Standardization

AAA

DEFINITION of 'Standardization'

A framework of agreements to which all relevant parties in an industry or organization must adhere to ensure that all processes associated with the creation of a good or performance of a service are performed within set guidelines. This is done to ensure the end product has consistent quality, and that any conclusions made are comparable with all other equivalent items in the same class.

INVESTOPEDIA EXPLAINS 'Standardization'

An example of standardization would be the Generally Accepted Accounting Principles to which all companies listed on U.S. stock exchanges much 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 can be found in business processes when companies require that a consistent level of quality be achieved. For example, many fast food franchises have detailed processes documented to make sure that a burger is prepared in the same manner regardless of which chain in its franchise a consumer visits.

RELATED TERMS
  1. Industry

    A classification that refers to a group of companies that are ...
  2. Proprietary Technology

    A process, tool, system or similar item that is the property ...
  3. Franchise

    A type of license that a party (franchisee) acquires to allow ...
  4. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
  5. Financial Accounting Standards ...

    A seven-member independent board consisting of accounting professionals ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...
Related Articles
  1. Henry Ford: Industry Mogul And Industrial ...
    Options & Futures

    Henry Ford: Industry Mogul And Industrial ...

  2. What is the difference between IAS and ...
    Investing

    What is the difference between IAS and ...

  3. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

  4. Footnotes: Early Warning Signs For Investors
    Retirement

    Footnotes: Early Warning Signs For Investors

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center