IThe following are the factors that favour
- Economies of scale in production: Where the product
is manufactured at one plant, long production runs can
give rise to considerable economies of scale (assuming
that the decreasing costs per unit will prevail over the
full extent of output required to satisfy export markets).
- Economies in development costs: A standardised product
permits amortisation of development costs over a larger
production volumes and turnover
- Reduction in stock costs: Additional products give rise
to the need for additional records and stock audits. Furthermore,
each product must be stocked to a level that not only
caters for normal demand but also includes a safety margin
to cover unexpected upsurges in demand. Consequently,
the minimum 'safe' stock level for several different products
will exceed that for one standard product.
- Technological content: Whereas consumer products are
likely to be affected by cultural and environmental differences
in the foreign market, industrial processes are relatively
uniform from one country to another and many industrial
products can therefore be standardised, especially those
in which technical specifications are critical. Even when
industrial goods are modified, the changes are likely
to be minor, e.g. adjustments may have to be made to the
voltage level, or metric measures (metres, grams and litres)
may have to be changed to imperial measures (yards, pounds
and gallons), etc.
- Consumer mobility: Standardisation is essential to consumer
acceptance where products are of particular relevance
to travellers or tourists, e.g. camera film, baby foods,
- Economies in marketing: Although sales literature and
advertising may vary from country to country - at least
in terms of the language in which the advertising message
is conveyed - it will be easier to achieve uniformity
(and thus, savings) with a standardised product than with
one which must be adapted to suit various foreign markets.
In addition, it is easier for the company to provide after-sales
service and parts for a standardised product.
- Market homogeneity: Some products are homogenous and
a world market is available without product modifications
being necessary, e.g. blue jeans, CDs, raw materials,