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Strategic Management Project Report
On
Alcon Laboratories, Inc.
FACULTY
Engr. Yousuf Ali
Lecturer – PAF KIET
SUBMITTED BY:
Beenish Akhter (52648)
M. Usman Qureshi (52059)
DATE
April 18th , 2010
PAKISTAN AIR FORCE KARACHI INSTITUTE OF ECONOMICS AND
TECHNOLOGY
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LETTER OF AUTHORIZATION
Dear Reader, Date: 18 -04-2010
The report prepared on “ALCON LAB INC.”, was given by Sir Yousuf Ali, supervisor of our report at PAF-KIET. This report covers the strategic management part of “ALCON LAB INC.”. We took the responsibility to complete the report in the assigned time.
Sincerely,
BEENISH AKHTER (52648)M. USMAN QURESHI (52059)
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LETTER OF TRANSMITTAL
SIR YOUSUF ALI Date: 18 -04-2010
Faculty
PAF KIET
Karachi.
Dear Sir,
Here is the report concerning “ALCON LAB INC.” which you have assigned us. This report is now finished, and it is attached to this cover memorandum. This report is the part of our STRATEGIC MANAGEMENT course.
As a result of our research, we have come to appreciate the superior work being done. We have done an entire investigation over the past few weeks. We have implemented all the knowledge that we have gained during the course by applying it on the chosen organization.
If you want any additional information, we would be pleased to meet with you.
Cordially,
BEENISH AKHTER (52648)M. USMAN QURESHI (52059)
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LETTER OF ACKNOWLEDGEMENT
Dear Reader, Date: 18 -04-2010
First of all thanks to ALLAH (SWT), the most Gracious and the most Merciful. He (SWT) provided us this opportunity to study in this prestigious institution.
We would like to offer our sincere thanks to our respected teacher Sir Yousuf Ali, who is well known facade for his vast expertise. His guidance in our project on “ALCON LAB INC.”, further provides us a great opportunity to learn the implementation of the courses. We believe that this experience have not only added value to our knowledge but have also strengthen the core knowledge of our entire educational career. It was his dedication in supervising the course that made us study and learn practical life matters in a well-defined manner. He, with his vast experience and knowledge, lead us in every step during the course and also in the preparation of this report.
We would again like to take this opportunity and express our acknowledgement distinctly to Sir Yousaf Ali for directing us about the technical aspects of the report.
Sincerely,
BEENISH AKHTER (52648)M. USMAN QURESHI (52059)
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T ABLE OF C ONTENTS
S.No Topic Page No.
01 Title 01
02 Letter of Authorization 02
03 Letter of Transmittal 03
04 Letter of Acknowledgement 04
05 Executive Summary 07
06 Alcon at Glance 08
07 People 09
08 Research & Development 09
09 Business Focus 10
10 Corporate Responsibility 11
11 Corporate Governance 12
12 Environmental Management & Safety 13
13 Core Competences 14
14 Alcon’s Values 16
15 Workplace & Culture 17
16 Alcon’s Product Categories 18
17 Alcon’s Organogram 23
18 Industry Analysis 25
19 PORTER’s Analysis for Industry 27
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20 Financial Analysis 28
21 Proposed Vision Statement 29
22 Proposed Mission Statement 29
23 Mission Statement Evaluation 30
24 SWOT Analysis 31
25 Alcon’s Long-term Objectives 33
26 IFE Matrix 34
27 EFE Matrix 35
28 CPM Matrix 36
29 TOWS Matrix 37
30 IE Matrix 38
31 Grand Strategy Matrix 39
32 QSPM 40
33 Alternative Strategies 42
34 Choosing Best Strategies 44
35 Conclusion 46
36 References 47
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EXECUTIVE SUMMARY
Alcon Laboratories, Inc. is one of the leading ophthalmic pharmaceuticals company in
Pakistan. It focuses its activities on major therapeutic and surgical ,Ophthalmic area. Its
portfolio of marketed products includes several medicines in the areas of Antibiotic,
Anti-Glaucoma, Dry eye management, Surgical IOL’s and Consumer Vision Care . In
Pakistan, Alcon Laboratories, Inc. markets Vigamox, Systane, Travatan, Tobradex,
acrysoft IOL, Torec, among other products.
This report aims to cover a thorough analysis of the strategic management of Alcon
Laboratories, Inc. It also included the study of ophthalmic pharmaceutical industry of
Pakistan, major competitors in the industry and various trends with respect to market
share and growth.
The complete analysis of the company’s long-term is provided, based on which the future
strategies are selected.
The above situation and analysis reveals that Alcon Lab Inc. has some major competitive
edge to be successful in the market, including strongest R&D and high production
capabilities. Keeping in view the all factors, the company should adopt “Intensive
Strategies” as intensive efforts are required to maintain the competitive position. The
alternative strategies are “Market Development”, Market Penetration” and Product
Development”.
