alcon inc
TRANSCRIPT
ALCON, INC
Company Analysis
by Danilo Avalos
Organizational Strategy
MANA 4322-009
University of Texas at Arlington
Instructor: Charles R. Dewar, MBA
December 5, 2007
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Executive Summary
For about 62 years Alcon, Inc. has been around the drug industry and since its
foundation its growth has been geometric. Who could believe that a little drug
store would become the giant Alcon of today? What we will see in the following
research is a company that through continuous dedication has succeeded thanks
to the collaboration effort its leaders seeded since the foundation of the
corporation. It was through its called strategic partnership to an efficient and
effective enterprise layout of a divisional structure that Alcon moves around
quickly.
But what triggered its rapid growth and keeps the company in business? There
is more than one explanation, however just like in a theater is only behind the
curtains that we can see how the preparation and dedication of the artists make a
successful show; it is underneath Alcon’s surface that we will see how a
differentiation strategy and a focused team into preserving and restoring vision
worldwide makes a difference. At Alcon’s headquarters we can only see a very
organized team transforming raw material to finished good for further delivery to
locations worldwide with high standards of productivity and employee efficiency.
There is a very competitive environment for Alcon, since its flourishing market
keeps attracting new entrants, but Alcon dominance of the market makes it
difficult for new entrants to compete against a corporation that has developed not
only economies of scale, but its tem is incredible efficient due to the fact that they
want to be around Alcon for a long time and their experience has been reflected
into the production improvement that lets Alcon supply efficiently its worldwide
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demand.
From all countries where Alcon operates, there is only one mission
accompanying the core of development, and it is the passion of employees for
helping the world see better.
Company Information
Alcon was founded in 1945, and named after their founders Robert Alexander and
William Conner, which syllables combined gave birth to what it is now one of most
prosperous companies in the United States. Alcon is owned by Nestlé S.A. in its
majority with 75 percent ownership of the company stock, but incorporated in
Hünenberg, Switzerland with its base operations in Fort Worth, Texas. With more
than 13,000 employees worldwide, Alcon operates smoothly developing,
manufacturing and distributing eye care products on its three divisions –Surgical,
pharmaceutical, and customer vision care.
Alcon’s vision and mission are summarized into keeping the company competitive
through innovation, high quality control standards, and balancing between its
efficacy and efficiency of its product development. Its research and development,
and marketing and sales force are dedicated to boost the sales of Alcon’s products
in the worldwide market which is successfully achieved with 403.1 million dollars of
income generated from operations.
The corporate governance of Alcon is well established and described in its
company website, where the company made sure its code of conduct includes the
values and behavior that are appropriate and not appropriate for every employee
from the bottom to the top executives. Part of its code of business, conduct, and
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ethics reads, “No employee, officer or director shall retaliate against anyone, who
in good faith, reports what they suspect to be illegal or unethical behavior.” (1) In
order to enforce ethical behavior within the company Alcon’s Board of Directors
and committees are divided into Audit committee, Compensation committee, and
Nominating/Corporate governance committee whom together ensure transparency
in its internal and external operations and financial reporting.
External Environment
The pharmaceutical industry in the United States is one of the biggest
industries in expansion. With thousand of customers worldwide with the need of
being healed from different illness, the pharmaceutical industry together with the
health care industry have flourished due to the overwhelming demand for new and
improved medication. Alcon, Inc. is a company dedicated to the research,
development and production of eye care products that preserve and restore vision.
Alcon, Inc. reported in its consolidated Income Statement of March 31, 2007
income from operations of 403.1 million dollars. However, which factors have
favored the growth of Alcon in the United States? Some factors are analyzed below.
Demographics: The aging population in the United States has increased and with it
the need for health cares. Most elderly have vision problems and Alcon supply very
efficiently surgical, pharmaceutical, and eye care innovating products. In the
worldwide arena, the few companies that develop pharmaceutical products are few
and Alcon seems to have taken advantage to a worldwide market with few
competitors.
Sociocultural: The greater concern for heath have pushed the demand for all sort
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of health products, but eye care have always been of great concern among the
citizenry.
Political/Legal: The incorporation of different countries into the global market has
turned into free treaties with more countries that facilitate foreign investment. This
panorama have been favorable since the President was granted fast track
authority and countries like Chile, Peru, Brazil have negotiated treaties with the
United States. Alcon has been benefited since its cost will significantly decrease in
such countries.
Technological: The technological breakthrough of computerized systems into
medical equipment has boosted the development of surgical products in Alcon.
Examples of such innovations are the INFINITI® Vision System, which is a more
effective cataract lens removal due to its computerized equipment and software.
Also, the invention of contact lenses has created a market for the need of contact
lenses care fluids, disinfectants, and other products that Alcon produces effectively.
Economic: In the United States the stability of the economy in these years have
created an economic environment that fosters inversion, and in recent weeks the
announcement of the Fed of lowering interest rates are good news for everyone
including Alcon.
Global: The economic improvements in several countries in which Alcon operates
due to International Trade improvements have made possible for more people to
afford the cost of the medications and eye care products. The intensification of
Global Trade has considerable lowered transportation, and operation costs for
Alcon.
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The treat of entrance in the pharmaceutical industry is low, due to the large
capital involved in acquiring the necessary equipment for the development of
finished product. Besides the large capital requirement, potential manufacturers
have to compete against the giants Alcon, Novartis, and many others drug
manufacturers in the United States that enjoy the benefits of economies of scale
that their prolonged presence in the market has given to them.
Competition within the industry is high. Even though the treat of entrants is
low, there are a large number of competitors well established in the
pharmaceutical market. The flourishing market attracts foreign investors with large
capitals, and companies like Allergan Inc., Bausch& Lomb Inc., Novartis AG,
Medical Instruments & Supplies, and many others compete against each other to
gain a greater share of the market pie. However, Alcon seems to have focused on
quality standards and a good customer service following a sale.
The treat of substitute is low, because the herbal medicine alternative has
not been proved to be more effective than pharmaceutical medicine, and surgical
procedures relays heavily on the innovating products companies like Alcon can
provide.
The power of suppliers is low, because even though there are many
pharmaceutical companies only few have dominated the market. Subsequently,
giants like Alcon can put pressure over manufacturer’s prices. However due to the
symbiotic approach Alcon has over its suppliers and the innovative nature of their
products, Alcon happily pays a reasonable price for a responsive supplier who can
help reduce the gap generated by the market mediation costs.
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The power of buyers is low, because of the few substitutes for eye care
pharmaceutical, surgical, and eye care products. Thus, customers have to pay the
premium price for the medicine they need.
Alcon seems to have developed a good relationship within its value net, and
most of their expansion worldwide seems to be strengthened by its partnership
strategy. There are few substitutors for the products Alcon develops, and its prod-
ucts are hard to imitate without expending millions of dollars in research and de-
velopment. Alcon’s complementors seem to work together with Alcon in order to
improve revenues for everyone. Example, if you have contact lenses you better
have OPTI-FREE® RepleniSH® Multi-Purpose Disinfecting Solution (MPDS). Suppli-
ers are being paid a fair price for their raw material, and customers are being de-
livered a high quality product at a price determined by the market.
