Pareto's Principles Essay

840 Words 4 Pages
Pareto’s Principle in Business and Beyond
Pareto’s principle, also known as the 80/20 rule, defines an unequal relationship between any two factors. Understanding the 80/20 rule helps managers pinpoint causes of problems, measure employee productivity, and interpret product sales in order to improve the overall functionality of the organization. Pareto’s principle can also be tested and applied in science –researchers utilized the principle in cancer research. In all areas, the 80/20 rule helps society understand how to efficiently maximize benefits and minimize detriments.
Pareto’s Principle Explained
In 1906, Vilfredo Pareto, an Italian economist, noted that 80% of Italy was owned by 20% of the population. 35 years later, American
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For example, the manager can identify which 20% of consumers account for 80% of sales. Doing so, he or she can recommend the company cater to this 20%’s needs and wants.
Proctor & Gamble Household-good company Proctor and Gamble (P&G) plans to apply Pareto’s principle to its product management. CEO A.G. Lafley intends to identify the 20% of P&G’s brands that account for 80% of the company’s sales. Shifting production to favor this 20%, P&G can proliferate net sales and revenue without scaling back products or workers. P&G is also shifting its production focus to the 20% of customers that generate 80% of sales –another way to maximize the company’s sales and revenue.
Pareto’s Principle and Cancer Research Scientists have been able to apply the 80/20 rule to cancer research. Discovering that the growth of cancer cells is highly ordered and follows Pareto’s principle is a definitive breakthrough that challenges the traditional understanding of cancer growth. Scientists established that the frequency of early errors in genetic code is greater than the frequency of later errors in genetic code, meaning cancer-causing imperfections build up over time. In other words, scientists have concluded that 20% of early mutations cause 80% of normal cell deterioration by carcinogenic

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