Standardization
Standardization is the process of implementing and developing technical standards based on the consensus of different parties that include firms, users, interest groups, standards organizations, and governments.
Standardization can help maximize compatibility, interoperability, safety, repeatability, or quality. It can also facilitate the normalization of formerly custom processes. In social sciences, including economics, standardization is close to the solution to a coordination problem. All parties can realize mutual gains only by making mutually consistent decisions [Wikipedia].
Standardization ensures that certain goods or performances are produced similarly via set guidelines. Standardized lots are used in trading stocks, commodities, and futures to allow for greater liquidity, efficiency, and reduced costs. Standardization is used in accounting practices and to establish manufacturing quality and production standards. Standardization is achieved by setting generally accepted guidelines about how a product or service is created or supported, how a business is operated or how specifically required processes are governed. Standardization aims to enforce consistency or uniformity to specific practices or operations within the selected environment. An example of standardization would be the generally accepted accounting principles (GAAP) to which all companies listed on U.S. stock exchanges must adhere. GAAP is a standardized set of guidelines created by the Financial Accounting Standards Board (FASB) to ensure that all financial statements undergo the same processes so that the disclosed information is relevant, reliable, comparable, and consistent. Standardization ensures that certain goods or performances are produced similarly via set guidelines. Standardization can be found throughout the business world when companies want to achieve consistent quality, production standards, manufacturing output, and brand recognition [Investopedia].
Standardization: Overview. Investopedia. Retrieved from: https://www.investopedia.com/terms/s/standardization.asp
Standardization. Wikipedia. Retrieved from: https://en.wikipedia.org/wiki/Standardization