The major objectives of the company are to gain market share through increasing sales
and introducing new products by utilizing its strong R&D capabilities. Keeping in view
all the e analysis, “Market Penetration” and “Product Development” strategies are
suggested for implementation.
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ALCON AT-A-GLANCE
Founded in 1945, Alcon Laboratories, Inc. traces its roots back to two pharmacists,
Robert Alexander and William Conner, who opened a small pharmacy in Fort Worth,
Texas, and combined the first syllables of their last names to create the name Alcon.
Majority owned by Nestlé S.A. and incorporated in Hünenberg, Switzerland with U.S.
operations based in Fort Worth, Texas, our team of over 15,000 dedicated employees
worldwide develops, manufactures, and distributes hundreds of eye care products in more
than 180 countries. This seasoned and diverse group of people, who encircle the globe,
In March 2002, Alcon conducted a partial initial public offering (IPO) on the New York
Stock Exchange (NYSE). Nestlé still owns approximately 75 percent of the company.
Alcon's core business is centered on three key divisions – Surgical, Pharmaceutical and
Consumer Vision Care. As of 2008, sales reached US$6.3 billion.
We conduct our business from Alcon offices located in 75 countries around the world in
regions including Canada and the Far East; Europe, Middle East and Africa; Latin
America and the Caribbean; and the United States.
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PEOPLE
Although the average tenure of Alcon employees is just nine years, it is not uncommon to
find people who have worked for Alcon for 25 years or more. The dedication and
commitment is contagious – often when people arrive, they see no reason to leave.
Instead, they see several reasons to stay. Alcon employees are constantly being
challenged and rewarded for excellence. It's easy to be proud of who we are and what we
do. More importantly, it's easy to be proud of how we do it. We don't just enhance,
preserve and restore vision; we foster an Alcon family of over 15,000, around the world
who dedicate themselves to this same mission.
RESEARCH & DEVELOPMENT
Alcon's R&D organization is the largest of its kind in the world consisting of more than
1,350 employees, including approximately 300 individuals who are M.D.s, O.D.s or
Ph.D.s. Our researchers, scientists and engineers work in one of five state-of-the-art
research facilities in the U.S., Spain and Switzerland and partner with leading academic
institutions, other healthcare companies and individual physicians to ensure that our
products are among the best in eye health.
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BUSINESS FOCUS
Alcon's core business is centered on three key divisions – Surgical, Pharmaceutical and
Consumer Vision Care.
1. Surgical
Alcon offers the industry's most comprehensive portfolio of ophthalmic surgical
products, enabling surgeons to achieve optimal results for their patients. As the
worldwide leader in ophthalmic surgical products, Alcon occupies the premier position in
surgical suites across the globe and manufactures and markets products for all ocular
surgical procedures. As the developer and manufacturer of the worlds' most preferred line
of intraocular lenses, AcrySof®, which is implanted globally in 60 percent of all cataract
patients, Alcon is redefining vision for the aging population.
2. Pharmaceutical
Alcon continues to build its position as the worldwide leader in pharmaceuticals for the
eye by continuing to advance treatments for diseases such as glaucoma, infection and
allergy, while also expanding focus into relatively unknown areas such as, macular
degeneration, diabetic retinopathy and other sight-threatening diseases. Our intraocular
pressure (IOP)-lowering TRAVATAN Z® Solution is changing the treatment of
glaucoma, still a leading cause of blindness today.
3. Consumer Vision Care
As the world's second largest manufacturer of consumer vision care products, Alcon
continues to produce innovative products to meet the eye care needs of consumers
globally. Our consumer vision care product line includes contact lens care products such
as our line of OPTI-FREE® contact lens solutions, as well as a full line of artificial tears
that provide comfort to individuals suffering from dry eye. Moreover, our consumer
vision care allergy eye drops and ocular dietary supplements are formulated to enhance
eye health as people age.
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CORPORATE RESPONSIBILITY
Community & Humanitarian Involvement:
We recognize we offer what many people need, whether or not they can afford it or even
know it exists. As a result, a significant part of our culture revolves around our
responsibility to the community and to humanity as a whole. Many of our charitable
endeavors involve services for, and support of, the communities in which we operate and
live. We also offer a patient assistance program to assist those in need of our therapies
but who lack the resources to pay for them.
Commitment to Quality:
We consider quality to be much more than simple conformance to product or program
specifications and requirements. We seek to continually improve all aspects of our
business processes and quality management systems. We strive to comply with the
highest level of regulatory and statutory requirements, and we consistently meet or
exceed these standards in each market. And we recognize that the global market can be a
complicated one with local controls and requirements. As a global company, we are
diligent in ensuring compliance in each of our global markets.
