Corporate Strategies - Basic Concepts and Management
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...
