Final answer:
Licensing is an appropriate strategy for small and medium-sized companies because it allows them to expand their reach, generate revenue, and leverage the resources of larger companies.
Step-by-step explanation:
Licensing is an appropriate strategy for small and medium-sized companies because it provides several benefits. Firstly, licensing allows these companies to expand their reach and enter new markets without the need for large investments in production facilities or distribution networks. Instead, they can license their products or services to local partners who already have the necessary infrastructure in place.
Secondly, licensing can provide a steady stream of income for small and medium-sized companies. By granting licenses to other businesses, they can earn royalty payments or licensing fees in exchange for the use of their intellectual property. This can help these companies generate revenue while minimizing their own manufacturing or operational costs.
Lastly, licensing can help small and medium-sized companies leverage the expertise and resources of larger companies. By partnering with established players in their industry, they can benefit from their market knowledge, brand reputation, and distribution channels. This can significantly enhance their competitive advantage and increase their chances of success.