Internal Environment
The Value chain analysis of Alcon, Inc. can help reveals how this corporation
is organized in such efficient manner that boosts its growth.
Firm Infrastructure: The company culture of the company is concentrated on
develop and improving a product that can improve and preserve vision worldwide.
Administration of Alcon is always striving to reduce overhead which will reduce
expenses overall the company. The relationship with its stakeholders has been
always important for this company and its suppliers are aware of Alcon productivity
through Alcon’s software which integrates its supply chain for an efficient
distribution of raw material and finished product. The fact that the company is
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concentrated in the sole goal of vision health care has strengthened its corporate
mission and keeps it focused.
Human resources management: Alcon’s Human Resource team is focused on
recruiting the best talent from the market, so in order to insure high quality
employees Alcon utilizes the services of stuff companies like Manpower, and Adeco
Co. in the United States. One of the policies of these companies is that potential
employees have at least high school diploma or its equivalent. After recruiting the
best candidates, Alcon provides a lot of benefits for the employees that worked
hard and became Alcon employees, such employees includes comprehensive
insurance, tax-advantage reimbursement, paid time off, retirement benefits, and
others. This is a strength the Alcon has, since educated employees reduce the
amount of training and human error within the production cycle.
Technology Development: In order to insure Alcon’s product innovation, Alcon’s
laboratories are equipped with high technology assembly lines, sterilization
machines, electronic equipment and software capable to monitor temperatures of
the machines processing chemicals. Alcon enjoys top of line high technology which
is necessary for this type of industry, and gives it the potential to compete with
other pharmaceutical companies
Procurement: The purchasing of materials, suppliers, and equipment are made in a
very efficient way. Suppliers participate on Alcon’s bidding process and at least one
or more suppliers are small business due to its small business development goal.
After that process, suppliers are chosen from Alcon’s database based on their
reliability and prices. These suppliers must meet Alcon’s specification
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requirements. A good relationship with Alcon stakeholders gives this company a
strength that increased the company good reputation.
Another perspective from which Alcon seems to pick its suppliers comes from
the fact that the products Alcon develops are innovative, so its suppliers also have
to be responsive in order to be able to satisfy its hard to predict demand. The
market mediation expenses, which is the opportunity cost lost of sales or excess of
inventory can be costly, thus suppliers can play an important role in reducing
Alcon’s operating expenses.
Inbound logistics: Raw materials are received at the inbound dock and classified
after being scanned with a laser gun by the forklift drivers and warehouse
manager. Raw materials are immediately distributed from the unloading area to
the production lines by material handlers with warehouse pallet jacks in order to
avoid accidents that could be caused by the use of forklifts in traffic areas. This
policy is a strength, because it reduces the number of accident at work, which
could end in legal suits against Alcon and other medical related expenses.
Operations: Raw materials are properly distributed to the different production lines.
Some lines sterilize the empty bottles for it further processing and bottling process
and other machines put labels to the medicine bottles, seal the top of the bottles,
put inserts inside its boxes and packages the finished product in package boxes.
This process is synchronized by the production software that monitors the 14 lines,
flex, white stock, and other lines. Within the production line standards, Alcon is
committed to reduce contamination exposure, so all employees crossing
designated areas marked with a blue line must wear protective cloths. The quality
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control standard is high, which is a strength.
Outbound logistics: Finished product is carried by material handlers to the
outbound dock where the forklifts take the pallets to other areas where packages
are covered according to the specifications of customers from different countries
and then taken to the wrap machine. After the packages are wrapped, fork lifts
load the packages into the containers that finally will deliver the product, or take
the containers to another shipping location for its further distribution to worldwide
Alcon locations.
Marketing and Sales: Alcon produces innovating products for which demand is hard
to predict, so forecasting has become an important function of the marketing and
sales team. Another important role its marketing and sales team seems to have
achieved successfully is its entrance into the global market. Alcon seems to have
gained an important share of the market in several countries like, Italy, Portugal,
Peru, Chile, etc among many others.
Services: Alcon is aware of the importance of the follow-up process after a sale,
thus management created the Alcon partners in patient care program which
consist in regular maintenance, in-service training, and on-site emergency service
supplied by Alcon field engineers to help its customers to provide a better service
to their patients. These programs ensure Alcon’s future sales because most
customers will continue loyal to the company.
All activities are related and work in a synergetic equilibrium. However, since
all activities are closely integrated a failure of a wrapping machine or packaging
machine can delay the distribution process. Alcon seems to be aware of this
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weakness and hired an inside crew to diagnostic, solve, and repair machine
malfunctions. However, I witnessed serious delays even all the effort of the
engineering crew. Alcon’s net cash from investing activities for the 2007 first
quarter is 71.6 million dollars (taken from the statement of cash flow of Alcon)
which is a strength. Thus, in case an investment opportunity is discovered because
there is sufficient cash for further investment. A company as Alcon relays its
profitability to stay up to date with the latest medical trends, such as
nanotechnology innovations, and its creativity to continue improving and
developing new eye care products, a mislead in its mission could cost Alcon big
time and give its competitors an advantage. Alcon recognizes its weakness and
strives to keep every member in its organization aware of the importance of
innovation.
Alcon products are valuable, because they promote the development of
strategies to improve the efficiency and effectiveness of the company. Eye care
products have permitted the company to establish a strategy to penetrate the
health care market by concentrating the company resources into one aspect of
health care: vision care.
Eye care products are not rare, because in our era, technology
advancements has given the industry the capability to explore and develop
products that otherwise would be impossible to manufacture. Such is the case that
Allergan Inc. can develop eye care products or Bausch & Lomb Inc. with the
same quality that Alcon does. However, Alcon eye care products are difficult to
imitate by new entrants, because of its innovative characteristic. For someone to
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develop these products would require such companies years of research and the
best human capital in its area of expertise.
Finally, there are not many substitutes readily available in the market. Many
Americans are still skeptical to natural medicine and the herbs with curative
properties are difficult to find in the US. However, in developing countries natural
medicine is a substitute available for families with very low income.
