Answer in brief:
How is the standard time of a place determined?
Local time of any place is determined by its longitudinal location. It varies with different longitudes. As a result, many places within a country can have multiple local times. This could disrupt the coordination in the routine activities in the country. Thus, the local time of a longitude passing through the middle of the country is taken as the standard time for that country. This standard time is used all over the country. Usually, a single standard time is used if the difference between the longitudinal extent of the country is less than 1 or 2 hours, otherwise, multiple standard times are used. For example, Canada has 6 time zones.
At the global level, the world has been divided into 24 time zones. These time zones have been created with reference to the Prime Meridian itself. Thus, the standard time of any country is expressed in terms of GMT.