CUET Preparation Today
| What is the most important relevance of Pareto's Principle for modern businesses? |
The value of the Pareto Principle in management is in reminding us to stay focused on the 20
percent that matters. The value of the Pareto Principle in management is in reminding us to stay focused on the most important things. The value of the Pareto Principle in management is in reminding management to involve in each and every minute detail in planning process in the absence of which the business may die out. None of the above |
| The value of the Pareto Principle in management is in reminding us to stay focused on the 20 percent that matters. |
| Pareto's Principle, you may have observed its effects. This principle holds that in a given system, a relative handful of "causes" will produce the majority of "effects." For example, one may find that 20 percent of customers are responsible for 80 percent of sales, or that 30 percent of the product lines result in 70 percent of returns.The principle is named for Vilfredo Pareto, an Italian economist who studied land ownership in Italy in the early 1900‘s and found that roughly 20 percent of the population held title to about 80 percent of the land. Legend has it that he further developed the theory upon observing that 20 percent of the pea pods in his garden produced 80 percent of the peas. For this reason, Pareto's Principle is often referred to as the "80/20" rule. A relatively handful of things will generate the bulk of the results or in any group will have “vital few and trivial many”. |
