defensive reasons for expanding

• reducing costs - as a business becomes larger, it benefits from economies of scale - it will receive larger discounts from suppliers, thus reducing business costs - then offer lower prices to consumers, resulting in higher sales and profits
• diversification - large businesses can produce a wide range of products and sell into different markets - reduces the risk of failure as the business is not dependent on one product or market
• projecting supplies - a business may project its supplies by using backward vertical integration - occurs when a business merges or takes over a supplier of its raw material - protects the quality and quantity of raw material and helps to control their cost
• protecting channels of distributions - a business ight use forward vertical integration to control the channel of distribution used to get its products to the consumer - might merge with or take over a business that sells its products