Alcon financial ratios up to this date were taken from the online industry
analyst Reuters and are shown bellow:
Alcon Inc ACL (NYSE) (2)Sector: Healthcare Industry: Major DrugsAs of 3:02 PM EST
$144.81USD Price Change
0.14 Percent Change
0.10%
Valuation Ratios CompanyIndustry Sector S&P 500
P/E Ratio (TTM) 31.90 25.09 27.18 20.84P/E High - Last 5 Yrs. 43.23 42.32 44.24 32.81P/E Low - Last 5 Yrs. 25.64 15.54 16.61 13.98 Beta 0.20 0.69 0.72 1.00 Price to Sales (TTM) 8.27 3.78 5.34 3.00Price to Book (MRQ) 16.29 4.63 5.36 4.31Price to Tangible Book (MRQ) 21.25 9.25 10.69 8.38Price to Cash Flow (TTM) 27.52 16.82 20.05 14.88Price to Free Cash Flow (TTM) 55.56 39.13 36.56 35.46 % Owned Institutions 21.14 70.07 50.13 71.18
Dividends CompanyIndustry Sector S&P 500
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Dividend Yield 1.41 3.01 2.43 2.14Dividend Yield - 5 Year Avg. 0.65 2.63 1.38 1.85Dividend 5 Year Growth Rate NM 8.16 9.93 11.56 Payout Ratio (TTM) 44.47 62.95 31.12 29.10
Growth Rates CompanyIndustry Sector S&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago 12.26 7.64 14.46 14.62Sales (TTM) vs TTM 1 Yr. Ago 13.69 6.95 14.57 14.59Sales - 5 Yr. Growth Rate 12.25 7.15 17.26 13.90 EPS (MRQ) vs Qtr. 1 Yr. Ago -1.09 8.16 13.27 15.40EPS (TTM) vs TTM 1 Yr. Ago 26.45 -5.66 7.73 20.01EPS - 5 Yr. Growth Rate 32.94 3.87 13.06 23.42 Capital Spending - 5 Yr. Growth Rate 9.96 -1.41 9.80 8.71
Financial Strength CompanyIndustry Sector S&P 500
Quick Ratio (MRQ) 1.49 1.33 2.13 1.26Current Ratio (MRQ) 1.77 1.91 2.84 1.78LT Debt to Equity (MRQ) 0.02 0.26 0.36 0.60Total Debt to Equity (MRQ) 0.33 0.35 0.43 0.79Interest Coverage (TTM) NM 11.90 9.44 13.08
Profitability Ratios CompanyIndustry Sector S&P 500
Gross Margin (TTM) 75.04 72.51 68.21 45.08Gross Margin - 5 Yr. Avg. 73.09 73.45 67.80 44.20 EBITD Margin (TTM) 34.11 28.41 23.58 23.23EBITD - 5 Yr. Avg. 33.58 29.68 22.59 21.42 Operating Margin (TTM) 30.51 21.80 18.27 19.73Operating Margin - 5 Yr. Avg. 27.94 24.05 17.23 19.30 Pre-Tax Margin (TTM) 31.76 21.80 18.94 18.60Pre-Tax Margin - 5 Yr. Avg. 27.97 24.19 17.47 18.05 Net Profit Margin (TTM) 26.45 16.79 12.88 13.68Net Profit Margin - 5 Yr. Avg. 21.50 17.84 11.85 12.50
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Effective Tax Rate (TTM) 16.72 22.68 26.52 29.79Effective Tax Rate - 5 Yr. Avg. 23.13 26.97 28.86 30.79
Management Effectiveness CompanyIndustry Sector S&P 500
Return On Assets (TTM) 26.60 10.47 6.97 8.41Return On Assets - 5 Yr. Avg. 18.61 11.63 6.90 7.10 Return On Investment (TTM) 42.77 13.53 9.25 12.42Return On Investment - 5 Yr. Avg. 35.49 15.95 9.93 10.66 Return On Equity (TTM) 51.26 20.33 14.59 21.43Return On Equity - 5 Yr. Avg. 44.49 24.82 16.83 18.49
Efficiency CompanyIndustry Sector S&P 500
Revenue/Employee (TTM) 386,882 433,835 543,062915,073Net Income/Employee (TTM) 102,326 74,023 81,479 115,900 Receivable Turnover (TTM) 5.36 6.13 7.04 10.33Inventory Turnover (TTM) 2.74 2.73 3.94 12.05Asset Turnover (TTM) 1.01 0.64 0.77 0.95
Alcon’s stock has a beta of .2 which means that its stock will go up or
down .2% for every 1% move in the S&P 500, thus is considered a less-risky
investment as the overall market. Alcon’s P/E ratio is 31.90 compared to 25.09,
27.18, and 20.84 respectively. This means that investors are paying $31.90 dollars
for every dollar of earnings. Without doubt investors are paying more for Alcon’s
stock that for the average industry, sector, and the S&P500.
The management effectiveness ratios have shown how profitable Alcon
assets are in generating revenue, so we can see that Alcon is performing better
compared to the Industry, the sector, and the S&P500. Here is a graph to help us
visualize Alcon’s performance based on the data above.
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Management Effectiveness
0 10 20 30 40 50 60
Return On Assets (TTM)
Return On Assets - 5 Yr. Avg.
Return On Investment (TTM)
Return On Investment - 5 Yr.Avg.
Return On Equity (TTM)
Return On Equity - 5 Yr. Avg.
Typ
e o
f re
turn
Average Return
S&P 500
Sector
Industry
Company
These ratios have shown the strong position of the company in the drug industry,
and a good expectation for the future of Alcon.
Customer Perspective: Alcon customers see Alcon as a company that integrates its
community into its operations and improves its surrounding. Alcon strives to
deliver its products quickly to its customers, and to supply high quality products.
These goals are clearly showed in the way Alcon has organized its manufacturing
process and warehouse to be able to respond to the market needs efficiently.
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Internal Business Perspective: The processes, decisions and actions that managers
at Alcon take are customer-based because customer satisfaction is very important.
Such is the case of this factor that every some key lines of production have its
production per day and goals projected through a big plasma monitor. Managers
want Alcon’s employees to be conscious of the importance of being able to met its
goals and satisfy its forecasted demand.
Innovation and Learning Perspective: Innovation is a big concern for Alcon top
leaders, so they strive to keep up with the market needs and Industry standards.
Alcon through Short-term pipelines continuously evaluate its products to come up
with better strategies. Also, Clinical trials, and Alcon research and development
facilities helps Alcon managers to achieve its goals and the results are a vast
number of successful products in the market and a prominent company. As
managers said, “We recognize the immediate need to respond to the needs of
aging populations and the consequent pressures on healthcare costs. We are
confident in our ability to address these 21st century needs through our research
and development efforts where we combine the advantages of size, creativity and
focus.” (3)
Financial perspective: Top management at Alcon seems very concerned about
keeping the company tuned with its financial ratios. In an industry where millions
of dollars are utilized to develop new drugs, investments are a necessary lubricant
to keep up with all the necessary expenses of creating innovating products. Such it
is the case that Alcon financial ratios make Alcon securities attractive. For
example: Alcon’s stock has a beta of .2 which means that its stock will go up or
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down .2% for every 1% move in the S&P 500, thus is considered a less-risky
investment as the overall market. In addition Alcon quick ratio is 1.49, which
indicates that for every dollar of current liabilities there are 1.49 dollars of easily
convertible assets compared to 1.33 quick ratio of the industry and 1.26 of the
S&P500 in average, which definitely is better with exception of the sector quick
ratio which is 2.13.