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CORPORATE GOVERNANCE
At Alcon, we believe that how we conduct business says a lot about our company – thus
we strive to operate with a high level of honesty and transparency. This commitment to
being transparent, upfront and forthright has become the foundation for all that we do.
Dedication as a Corporation:
Alcon is dedicated to continually earning the trust of
patients and physicians who look to us as an industry
leader in protecting, preserving and restoring sight;
therefore we are all committed to ensuring that the
highest standards of ethics are followed in the conduct of business each and every day.
By practicing sound principles of corporate governance, Alcon is ensuring positive future
growth and continued success on a corporate level.
Commitment to Integrity: At Alcon, we are committed to creating and maintaining
ethical, trust-centered relationships with the healthcare professionals and patients we
serve. Because Alcon manufactures both pharmaceutical and medical device products,
our U.S. compliance program and policies are designed in accordance with both the
Pharmaceutical Research and Manufacturers of America Code on Interactions with
Healthcare Professionals (the "PhRMA Code") (PhRMA) and the AdvaMed Code of
Ethics on Interactions with Health Care Professionals.These Codes provide standards for
transparent, ethical interactions between pharmaceutical and medical technology
companies and healthcare professionals.
Creating Shared Value: Alcon is majority owned by Nestlé S.A. and as such we
conduct our business in accordance with the Nestlé philosophy of creating shared
value and corporate social responsibility. "Creating Shared Value is a very different
approach to corporate social responsibility (CSR), because it is not focused on meeting a
set of standard external criteria, or on philanthropy." Mark Kramer, Harvard University
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ENVIRONMENTAL MANAGEMENT & SAFETY
Alcon is committed to conducting our business
worldwide in compliance with our own internal
expectations as well as those of external regulatory
agencies. We are committed to maintaining the safety
of the workplace and our employees while minimizing
environmental impact.
Environmental Policies & Principles:
Managerial and employee adherence to our policies and principles regarding
environmental management allows us to best serve the environment, the public and our
employees.
ISO 14001;
The international environmental management standard, ISO 14001, was revised in 2004
and Alcon has achieved certification at all of our manufacturing and Research &
Development facilities.
REACH;
REACH (Registration, Evaluation, Authorization of Chemicals), a European Community
Regulation passed in 2007, focuses on chemicals and their safe use. Alcon is committed
to full compliance with the obligations included in the REACH Regulation 1907/2006.
Safety Practices:
By monitoring emerging developments in safety worldwide, Alcon has created guidelines
and practices that will afford us continual improvement in our work environments and
employee work habits.
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CORE COMPETENCIES
Research & Development:
Our financial commitment to research and development surpasses all others in the eye
care industry. Annually we invest up to 17 percent of our pharmaceutical revenue and
nearly 10 percent of our overall revenue back into research efforts totaling US$3 billion
over the last five years. This investment will grow to at least US$3 billion over the next
five years. To put this in perspective, we invest more in research and development than
any other eye care company worldwide.
Our R&D organization is driven by nearly 1700
dedicated researchers, scientists, engineers and support
staff located in five state-of-the-art facilities in the
United States and Europe. Alcon's R&D organization
includes hundreds of individuals who are either M.D.s,
doctors of optometry or Ph.D.s and have extensive experience in the fields of
ophthalmologic and optometric science.
Manufacturing:
Alcon employs approximately 5,800 individuals to manufacture
our products at 15 plants around the world. We organize our
manufacturing facilities along product categories, with most plants
primarily dedicated to manufacturing either surgical equipment
and devices or pharmaceutical and contact lens care products. Our
functional division of plants reflects the unique technical skills
required of employees in these two manufacturing environments
as well as the differences in regulatory requirements governing the
production of surgical devices and pharmaceuticals.
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We operate a continuous improvement program that involves activities such as quality
improvements and cycle-time reductions. Alcon also makes sure to maintain Good
Manufacturing Practices through year-round training of our direct labor manufacturing
staff. Our professional employees are trained in various aspects of management,
regulatory and technical issues through a combination of in-house seminars, local
university classes and trade meetings.
Sales:
Alcon is deeply committed to developing strong
relationships with customers. We are not successful
unless physicians and patients are successful in
achieving the best possible outcomes. Our relationship
philosophy is a direct result of this realization. This
philosophy begins with identifying and meeting customer needs, and develops into
coaching health care providers in the use of our products and providing additional
educational resources so they can provide their patients with the best care.
As a result, Alcon is present in every significant market in the world where
ophthalmology is practiced and, currently, our products are sold in more than 180
countries. We conduct our sales and marketing activities through more than 75 offices
around the world.
Every member of our global sales team undergoes rigorous training on all major eye
conditions and treatments with special attention on surgical systems and devices or
pharmaceutical and consumer vision care products. Additionally, our sales force provides
Alcon's customers with access to clinical education programs, technical service
assistance, practice management programs and surgical training sites located around the
world.
