What is the relationship between standardization and cost in international business?

In international business, the relationship between standardization and cost is primarily driven by the concept of economies of scale. When a company standardizes its products, it means that the same product design, features, and production processes are used across different markets. This allows the company to produce larger quantities of the product, which can significantly lower the per-unit cost.

By implementing standardization in their operations, firms can simplify their supply chains, reduce complexity in manufacturing, and lessen the need for diverse marketing strategies. All of these factors contribute to reducing overall operational costs. This approach is particularly effective in markets where consumer preferences are similar, enabling the firm to leverage its production and marketing resources more efficiently.

The other options highlight different aspects of international business, but do not capture the fundamental benefit of standardization regarding cost efficiency. Adaptation may enhance effectiveness in meeting local preferences but often leads to increased costs due to the need for diverse product variations. Similarly, while product confusion could occur with excessive standardization, the primary advantage lies in the cost reductions achieved through the economies of scale afforded by standardized production processes.