Alcon Inc

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.

Page 23 of 48

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,

Page 24 of 48

“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.

Page 25 of 48

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

Page 26 of 48

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

Page 27 of 48

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

Page 28 of 48

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.

Page 29 of 48

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

Page 30 of 48

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

Page 31 of 48

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.

Page 33 of 48

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.

Page 34 of 48

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

Page 36 of 48

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

Page 37 of 48

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

Page 40 of 48

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

Page 41 of 48

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.

Page 42 of 48

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

Page 44 of 48

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.

Page 45 of 48

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

Page 46 of 48

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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