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ALCON’S VALUES
IntegrityWe conduct our business ethically and legally while creating a safe and secure workplace.
InnovationWe are focused on discovering new advances that will lead to improved diagnosis and treatment of eye diseases and conditions.
QualityWe strive for excellence in developing and manufacturing differentiated products to improve vision and eye health.
CommitmentWe are dedicated to providing unmatched support and service to all customers and patients, as well as serving and enriching the communities where we live and work.
RespectWe promote a culture that fosters fairness and open communication among employees and values individual differences.
PerformanceWe are passionate about advancing the preservation, restoration and enhancement of sight around the world.
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WORKPLACE & CULTURE
By focusing on team efforts and individual growth, Alcon fosters an environment where
the accomplishments of a single person can affect many in a positive way. Alcon
employees work hard to find ways to better themselves and their communities –
producing positive results while providing those who work at Alcon with a larger sense
of purpose.
Community Involvement:
Many of Alcon's commitments involve support for the local communities in which we
operate and live. This includes support of employee volunteerism, school programs and
other deserving local non-profit organizations.
Training & Development:
Alcon believes that investing in the development and training of its employees is a step
towards investing in the advancement and future success of eye health worldwide.
Health & Wellness:
Alcon is in the business of providing a better quality of life for individuals using our
products. This quality commitment extends to our employees as well – thus the overall
health and well being of our employees is paramount.
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ALCON’S PRODUCT CATEGORIES
(1) Pharmaceutical Products
Alcon is the largest ophthalmic pharmaceutical company in the world. Our
pharmaceuticals are used globally every day to treat millions of people who suffer from
eye diseases and conditions such as glaucoma, eye infection, eye inflammation, eye
allergies and ear infections. We've highlighted some of our flagship pharmaceutical
products that are revolutionizing eye care and eye health.
A. Eye Allergies
Eye allergies, also known as allergic conjunctivitis, often result in red, swollen, itchy
eyes that create a range of annoyances from mild to severe. These allergies can be caused
by a number of situational or environmental factors – animal hair and dander, and pollen
from trees, grass and other plants.
B. Eye Inflammation
Eye inflammation most commonly occurs in response to eye surgery, which while
necessary, can upset the delicate tissue of the eye. It can also occur as a result of
infection.
C. Glaucoma
Glaucoma is a leading cause of blindness, which usually occurs as a result of elevated
intraocular pressure (IOP). Glaucoma is a disease without noticeable symptoms.
Consequently it may be diagnosed late and patient compliance with treatment may be
poor. Glaucoma can easily be detected early, however, through a standard eye exam
before there is any loss of vision. Today there are convenient treatments that can lower
intraocular pressure (IOP).
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D. Dry Eye
Dry eye describes a disorder that causes inadequate wetting of the eye. Millions of people
worldwide suffer from dry eye, making this a very common condition. It usually
manifests itself as dryness, itchiness or scratchiness, burning or stinging, tired eyes and
sometimes includes sensitivity to light. In short, it feels like there's something in the eye
causing general discomfort. Dry eye can occur as a result of the normal aging process,
exposure to air pollution or other environmental factors, or in conjunction with disease.
E. Eye Vitamins
Alcon's ICAPS® Eye Vitamins include specialized formulas of antioxidant vitamins,
minerals, and carotenoids which are believed to be important to vision and eye health.
Various ICAPS® formulas contain vitamins with lutein and zeaxanthin, nutrients that
occur naturally in the macula and which are believed to help protect the eye by reducing
oxidative stress and absorbing free radicals before they cause damage.
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(2) Surgical Products
Alcon is the worldwide leader in ophthalmic surgical products, ranging from cataract and
refractive surgery and intraocular lenses to surgeries requiring vitreoretinal systems,
sutures, needles and knives. More eye care professionals rely on our ocular surgical
products than any other company in the world. Highlighted below are some of our key
products.
A. Cataract Surgery
Cataracts, the leading cause of treatable blindness, create vision cloudiness and develop
for a variety of reasons, but most commonly result as part of the aging process. However,
they can also be caused by long-term ultraviolet (UV) light exposure, trauma to the eye
and as secondary effects of diseases such as diabetes. Cataracts typically require surgical
removal and replacement of the eye's lens. We offer products in all areas of cataract
surgery, including equipment for lens removal and insertion; intraocular lenses (IOLs) to
replace the eye's natural lens; solutions and viscoelastics to protect the eye; and sterile
surgical kits to streamline surgery.
B. Vitreoretinal
Vitreoretinal surgeries treat conditions of the retina such as retinal detachment,
intraocular tumors, severe eye trauma and ocular complications of diabetes or sickle cell
disease.
C. Refractive Surgery
Refractive surgery is performed to correct vision impairments such as myopia,
hyperopia and astigmatism to reduce dependency on eye glasses and contact lenses.
