On the Leading Edge… or Behind the Curve?August 1, 2009
Potential Competitive Advantage through Standards
“Having influence in the content of a standard is an important factor in gaining competitive advantage.”
It is often said that you can be part of the solution, or live with the solution developed by others. Being part of the standards development process allows the company to gain ‘insider knowledge’ and to exert greater influence on the substance of the standards.
Cost Reduction through Standardization
“Standardization can lead to lower transaction costs in the economy as a whole, as well as to savings for individual business.”
The interviews with representatives of major firms as well as small- and medium-sized companies revealed that the costs of developing standards are not easily quantified. However, the businesses interviewed rated the positive effect on transaction costs as positive, noting that transaction costs drop considerably as a result of standards since they make information easily accessible to all interested parties.
Effects of Standards on the Supplier-Client Relationship
“Standards have a positive effect on the buying power of companies.”
Standards can encourage competition within the marketplace, and can be used by businesses to exert market pressure on companies further down the value-added chain. Businesses are, therefore, able to use standard to broaden their potential markets. Companies also have increased confidence in the quality and reliability of suppliers who use standards.
Standards and the Formation of Strategic Alliances
“…it is clear that cooperation between companies in matters of standardization is advantageous, for the resulting synergy can help reduce costs and increase profits.”
In the survey, respondents rated the effect of standardization on cooperation with competitors as positive, indicating that standardization encourages cooperation between businesses that are at the same stage in the value chain.
Standards and Research Development
“Businesses not only reduce the economic risk of their R&D activities by participating in standardization, but can also lower their own R&D costs.”
The economic risk of research and development is lowered when a company can influence the content of standards to its advantage. In addition, the expense of R&D can be reduced when participants in standards work make their results generally available, eliminating duplication of research efforts.
Product Safety and Liability
“Lower accident rates are partly due to standards. Participation in the standardization process increases awareness of product safety.”
The development and implementation of safety standards contributes to the reduction of accident rates, and raises awareness of safety features and practices. Representatives of consumer organizations see their involvement in the standardization process as having increased the industry’s awareness of the importance of product safety.
“Because standards reflect the current state of technology, they can help businesses reduce their liability risk.” NPES makes it easier for you to become part of the standards development process.
For more information about the NPES Standards Program, refer to the brochure enclosed with this edition of NPES News or contact Debbie Orf at e-mail: firstname.lastname@example.org or phone: 703/264-7200.