A closer view to Alcon Inc and its closest competitors is shown in detailed at
Yahoo finance (4), I took the updated data from the site and display it bellow:
DIRECT COMPETITOR COMPARISON
ACL AGN BOL NVS Industry
Market Cap: 43.18B 20.44B 3.58B 126.79B N/A
Employees: 13,500 6,772 13,000 100,735 N/A
Qtrly Rev Growth (yoy): 12.30% 23.30% 13.60% 10.50% 0.00%
Revenue (ttm): 5.22B 3.51B 2.40B 39.28B N/A
Gross Margin (ttm): 75.86% 82.39% 56.84% 71.80% 0.00%
EBITDA (ttm): 2.13B 903.10M 288.10M 10.77B N/A
Oper Margins (ttm): 33.91% 20.34% 6.51% 21.99% 0.00%
Net Income (ttm): 1.38B 424.80M 51.70M 7.60B N/A
EPS (ttm): 4.534 1.392 0.923 3.26 N/A
P/E (ttm): 31.94 47.99 70.04 16.66 N/A
PEG (5 yr expected): 1.67 1.83 1.81 1.21 N/A
P/S (ttm): 8.28 5.80 1.49 3.24 N/A
AGN = Allergan Inc.BOL = Bausch & Lomb Inc.NVS = Novartis AGIndustry = Medical Instruments & Supplies
In the graph we clearly see how Alcon’s earnings before income taxes,
depreciation and amortizations is $2.13 billions compared to $903.10M, $288.10M,
and $10.77 billions respectively. With the exception of Noartis A G, Alcon
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performed pretty well against its competitors.
Alcon’s net income was of $1.38 billion for the period against 424.80M,
51.70M, and 10.77 billion respectively. If it is true Alcon performed better than both
AGN and BOL, NVS showed a better number.
Alcon’s Price/Earnings To Growth, which is a valuation metric for determining
the relative trade-off between the price of a stock, the earnings generated per
share (EPS), and the company's expected future growth is lower than Allergan Inc
and Bausch & Lomb Inc, but once again Novartis has the lowest ratio in the
industry. In order to have a better understanding of the PEG ratio, a quick rule of
analysis would be that the lowest the ratio the better the company future growth
rate.
Intellectual Capital
Alcon has taken very seriously its mission of helping people around the world
to see better. Such is the case that every employee is conscious of the importance
of the medication developed at Alcon labs and manufacturing plants. Alcon human
resources managers are aware of the importance of its employees, and when kay
Cox, a human resources manager was interviewed she said, “You can take away
the buildings, you can take away the equipment, but if you take away Alcon's peo-
ple, if you take away the talent – you have nothing.” (5)
Alcon, Inc is focus on recruiting dedicated and skill people to complement
and improve Alcon standards. Thus, in order to attract human capital Alcon is ac-
tively researching for the best candidates from a vast pool of applications. Alcon
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invites students from different universities in the U.S. and the world to apply for a
position at Alcon, and contracts staffing agencies to act as a human filter, after
employees have worked at Alcon for a period of time, some employees are hired
by Alcon and given the bundle of benefits Alcon employees enjoy.
Intellectual capital is, for some companies, one of the biggest assets they
have. For example, Google Intangible and Intellectual assets are far more valuable
than any building the company holds. Every part of its building is designed to fos-
ter creativity, and employees are given all the facilities they need to grow within
the company. Another example is Pixar Animated Studios, this animated studios
have customized offices that are sort of eccentric but nothing formal. The message
delivered to employees is definitively, have fun while producing. Thus, creating
movies is a fun process at Pixar.
Alcon also relies on the creativity of physicians and scientists to come up
with new products; however its environment is more formal. In addition to the
comfortable environment provided to physicians and lab technicians. Alcon has
made sure it offers an attractive package of benefits to attract human capital.
Some of the benefits Alcon offers are described bellow and taken from Alcon’s
website (6):
Insurance
Health Care
Medical Plan - several options based on location
Dental
Vision
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Life/Accident
Basic and Optional Term Life
Dependent Life
Basic and Optional Accidental Death & Dismemberment
Business Travel Accident
Disability
Short-Term Disability Income
Long-Term Disability Insurance
Personal Auto and Homeowners at discounted rates
Tax-Advantaged Reimbursement Accounts
Healthcare Flexible Spending Account (FSA)
Dependent Care Flexible Spending Account with company match
Health Reimbursement Account (HRA)
Paid Time Off (PTO)
Paid Time-Off (PTO) - number of days varies
Holidays - 11 days including 4 days off during December holidays
Other Paid Time-Off (PTO) for family deaths, jury duty, military training, etc.
Retirement Benefits
Alcon 401(k) Plan - contribute from 1 percent to 5 percent of your eligible pay
with Alcon matching it dollar for dollar. Plus, company contributions will fully vest
after only 5 years of service. Contribution eligibility begins the first day of employ-
ment.
Alcon Retirement Plan (ARP) - Alcon makes a 7 percent contribution on your
behalf to the ARP each pay period.
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Total Company combined contributions to the Alcon 401(k) and the Alcon Retire-
ment Plan can be as much as 12%.
Retiree Benefits
Medical Coverage
Life Insurance Plan
Accumulated Paid Time Off
Health & Wellness Programs
On-site Fitness Center & recreational activities in several locations
National fitness center discounts
Physical Activity Incentive Program
Health Coaching for improvement of health risks
Weight Watchers program subsidized by Alcon
Stop-Smoking Program subsidized by Alcon
24-hour Nurseline
Nutrition programs
Free Flu Shots
Education Programs
Alcon provides and/or assists with relevant on-site and external courses, confer-
ences and seminars, tuition reimbursement, professional memberships, etc.
Family Programs
Employee Assistance Program - provides assistance and support with issues
such as mental health and legal problems.
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Adoption Reimbursement Program
Long-Term Care Insurance
Other Benefits, Based on Location
Business Casual Attire
Employee Credit Union
Cafeteria
Service Awards
Various Free Beverages
Company Store
Free Parking
Auto Purchase Discounts
Other Corporate Discounts
In order for Alcon to retain its employees, Alcon continuously strive to keep
employees challenged to improve, and innovate in every area of the company.
There are constant evaluations to the personnel, and production of every
production line is evaluated measured, and compared to previous days.
Social capital is recognized at Alcon, and employees socialize at Alcon’s
break rooms where employees can chat, read, or browse the internet from the
computers available to Alcon employees. All explicit knowledge is welcome at
Alcon’s, so employees and non-employees are encouraged to provide feedback to
Alcon through its website or direct interaction.
Business-Level Strategy
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Alcon, Inc. products are marketed and produced under a differentiation strategy.
Alcon manager’s efforts to differentiate its products from the competence have
been pretty successful. The data shown bellow was taken from Walgreens.com and
the prices clearly show the premium price customers are willing to pay for Alcon’s
allergy relief eye drops.
Name of Drug 5 ML 15 ML Description
PATANOL 0.1% OPHTH SOLN 5ML $92.99 $278.89
This medicine is antihistamine used to prevent itching of the eyes due to allergies.