Laser surgery is the most common form of refractive surgery today.
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(3) Consumer Vision Care Products
Alcon is the largest manufacturer of contact lens care products in the world and is widely
known for its artificial tears for dry eye therapy and eye vitamins to help protect eye
health. While we manufacture and sell dozens of eye care products around the globe,
some of our more widely used products are highlighted here.
A. Contact Lens Care
The surface of a contact lens may develop dry patches and protein deposits, especially
late in the day. These dry patches interact with the eyelids, causing a scratchy, gritty,
almost itchy sensation. They also interact with tear proteins, which can make the lens
dirty. The dry spots can actually repel rewetting drops, which is why rewetting drops may
not always be an adequate fix. With all the additional eye care needs of contact lens
wearers, it is important to select the right contact lens solution.
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ORGANOGRAM
Strategic Management Project Report on Alcon Laboratories, Inc.
ALCON’S CEO
ALCON’S CEO
MARKETING HEAD
MARKETING HEAD
MANUFACT-URING HEAD
MANUFACT-URING HEAD
SUPPLY CHAIN HEAD
SUPPLY CHAIN HEAD
HR HEAD
HR HEAD
SALES HEADSALES HEAD
FINANCE HEAD
FINANCE HEAD
R & D HEADR & D HEAD
UNDER EVERY HEAD OF DEPARTMENTS THERE ARE 5 REGIONSUNDER EVERY HEAD OF DEPARTMENTS THERE ARE 5 REGIONS
CAFECANADA,
AUSTRALIA, FAR EAST
CAFECANADA,
AUSTRALIA, FAR EAST
LACARLatin, Caribbean
LACARLatin, Caribbean
EURMEAEurope, Middle East,
Africa
EURMEAEurope, Middle East,
Africa
USAUSAJAPANJAPAN
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ORGANOGRAM OF PAKISTAN
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COUNTRY MANAGER
(OPTHALMIC)
BUH PHARMA(PHARAMA MARETING
AND SALES)
ADMINSTRATI-VE
HEAD
BUH SURGICAL(SURGICAL
MARETING AND SALES)
RSMWEST
6 FIELD OFFICERS
RSM SOUTH
FINANCE STAFF
RSM EAST
RSMWEST
6 FIELD OFFICERS
RSM NORTH
FINANCE HEAD
HR HEAD
RSM EAST
RSM NORTH
HR STAFF6 FIELD
OFFICERS6 FIELD
OFFICERS
RSM SOUTH
6 FIELD OFFICERS
6 FIELD OFFICERS
6 FIELD OFFICERS
6 FIELD OFFICERS
PRODUCT MANGER SURGICAL
PRODUCT MANGER PHARMA
IT HEAD
IT STAFF
NOTE:
BUH =BUSINESS UNIT HEAD
RSM = REGIONAL SALES MANAGER
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INDUSTRY ANALYSIS
The global ophthalmic pharmaceutical industry offers innovative, automated and quality
ophthalmic devices and equipment to optometrists, ophthalmologists and optical retailers.
This industry has a total size of US $ 3.25 billion. Eyewear sector is considered to be one
of the largest markets of this whole ophthalmic instruments industry. The market for
ophthalmic instruments is occupied by variety of products such as clamps, retractors,
needle holder, vasectomy devices, hooks, forceps, disposable, suture rings, needles,
blades, knives, rotators, picks, manipulators, spatulas and retractors. Generally,
ophthalmic instruments are very costly and require careful cleaning, lubrication and
handling. Stainless steel is the most common material used for making these instruments
and other materials that can also be used includes chrome, nickel, aluminum, or rubber.
Driven by demographic trends, such as an increasing aged population, the global
ophthalmic pharmaceutical market is set to become a serious growth area experiencing a
compound annual growth rate of 11.11 per cent to 2012.
The Ophthalmic pharmaceutical market is divided into six major diseases.
Glaucoma
Age-related macular degeneration
Dry eye syndrome
Ocular allergy
Ocular inflammation
Ocular infection
With an increasing aged population and unmet medical needs this market is set to grow
rapidly, Eye diseases such as cataract, glaucoma, diabetic retinopathy and age-related
macular degeneration are increasingly important in the general scope of medical practice.
Consequently, at the International level and National level, Governments are promoting
ophthalmology education for medical students through a universally applicable
curriculum. Ophthalmic patient care services are provided within a broad range of eye
and healthcare programs. For efficacy and efficiency, the ophthalmologist is in
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continuous communication with para-ophthalmic vision specialists and with physicians in
related medical specialties.
