Pareto Principle
12th July 2012
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Today I would like to remind ourselves of the Pareto Principle The Pareto Principle states that, for many events, roughly 80% of the effect comes from 20% of the causes. Vilfred Pareto who observed in 1906 that 80% of the land in Italy was owned by 20% of the population.It is very common to apply this principle in business as folllows:-
  • 80% of your sales come from 20% of your client.
  • 20% of your stock has 80% of the value.
  • 80% of your sales are made by 20% of your sales staff.
  • 80% of your problems are caused by 20% of your procedures.
  • 20% of your clients produce 80% of your profit etc
So have a look at your businesses and see if this applies and if so try to improve your profitability, efficiency etc by focusing on those 20% events.

About the Author

Dipak R

Member since: 3rd July 2012

I am a chartered management accountant with over 20 years of accountancy experience.
My main objective is to assist my clients in increasing and keeping their wealth.

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