3 ML 9 ML
VIGAMOX 0.5% OPHTH SOLU-TION 3ML $71.99 $215.89
This medicine is quinolone antibiotic used to treat eye infection.
5 ML 15 ML
TOBRADEX OPHTH SUSP 5ML $82.99 $248.89
Treat infections and to relieve the redness,irritation and discomfort associated with
certain eye problems. 2.5 ML 7.5 ML
PATADAY 0.2% OPHTH $92.99 $278.89
This medicine is antihistamine used to prevent itching of the eyes due to allergies.
In contrast to the huge price Alcon charges to its differentiated products, other eye
products like the ones shown bellow show the gap in the prices among the
different eye-care products. Generic allergy drops are significantly cheaper than
Alcon eye drops, and even other products like Similasan Healthy Relief Cataract Care Eye
Drops are just $9.99 plus taxes, or in other cases shipping and handling. Definitely Alcon is the Apple,
the computer manufacturing company, of the eye-care products.
Name of Drug 0.5 OZ Description
Clear Eyes Lu-bricantRedness Eye Drops for Red-ness Relief $3.99 Relieve redness of the eye due to minor irritations. 0.33 OZ
Similasan Healthy $9.99
Relieve redness, watery discharge & burning associ-ated with conjunctivitis.
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Relief Pink Eye Relief Eye Drops
Alcon makes sure to let its customers know the quality of components used in the
production of the medicine, the strict quality control, and its rigorous procedures.
Because of the innovative characteristics of Alcon products, customers perceive
them as unique.
Firm Infrastructure: Alcon facilities are well equipped and promote an image of
prestige in its surrounding environment. Its manufacturing plan has a friendly
environment, and its parking and entrance are carefully managed by
administration and security personnel. However what has enhanced the reputation
of the corporation are its new CEO and CFO hires. The biographical data of Alcon’s
CEO and CFO was taken from Alcon.com and Business Wire.com respectively.
Alcon’s CEO, Mr. Rayment started his career with Kendall Company in 1974, in
which he worked in diverse positions of sales and marketing. He later was hired by
CooperVision IOL as a new director for the sales and marketing department. His
curriculum vita is very prestigious, since he holds a Bachelor of Arts in Education
from the University of Washington in Seattle, as well as a Masters of Business
Administration from the University of Kansas in Lawrence, Kansas. He is a graduate
of the Harvard Program for Management Development. In addition to this hire,
Alcon’s new CFO is Mr. Richard Croarkin who comes from Nestlé, SA, where he was
executive vice president finance and chief financial officer of Nestlé Waters North
America. One of the many internet sites dedicated to provided biographical data
and other source of financial information describes Croakin career,
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“Croarkin joined Nestlé Waters North America in 1994 and he has overseen
the finances of a business unit that has grown to $4.4 billion in sales. He has
responsibility for all aspects of finance including financial planning, treasury,
tax, accounting, controls, credit, information systems and acquisitions.
Before joining Nestlé, Croarkin worked for Pepsico Incorporated for 11 years,
where he served in a number of senior financial positions around the world,
including as chief financial officer of Pepsi Latin America and Pepsi Canada.
He started his career with AMAX, Inc. and worked in treasury, corporate
development and planning. Croarkin is a 1976 graduate of Georgetown
University with a degree in economics and received his MBA from University
of Connecticut in 1979. He also has a diploma of the French language from
Alliance Francaise in Paris, France. During his career he has gained extensive
global experience by serving in a variety of key financial positions in several
countries.” (7)
Human resource management: If there is something besides its products that
Alcon, Inc should be famous for, it is for its extensive search and gathering of the
best talented physicians and scientist in the market. It is easy to post a resume
online on the Alcon’s website, as well as contacting the staffing agencies that
supply Alcon with labor. However, Alcon employees have to fulfill minimum
requirements. For example, as I informed before, Manpower, one of Alcon staffing
agencies, has a policy that a potential worker must at least hold a High School
diploma or GED. The company wants to make sure employees are going to be able
to meet Alcon expectations, and to be able to operate sophisticated equipment.
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Alcon managers not only hire the best, but they also want to make sure Alcon
employees stay competitive,
“At Alcon, we take a vested interest in our employees who strive along with
physicians worldwide to continually improve vision care and eye health. As a
result of intensive, technical job training, various personal development
opportunities, and an unprecedented level of pride in service, Alcon has
grown into one of the largest and most respected eye care companies in the
world.” (8)
The cons of having stuffing agencies supply labor are shown bellow:
o Stuffing agencies doesn’t provide the same benefits Alcon employees have,
and qualified employees can be lost due to other job offerings.
o Stuffing agencies don’t guarantee stability in hours and personnel are called
as needed. This fact could deter potential well qualified employees to apply
for a job at Alcon.
o If it is true that there are thousand of applications for a position at Alcon, also
there is a high turnover within staffing agencies. This could affect the quality
of productivity and effectiveness at Alcon’s plants, if this problem gets
chronic, in the long run.
Technology development: Alcon’s material handling is definitely superior to other
company’s warehousing procedures. At Alcon’s warehouse workers use
sophisticated swing-reach trucks, forklifts, and pallet jacks to handle raw material,
work in process, and finished product around the building. The transit flow is well
designed, so production lines are isolated from excessive debris and dust. Also, as I
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indicated before, blue lines, yellow lines, and white lines separate circulation
spaces. Some spaces where contamination is an issue has blue lines and cannot be
crossed over without protective clothes. The engineering support is highly
sophisticated and software remotely control the temperature at which chemical
mixes containers should work, as well as sterilization machines, and other
machinery involved in the manufacturing process of Alcon’s pharmaceutical
medicine.
Procurement: Alcon’s emphasizes the quality of the components used in the
elaboration of its medicine. Thus, suppliers are carefully selected and even some
small businesses from the area are elected through Alcon’s Supplier Diversity
Program.
Inbound, operations, and outbound logistics: These primary activities are
integrated at Alcon’s warehouse in order to shrink overhead and lost time. Forklift
drivers aided by small computers are able to scan, place labels, read material
requisition, moving orders, etc from its units. Material handlers supply, with
mechanical jacks, raw material to the lines, and from the production lines finished
products to the outbound dock. Forklift drivers then take the work in process items
to the palletizer where some packages are wrapped and loaded into the trucks
containers.
Marketing, sales, and services: These activities play an important role in the
development of any company, and Alcon seems to have benefited from the hiring
of talented marketing and sales people which have given the company the rising
sales and profitability Alcon enjoys. In addition to it, managers want to make sure
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Alcon’s clients have all the necessary information for physicians to use the medical
equipment and prescribe the right product,
“Alcon realizes that success is not merely measured by innovation, but
effective implementation as well. Thus, we foster an important relationship
with practicing physicians. We want to provide them with the best tools
possible while offering instruction on how to best utilize these resources –
requiring a level of interaction and exchange that few other ophthalmic
companies provide.” (9) Managers said.
