Pareto principle was introduced by Italian Economist Vilfredo Pareto. He stated that 80% of the effects are caused by 20% of the causes. So if we closely monitor and solve 20% of the causes. It will significantly improves the affected area and you will see good results.Â
For Example: 80% of the revenue gets generated by 20% of the clients
While doing research Mr. Pareto found that 20% of land in Italy was occupied by 80% of the population. He carried out this survey to other areas and got same results
This rule is also well known as 80/20 rule across the globe and is mostly being used to find the causes which is impacting business or producing defective products/services
Hence Pareto chart is a graphical representation of Pareto Principle
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