Customizing refers to tailoring the SAP R3 software based on the needs of the customer. Customizing in SAP R/3 helps in meeting a company's individual requirements based on its business. SAP R3 transactions can be customized to best leverage SAP ERP.

To take an example of how SAP can be customized, consider a scenario of a company which sells automobiles. The company may sell its automobiles both in the domestic as well as in the export market. It is important that the company defines in SAP the correct business strategy. Customizing can be used for this purpose. Thus, the company may define a sales organization, define various distribution channels, assign distribution channels to sales organization, define pricing conditions, assign general ledger accounts, define tax determination rules etc. All of the above is possible through customizing in SAP R3. One important point to remember here is that "Customizing" in SAP R/3 is client specific. But important changes such as changes in pricing conditions are not client specific. Such changes affect all the clients in the system and are cross client.

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