Industry life cycle stage: The drug industry seems to be in between Introduction to
Growth, because research and development is still being a big concern and
expense for companies like Alcon. Even though Alcon has differentiated its
products, the market for eye-care, surgical, and pharmaceutical products is in
constant growth, so its current market is fairly large. The growth of the market in
and out the U.S. makes of this market very attractive, and even though the barriers
of entrants are significantly high, “Alcon has 13 top competitors” –according to
Hoovers, an internet analyst company. (10)
The emphasis in product design and process are still being implemented, but
for the products in the market the processes of how to speed up distribution are a
crucial concern. This is easily observed by the way manufacturing lines are
surveyed, and the production rates displayed on screens for line supervisors to
analyze and foster productivity improvement.
On the other hand, R&D, and sales and marketing are major functional areas
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of concern. In respect to these functional areas Alcon managers disclosed the
following information,
“Alcon has research and development facilities and laboratories located in
the United States, Spain and Switzerland. With more than 1,350 dedicated
researchers and a projected budget of US$2.5 billion dollars over the next
five years, we are well poised to accomplish our mission.” (11)
Also, about sales and marketing, Alcon has offices in 75 countries and sales
personnel in 180 countries to be able to meet the demand for eye care products.
Besides selling Alcon’s products, salespeople gather information in the field about
people’s experiences with the usage of eye-care drops or any other pharmaceutical
product, and physicians provide feedback and techniques that together with the
information gathered through salespeople helps Alcon to improve its products.
Increasing market awareness and creating consumer demand: In this area Alcon
does what they call applied research. Applied research is taking a discovery and
making it fit to a specific need. In addition to the discoveries made on Alcon’s labs,
Alcon has partnerships with academic institutions and other institutions around the
world. This vast pool of information available to Alcon makes it easy for managers
to keep up with the worldwide needs for new and improved medication in the eye-
care field. The release of new products in the market for eye diseases, and its
active participation in third world countries have increased market awareness and
created customer demand worldwide. After all, no matter what the cost is if a
patient is going to recover vision after being blind for a period of time.
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Corporate-Level Strategy
ALCON Labs, is one of the many companies the food giant Nestlé owns. In this case
Nestlé is the parent company which distributes the earnings within the company.
How Nestlé does distribute the earnings among the companies? Such information
is classified, but one thing is clear, most of the companies Nestlé acquired
definitely will help Nestlé to expand in the international food market. For example,
Nestlé acquisition of Dreyer’s and Purina will help Nestle to add diversity to the
food products Nestlé offers. However, Alcon as a company has not acquired,
neither merged with any other company. Currently Alcon owns some trucks for
distribution of its products, but it hasn’t merged or bought any other
pharmaceutical companies. What Alcon does instead is partner with other labs,
biotechnology companies, and other companies. Such partnerships have been a
success in Alcon’s growth. Alcon managers seem happy with the results as they
said,
“Our results speak volumes. We are proud of our successes with licensing
compounds and surgical devices and the impact they've had on the
community.” (12)
Some of the aspects of Alcon’s partnership programs are its In-Licensing and Out-
Licensing partnerships. Alcon welcomes global licenses and co-promotion
agreements for compounds, and different kinds of technology in order to foster
research and innovation in its area of interest.
In-Licensing: The areas of interests are the following:
1) Cataract
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2) Dry Eye
3) Glaucoma
4) Ocular allergy and inflammation
5) Ocular infections
6) Otic/Nasal
7) Refractive
8) Retina
Out-Licensing: these intellectual properties are given to any interested party
through Alcon’s website:
1) Alpha 2 Adrenergic Agonists
2) Carbonic Anhydrase Inhibitors
3) Muscarinic Agonists
4) Prostaglandins
5) Aldose Reductase Inhibitors
6) Angiostatic Steroids
7) Viscoelastic Solutions
8) Serotonergics
9) Biocides
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10) Blue Light Blocking Chromophores
11) Analogues of 15
Bellow there is a graph showing some of the acquisitions Nestlé have made:
Page 32 of 48
As noticed, most of the companies Nestlé has acquired are in the food industry,
but Alcon and Novartis. Such pharmaceutical companies help Nestlé diversify its
portfolio and to differentiate its companies as Stars, Question marks, Cash
cows, and Dogs.
International Strategy
Alcon has offices, headquarters, research and development facilities, and owned
subsidiaries around the world. Alcon locations are as followed:
Central and North America
o Canada, Mexico, US, Argentina, Chile, Colombia, Costa Rica, Dominican
Republic, Ecuador, Guatemala, Panama, Peru, Puerto Rico, Uruguay,
Venezuela.
Southern Europe
o Greece, Italy, Portugal, Slovenia.
Western Europe
o Austria, Belgium, France, Germany, Ireland, Spain, Switzerland, UK.
Africa
o Egipt, South Africa.
Central Asia
o Kazakhstan
Easter Asia
o China, Hong Kong, Republic of Korea, Japan, Taiwan, Vietnam.
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Southeast Asia
o Indonesia, Malaysia, Philippines, Singapore, Thailand.
Southern Asia
o India, Pakistan.
Western Asia
o Lebanon, Saudi Arabia, Turkey.
Eastern Europe
o Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic,
Hungary, Poland, Romania, Russia, Serbia, Slovak Republic, Ukraine.
Northern Europe
o Denmark, Finland, Latvia, Lithuania, The Netherlands, Norway, Sweden.
Oceania
o Australia, New Zealand
How to manage and gather information from so many places is a very
complicated task that relays on sophisticated Enterprise Resource Planning
systems (ERP), good organization, great people, and a single vision. However,
Alcon did expand so aggressively due to its International strategy layout. A closer
look at Alcon strategic locations are as follows:
Headquarters
o Fort Worth, Tx, USA
o Hünenberg, Switzerland
Research and Development Facilities
o Tokyo, Japan.
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o Irving, CA, USA
o FW, TX, USA
o Orlando, FL, USA
o Barcelona, Spain
o Schaffhausen, Switzerland
Manufacturing Plants
o Irvine, CA, USA
o Sinking spring, Pennsylvania, USA
o Huntington, West Virginia, USA
o Orlando, FL, USA
o Houston, TX, USA
o FW, TX, USA
o New Mexico, Mexico
o Sao Paolo, Brazil
o Beijing, China
o Puurs, Belgium
o Kaysersberg, France
o Schaffhausen, Switzerland
o Barcelona, Spain
As we can see in the distribution layout, the headquarters are located in the
USA and Switzerland where the two major owners are concentrated. Another factor
to consider is that in such locations; innovation, the flow of information and capital
Page 35 of 48
is high, as well as protection for intangible capital. The manufacturing facilities are
mostly located in the US, but other plants as the one located in Beijing could take
advantage of cheap labor. On the other hand the manufacturing plan in Sao Paolo,
Brazil is a strategic spot for delivering Alcon Products to different countries in
South America. The other plants in Europe are well located in Barcelona,
Switzerland, and France to deliver plenty of Alcon’s eye care product to the
European market.
