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Corporate Strategies: Basic Concepts and Management

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  You need to know three things about management:   80/20 Rule Opportunity Cost Compound Growth   80/20 Rule (Also called Pareto’s Law)   This idea says that a relatively small percent of actions account for a relatively large percent of outcomes. Find and concentrate your efforts on the important influences on your business.   Some hypothetical examples.   20% of your customers account for 80% of your sales.   20% of your product line accounts for 80% of your sales and profits.   Often, companies with a large product line with many variations find that 50% of their products account for over 90% of sales. An even smaller percent usually accounts for most of the profits.   20% of your SKUs account for 80% of your stockouts (and lost sales).   20% of your programmers account for 80% of the bugs in new programs.   The percentages aren’t always 80/20. Some examples:   McDonald’s accidentally learned that 10% of its customers accoun...
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Corporate Strategies: Marketing and Price Discrimination

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      INTRODUCTION – COMPANIES WITH “MARKET POWER”   The focus of this essay is on corporations that sell products or services to final consumers. A common strategy is price discrimination.   Retailing is somewhat different than most market transactions. Retailers sell to a large number of consumers. They negotiate prices and terms of sales with a wide variety of suppliers, both in size and products offered.   Retailers and distributors are market-makers. They bring buyers (consumers) and sellers (manufacturers) together. Some companies have their own bricks-and-mortar stores (Sherwin-Williams) or their own websites. Many online retail sites such as Amazon are market-makers.   This discussion assumes that sellers and retailers have “market power.” This may be a result of past strategies of branding, advertising, developing loyal or return customers, developing market niches by product line extension, or any other strategy that differentiates its produc...
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