Recently The ICO and ICO Foundation convened an Ophthalmology Resident Program
Directors Course in Lahore, Pakistan on February 27–28, 2007. With Dr. M. Daud Kahn
(Pakistan), Chair, and Dr. Karl C. Golnik (United States), Co-Chair, the program was
coordinated with the Asia-Pacific Academy of Ophthalmology and endorsed by the
Ophthalmological Society of Pakistan and Pakistan Association of Professors of
Ophthalmology. With a multinational faculty, the Course featured extensive interactions
among the more than 30 Program Directors and educators representing Pakistan,
Afghanistan, Bangladesh, China, India and Maldives.
Eye care in Pakistan is still in the early stages of development. Widespread poverty and a
weak health system underlie the poor health status of the population. Government
funding continues to be minimal, equal to around 3% of GDP and achieves little more
than maintaining the status quo, However as the economy improves, the level of spending
may well begin to rise. The Pakistani ophthalmic market remains beset with difficulties.
Strict government control over pricing has made many drugs uneconomical, with the
result that they either become available only on the black market at inflated prices, or
disappear completely. In this environment, manufacturers, both local and foreign-owned,
have proved unable to generate the profits needed for capital investment. This is not
helped by a regulatory system best described as rudimentary. In the wake of all these
potential threats, the organizations existing in the industry will have to be bringing in
internal efficiencies and make their Supply Chain stronger. Pakistan remains an
"Outsider" in the global community of nations providing some form of intellectual
property protection for ophthalmic pharmaceutical products. At present, there is no
product patent protection in Pakistan, but only protection for processes. It is incumbent
upon the patent holder in Pakistan to prove that the "pirate" is using the same process as
the inventor, which is practically impossible in the current Pakistan legal environment.
One of the most important current issues for our industry in Pakistan is that this piracy
continues to inflict losses on the research-based ophthalmic pharmaceutical industry.
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PORTER ANALYSIS OF FIVE FORCES
Bargaining Power of Buyers: LOW
The unique feature of ophthalmic industry is that the end user of the product is different
from the influencer (read doctor). The consumer has no choice but to buy what doctor
says. However, when we look at the buyer's power, we look at the influence they have on
the prices of the product. In ophthalmic industry, the buyers are scattered and they as
such does not wield much power in the pricing of the products. However, government
with its policies plays an important role in regulating pricing.
Bargaining Power of Suppliers: LOW
The ophthalmic industry depends upon several organic chemicals. The chemical industry
is again very competitive and fragmented. The chemicals used in the ophthalmic industry
are largely a commodity. The suppliers have very low bargaining power and the
companies in the ophthalmic industry can switch from their suppliers without incurring a
very high cost. However, what can happen is that the supplier might go for forward
integration to become an ophthalmic company.
Barriers to Entry: MODERATE
Ophthalmic industry is one of the not easily accessible industries for an entrepreneur in
Pakistan. The capital requirement for the industry is very high, although creating a
regional distribution network is easy, since the point of sales is restricted in this industry
in Pakistan. However, creating brand awareness and franchisee amongst doctors is the
key for long-term survival. Also, quality regulations by the government may put some
hindrance for establishing new manufacturing operations. Going forward, the impending
new patent regime will raise the barriers to entry. But it is unlikely to discourage new
entrants, as market for generics will be as huge.
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Threat of Substitutes: MODERATE
This is one of the great advantages of the ophthalmic industry. Whatever happens,
demand for ophthalmic products continues and the industry thrives. One of the key
reasons for high competitiveness in the industry is that as an ongoing concern,
ophthalmic industry seems to have an infinite future. However, in recent times, the
advances made in the field of eye care technology, can prove to be a threat to the
synthetic ophthalmic industry.
Competitive Rivalry: HIGH
Pressure of competitive rivalry in ophthalmic pharmaceutical industry is high because
Alcon is at top Position and there are 3 rivals Rimigton Pharmaceutical, Novartis
Pharmaceutical and Berrtt Hodgson( Allergan) fights of for Top Position.
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FINANCIAL ANALYSIS
The Alcon’s profitability is in decreasing trend as from year 2008 to year 2009. Analysis
of sales reveals that the sales growth of Alcon is decreasing by 18 % from year 2008 to
year 2009 in Pakistan. But as it’s mentioned the Alcon is International Company so when
we convert Alcon’s profit from Rupees to Dollar it not gives significant value due to
devaluation of Rupee.
The expenses have grown by 5% as compared to previous years. The net income of
Alcon Lab Inc. have marginal increase of year 2009 as compared to year 2008, this
marginal increase is due to the orders which was made in year 2008 and completed in
year 2009 have more dollar value as compare to year 2008.( dollar value increase in
2009). Over all the financial performance of Pakistan with in a CAFÉ region is low. In
contrast to other 4 regions, namely Japan, USA, LACAR, EURMEA; CAFÉ have
growing trend.
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PROPOSED VISION & MISSION
Vision:
To make Alcon the most trusted eye care company worldwide and the first choice of eye
care professionals and their patients.