The other Alcon facilities are owned subsidiaries dispersed around the globe to
foster sales, and gather information about the external environment in such
countries. Owned subsidiaries permit Alcon to have absolute control over such
facilities, and possibly to protect Alcon’s intellectual property.
Alcon follows a multidomestic strategy, because the emphasis of the company
is in differentiating its product and presenting it as a high quality drug, not as a
cheap commodity.
Even though the company’s headquarters are in the US and Switzerland, they do
business globally but think locally. They understand that in order to sell in a
different country they must partner with other physicians and institutions that
understand the market better and have information about customer preferences
and illness very important for Alcon. Alcon’s partnership program motivates and
rewards professionals from different countries that are able to supply innovating
ideas to Alcon through the internet.
Digital Business Strategy
Alcon as a giant in the pharmaceutical industry has taken part in the online
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business world. Alcon websites are very informative, such as the main Alcon’s
website in the US. Such website has from historical to financial data in a very
organized manner for its usage among the people interested in interacting with
Alcon. Other websites as the website of Alcon in Canada has a list of all Alcon’s
products as well as a section called: how to use Alcon medication, where people
can be informed about the right way of inserting drops, etc. The information is
disclosed in a step by step format. The website is made to promote Alcon’s
products on the Canadian market, and even though Alcon does not commercialize
its products by itself, such information can promote awareness of Alcon products
capabilities and thereby fostering sales on Alcon distributor’s places. On the Alcon
location’s site there are several links where people from different countries can
look job opportunities, medical education programs, distributor options, and much
other information.
Alcon taking advantage of the internet delivers its products directly to its
customers, and through its Intranet provides information to its current employees
about available positions within the company. Even though most information is
classified, it may be possible that just like other companies, Alcon utilizes its B2B
system to pull data about customer demand to avoid spikes in the consumption
market as well supply its product more efficiently. The same features are seen in
the website of Alcon in Mexico. Which is interesting is that every website is similar
and consistent with the other websites of Alcon worldwide. Although a lot of
information is confidential, it is common sense to believe that there has to be some
common place on the web where information is exchanged in an effort to
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collaborate to the creation of better drugs or surgical equipment. Since most of the
intellectual capital of Alcon is dispersed worldwide the scientists and other medical
professionals also use the internet to exchange information; thus, chats, virtual
spaces, and other tools are probably used for such purpose. Since Alcon does not
deal directly with its end-user, patients and general public, its website was built to
provide information to physicians and other customers about the benefits and
features of Alcon drugs. This makes the distribution of the products more effective,
because physicians are well informed about the drugs and medications prescribed,
and its utilization is made efficiently.
Strategic Control and Corporate Governance
Alcon Inc., it’s trying real hard to foster an ethical environment and makes sure its
strategies are followed. This fact is made clear in the company website, where
anybody can read their guidelines, code of business conduct and ethics, NYSE
compliance, compliance program, and compliance declaration. A possible
explanation about why Alcon has made such information public it’s because top
management wants to insure there is transparency in the company operations. On
the guidelines there is a clear overview of the responsibilities of the board. Part of
the guidelines referent to the role of the boar reads,
“The day-to-day management of the Company is the responsibility of the
Company's management. The primary responsibility of the Board is to
oversee and review management's performance of these functions. In
addition, the Board is responsible for the ultimate direction of the Company
Page 38 of 48
and for specific matters” (13)
Alcon’s code of conduct is very well narrated and contains rules and
guidelines for employee’s daily behavior. Its code of conduct establishes that Alcon
will comply with all rules and regulations, and employees must work in an ethical
manner in a high quality standards environment. Alcon employees must comply
with all laws while trading Alcon’s securities in the stock market. Also, the code of
conduct has explicit rules about the behavior of management and the working
environment; the working environment must be safe for the employees and the
assets of Alcon must be used for purposes of the company business.
Alcon, Inc uses a contemporary approach to strategic control, since it
constantly monitors the assumptions, premises, goals, and strategies of the
company. All of the key participants in corporate governance: shareholders,
management, and the board of directors participate together into driving Alcon to
safest waters in the business ocean. This collaboration issue is insured through the
creation of three entities:
o Audit Committee, the summary of the mission of this entity is defined as
followed,
The primary purpose of the Audit Committee (the "Committee") of the
Board of Directors (the "Board") of Alcon, Inc. (the "Company") is to assist
the Board in fulfilling its responsibility to oversee (i) management's conduct
of the Alcon Group Companies' financial reporting process (including the
development and maintenance of systems of internal accounting and
financial controls), (ii) the integrity of the Company's financial statements,
Page 39 of 48
(iii) the Company's compliance with legal and regulatory requirements and
ethical standards, (iv) significant financial transactions and financial policy
and strategy, (v) the qualifications and independence of the Company's
outside auditors, (vi) the performance of the Company's internal audit
function and (vii) the outside auditors' annual audit of the Company's
financial statements. (14)
o Compensation Committee, the summary of the mission of this entity is
defined as followed,
The purpose of the Compensation Committee (the "Committee") of the
Board of Directors (the "Board") of Alcon, Inc. (the "Company") is to (i)
facilitate the Board's discharge of its responsibilities relating to the
evaluation and compensation of the Company's executives, (ii) oversee the
administration of the Company's compensation plans, (iii) review and
determine director compensation and (iv) prepare any report on executive
compensation required by the rules and regulations of the U.S. Securities
and Exchange Commission (the "SEC"). (15)
o Nominating/ Corporate Governance Committee, the summary of the mission
of this entity is defined as followed,
The purpose of the Nominating/ Corporate Governance Committee (the
"Committee") of the Board of Directors (the "Board") of Alcon, Inc. (the
"Company") is to (i) identify individuals qualified to become Board members
and recommend such individuals to the Board for nomination for election to
the Board, (ii) make recommendations to the Board concerning committee
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appointments, (iii) review and make recommendations for executive
management appointments, (iv) develop, recommend and annually review
corporate governance guidelines for the Company and oversee corporate
governance matters and (v) coordinate an annual evaluation of the Board
and its Chairman. (16)
Alcon is dedicated to build a strong and effective culture, so it has
implemented rules, codes and rituals into Alcon’s implicit standards. For example,
employees must dress casual and inside the manufacturing facility a cloth
protector is wear by all employees. If an employee has bear, such employee must
cover it with a bear protector in order to avoid cross-contamination. With such a
dress code, employees are aware how serious Alcon is in safeguarding Alcon
products from cross-contamination. On the other hand, Alcon maintains a tight
informational control since it continuously scans and monitors the external and
internal environment of the organization through its vast number of partners in the
United States and other countries.
About the Culture, rewards, and Boundaries of Alcon:
o Culture: Alcon emphasizes product quality, and focuses on team efforts and
individual growth to achieve it.
o Rewards: Alcon rewards productivity improvements and quality control goals
achieved by rewarding its employees in a collective and individual manner.
