand businesses quickly, but companies need to be aware of some drawbacks.
Governments can restrict ownership of certain businesses.
Information about perspective companies may be difficult to obtain. Also, the business or market may not exist in the target country. The software industry is another area where acquisitions are popular. Since software and technology are always changing it is difficult to stay ahead in this market. Many companies use acquisitions to keep up with the competition.