Mission:
Alcon has one mission to discover and develop in a way eye care products that improve
the quality of life by helping people see better. We accomplish this by partnering with
eye care professionals around the world to advance the treatment of eye disease and help
people experience the best vision possible. We are committed to conducting all of our
business activities to the highest ethical and legal standards and are dedicated to quality
and continuous improvement in everything we do. We seek significant return to our stock
holders based on continued pursuit of excellence and creating career opportunities for our
employees.
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MISSION STATEMENT EVALUATION
The proposed mission statement, below, includes all the elements of a mission statement:
Elements Yes/ No
1. Customers Yes (eye care professionals)
2. Product/ services Yes (eye care product)
3. Markets Yes (around the world)
4. Concern for growth Yes (seek significant return to all our stockholders)
5. Technology Yes (advanced treatment of eye disease)
6. Philosophy Yes(improve the quality of life by helping people to see better)
7. Self-concept Yes (continuous improvement in everything we do)
8. Concern for public image Yes (highest ethical and legal standards)
9. Concern for employees Yes (career opportunities)
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SWOT ANALYSIS
Strengths:
1. Offering a wide range of products in three major ophthalmic areas: Surgical,
pharmaceutical and Consumer Vision care.
2. Providing a variety of Original Research.
3. Providing the highest standard of quality and innovative ophthalmic products to the
customers.
4. Emphasis on the Health & Safety of workers and the protection of the environment.
5. Strong Research & Development function having the largest number of1350
employees including 300 individuals who are M.D.s, O.D.s Ph.D.s who work in one
of the five state of art research facilities.
6. Strong distribution center
7. Effective and efficient Research and MIS software used.
8. Highly motivated employees
9. Strong and trained marketing/sales team
10. Emerging markets expanded to 18.3% of total sales from 15.5%
11. Continued to incrementally launch key products in new market
12. Increased focus on employee development and succession planning to support a
robust leadership pipeline and talent for Alcon’s future.
13. Alcon’s PATANOL® is the world's leading prescription eye drop.
14. Alcon is the worldwide leader in ophthalmic surgical products, ranging from
cataract and refractive surgery and intraocular lenses to surgeries requiring
vitreoretinal systems, sutures, needles and knives. And is the largest pharmaceutical
company in the world having top 15 products of pharmaceutical.
15. Alcon is the largest manufacturer of contact lens care products in the world and is
widely known for its artificial tears for dry eye therapy and eye vitamins to help
protect eye health.
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Weaknesses:
1. Lack of internal control over sales force resulting in declining sales trend over last
two years in Pakistan (CAFE).
2. Failed to gain FDA approval of Patanol in 2009.
3. Sales people of Pakistan lacks skills of communication and interpersonal.
Opportunities:
1. High market growth of 12% per annum.
2. Highly competitive market comprises of both MNCs and national corporations.
3. Under-developed Healthcare industry in Pakistan with a weak health system
underlying the poor health status of the population.
4. Growth trend of private sector health centers and hospitals in the country, creating
health awareness and medical facilities.
5. Internet- providing more advanced facilities for advertising of products.
Threats:
1. The multinationals are facing threat due to the trend of increasing market share of
national corporations over the past years. Major contribution to this threat is from
Rimigton pharmaceutical and berrtt hodgson pharmaceutical .
2. No product patent protection in Pakistan.
3. Generic products at cheaper prices. Piracy continues to inflict losses on the research-
based pharmaceutical industry. .
4. Due to poverty and unawareness of health issues, the patients are inclined towards the
cheaper generic products in the market, compromising the quality issues.
5. Strict government control over pricing. No increase in prices of drugs over the last 07
years.
6. Devaluation of Pakistan’s currency over the years.
7. Political uncertainty and Law-n-order issues of Pakistan causing a serious threat for
multinationals for their future growth and investment in the country.
8. Strong media advertising by competitors.
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LONG-TERM OBJECTIVES
The long-term objectives of the company, targeted to be achieved within next five years,
are:
1. To sustain leadership as the 1st largest ophthalmic company of Pakistan with a market share 35.5% by enhancing access to advance way of treatment of eye disease in next 2 to 3 years.
2. To gain the organic sales growth rate in all key businesses of more than 8.3% in the Pakistani market.
3. To sustain the market leadership in Surgical and pharmaceutical groups in Pakistan in next 5 years.
4. Work on the interpersonal skill, selling skills, soft and hard skills, and communication skills of Sales executive and ensure 100% improvement in next 2 to 3 years.
5.100% Re-evaluate comprehensive Target List for partnering opportunities by
therapeutic area and mechanism of action within 2 to 3 years.
6. To become the industry leader in introducing new Ophthalmic, pharmaceutical,
surgical and consumer vision product in next 3 to 4 years.