For example, Alcon encourages collaboration and personal involvement in
the manufacturing process. During my experience as an Alcon employee, I
always looked at the employee of the month board. This time, an employee
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was rewarded with private parking for a month because she found some
products were mislabeled and such discovery saved the company of
delivering hundred of wrong products to its customers. At the collective level,
the line that produces over its achieved goal is always rewarded with
bonuses.
o Boundaries, Everyone in Alcon works towards a common goal to develop
high quality products, and to help preserve and restore vision worldwide.
1. Focusing efforts on strategic priorities , Alcon has set the following
boundaries on strategic positions,
o Global collaboration between all internal teams
o Be a research and development driven eye care company oriented
o Hire team oriented people, highly skilled, and competent in the eye
care business, all other employees are constantly trained to meet
Alcon expectations
2. Improving operational efficiency and effectiveness , In order to maintain
control on production output Alcon does the following,
o Employees must dispose of all medication that has fallen to the
floor from the production line
o Employees must not cross the blue lines painted in several areas
around the production lines without proper clothing protection in
order to avoid cross contamination
o If an error is made, do not erase it, strikethrough it, and write on the
side new data.
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Making efficient use of its culture, reward system, and boundaries Alcon is ensuring
the company not only does the right things, but also does things right.
Organizational Structure
Alcon has a divisional structure, because it is organized around products. Its
business divisions are as follows and its diagram looks like the picture bellow:
Business Divisions
o Surgical Products
o Pharmaceutical Products
o Consumer Vision Care Products
The separation of its strategic and operating control has given Alcon the ability to
respond quickly to the changes in the external environment. There are few
problems in the sharing resources process, and the development of general
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management talent has been enhanced. This strategy has succeeded because
even though products are different they are in the same category –eye care
business.
Strategic Leadership
At a moment Alcon top executives had to set a direction in the corporation, it
seems that its direction of being the first choice in eye care products has been suc-
cessfully implemented, and the growth of the company is to admire. Achieving
such success was not easy and Alcon leaders work real hard encouraging employ-
ees to embrace leader’s philosophy about taking the challenge of improving every-
day to deliver high quality and innovating products to customers. Innumerable vi-
sion centers around the states carry Alcon products, and as the demand for con-
tact lenses increases, the demand for eye care products will also increase. How-
ever, delivering high quality products is not enough to be leaders in the eye care
arena, and as leaders described, “we are guided by a culture of accountability,
steadfast commitment to relationships with eye care professionals and other doc-
tors who prescribe our products and responsible support of our employees and the
communities we serve.” (17)
Cary Rayment, Chairman, President and Chief Executive Officer of Alcon has
taken over a company with such precedent and stakeholders hope he can continue
the growth of a company that just last year had the following global revenue:
2006 Global RevenueIn 2006, total sales totaled US $4.90 billion, an increase of 12.1 percent over 2005.
o Surgical: US $2.20 billion
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o Pharmaceutical: US $2.01 billiono Consumer: US $0.69 billion
Mr. Tim Sears, the previous CEO of Alcon left Mr. Rayment a solid base in which to
work towards the future of the organization and he acknowledge it, as he entered
Alcon following the acquisition of CooperVision Surgical. The company was well de-
sign and Mr. Rayment doesn’t seem interested in making any major changes. Per-
haps the future will say in which direction the actual CEO is driving Alcon. So far,
all we can see is a bright future for a company that has plenty of capital and a
wealthy father Nestlé of Switzerland which owns approximately 75% of Alcon
stock.
Perhaps what the leaders at Alcon are doing is nurturing the organization to
maintain its rhythm. Within the organization, management has empowered em-
ployees at all levels, from the recycle man to the top executive. Everybody looks
for way to stay productive. However, Alcon managers know it is not enough to
maintain the same rhythm while the race is near the end. As managers realize pro-
duction is doing well, they want to do great, so they continuously challenge em-
ployees and reward them to find ways to improve productivity.
About individual ethics and organizational ethics, Alcon strive to reward
ethical behavior –making use of its reward power—to employees that are ethical
and hard working, but punishes unethical behavior of any kind severely –this
behavior usually is punished with employee labor termination— thus Alcon
managers also use coercive power whenever it is necessary.
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Conclusion
Even tough Alcon is a giant and has been around for approximately 62 years it is
far from being perfect. The company must strive to continually implement its
policies and keep the bonfire of Alcon’s mission alive. Definitely, Alcon knows how
to gather data and to use such data to continually improve. The leaders value
people’s contribution to the organization, and they let them know it by rewarding
its employees.
The manufacturing plants of Alcon are well organized and located at strategic
countries around the world. In addition, Alcon R&D facilities, and Headquarters
locations permit leaders efficiently keep the flow of information and distribution
among facilities. The company it is in constant economic growth and provides good
returns to shareholders and stockholders.
Another characteristic of Alcon is that the company has high intellectual
capital which is important in the development of innovating products. Also, the fact
that Alcon has a differentiation strategy allows Alcon to receive good revenues due
to its premium prices, and thanks to the highly competitive people Alcon has at the
top it seems the company will be afloat for as long as the board of directors keep
picking the right person to lead Alcon.
Alcon, Inc. has a lot of capital which is an advantage that with permit the
corporation not to miss future financial opportunities, and its strict and well defined
corporate governance will keep the company free from the hazards of unethical
behavior among top executives. In addition, Alcon employees will keep
contributing to the success of the organization, because its leaders reward
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innovation at the individual and collective level.
All in all, Alcon has been successful because it has been around with the same
mission from the beginning with the right people, at the right places and with the
right product.
Words Cited
1: <http://invest.alconinc.com/phoenix.zhtml?c=130946&p=irol-govconduct>
2: < http://stocks.us.reuters.com/stocks/ratios.asp?rpc=66&symbol=ACL>
3: < http://www.alcon.com/research-development/>
4: <http://finance.yahoo.com/q/co?s=ACL>
5: < http://www.alcon.com/exclude/transcript-commitment.asp>
6: < http://www.alcon.com/alcon-locations/us-benefits.asp>
7: <http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=
news_view&newsId=20070716006179&newsLang=en>
8: <http://www.alcon.com/alcon-careers/learning-development.asp>
9: < http://www.alcon.com/eye-health/educational-efforts.asp>
10: <http://www.hoovers.com/alcon/--ID__89515--/free-co-factsheet.xhtml>
11: < http://www.alcon.com/research-development/>
12: < http://www.alcon.com/research-development/partnership-successes.asp>
13: < http://invest.alconinc.com/phoenix.zhtml?c=130946&p=irol-govguidelines>
14: < http://invest.alconinc.com/phoenix.zhtml?c=130946&p=irol-
govCommittee&Committee=1300>
15: < http://invest.alconinc.com/phoenix.zhtml?c=130946&p=irol-
govCommittee&Committee=1414>
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16: <http://invest.alconinc.com/phoenix.zhtml?c=130946&p=irol-
govCommittee&Committee=1413>
17: <http://www.alcon.com/investors-media/press-kit.asp>
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