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INTERNAL FACTOR EVALUATION METHOD (IFE)
INTERNAL FACTOR EVALUATION MATRIX
Key Internal FactorsWeight
Rating
Weighted Score
Strengths
Providing a variety of Original Research
0.10 4
0.40
Emerging markets expanded to 18.3% of total sales from 15.5%
0.10 3
0.30
Providing the highest standard of quality products
0.10 4
0.40
Continued to incrementally launch key products in new market
0.05 3
0.15
Emphasis on the Health & Safety of workers
0.05 4
0.20
Strong distribution center
0.10 4
0.40
Effective and efficient Research and MIS software used
0.05 2
0.10
Highly motivated employees
0.10 3
0.30
Strong and trained marketing/sales team
0.10 3
0.30
Increased focus on employee development and succession planning
0.10 4
0.40
Weaknesses
Failed to gain FDA approval of Patanol in 2009
0.04 3
0.12
Sales people of Pakistan lacks skills of smooth communication
0.05 2
0.10 Lack of internal control and declining sales trend over last two years in Pakistan
0.06
1 0.06
TOTAL 1.00
3
.23
Strong IndustryRating Scale4 = Major Strength3 = Minor Strength2 = Minor Weakness1 = Major WeaknessInterpretation<2 = Weak Industry Presence>2 - 3 = Average Industry
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>3 = Strong Industry
INDUSTRY ANALYSIS: EXTERNAL FACTOR EVALUATION (EFE- MATRIX)
EXTERNAL FACTOR EVALUATION MATRIX
Key External Factors WeightRating
Weighted Score
Opportunities
High market growth of 12% per annum
0.15 4
0.60 Highly competitive market comprises of both MNCs and national corporations
0.15
3 0.45
Under-developed Healthcare industry in Pakistan with a weak health system
0.15
3 0.45
Growth trend of private sector health centers and hospitals in the country
0.10
3 0.30
Internet- providing more advanced facilities for advertising
of products.
0.20 4
0.80
Threats
Strict government control over pricing
0.05 3
0.15
No product patent protection in Pakistan
0.10 3
0.30
Generic products at cheaper prices
0.10 2
0.20
TOTAL 1.00
3.25
Company Completely Aware and taking full actionRating Scale4 = Superior3 = Above Average2 = Average1 = PoorInterpretation<2.4 = Company is not taking any action2.5-3.20 = Company Aware, Taking Some Action>3.20 = Company Completely Aware and taking full action
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THE COMPETITIVE PROFILE MATRIX ( CPM)
CPMWeig
ht
Alcon Novartis Rimigton
Critical Success Factor Rating
Extended
Rating
Extended
Rating
Extended
Advertising 0.05
3 0.15 4 0.20 3 0.15
Effective Distribution 0.15
3 0.45 3 0.45 4 0.60
Large Market Share 0.10
4 0.40 4 0.40 3 0.30
Vast Product Line 0.10
3 0.30 2 0.20 3 0.30
Market Coverage 0.10
3 0.30 3 0.30 3 0.30
Research & Development
0.20
4 0.80 4 0.80 3 0.60
Strong Financial Position
0.10
3 0.30 4 0.40 3 0.30
Brand Recognition 0.20
4 0.80 3 0.60 2 0.40
Total 1.00
3.50
3.35
2.95
RATING SCALE
4 = Major Strength
3 = Minor Strength
2 = Minor Weakness
1 = Major Weakness
INTERPRETATION :
CPM identifies the Firms major competitors and its particular strength and weaknesses in
relation a sample firm’s strategic position. The two most important factors to being
successful in the industry are “R & D” and “Brand recognition” as indicated by weights
0.20. Novartis is on 2nd position and 1st on is Alcon and 3rd position is of Rimigton in
CPM.
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TOWS MATRIX OF ALCON LAB INC.
Strengths Weaknesses
1Offering a wide range of products in three major ophthalmic areas: Surgical, pharmaceutical and Consumer Vision care
1Lack of internal control over sales force resulting in declining sales trend over last two years in Pakistan (Southern Region)
2Continued to incrementally launch key products in new market.
2 Failed to gain FDA approval of Patanol in 2009.
3Emphasis on the Health & Safety of workers and the protection of the environment.
3Sales people of Pakistan lacks skills of communication and interpersonal.
4 Strong distribution center
5
Strong Research & Development function having the largest number of1350 employees including 300 individuals who are M.D.s, O.D.s Ph.D.s who work in one of the five state of art research facilities.
6Strong and trained marketing/sales team
7Emerging markets expanded to 18.3% of total sales from 15.5%
8Alcon is the worldwide leader in ophthalmic surgical products and largest company of the world in the pharmaceutical having top 15 products in pharama.
9Alcon is the largest manufacturer of contact lens care products in the world
Opportunities S - O Strategies W - O Strategies
1 High market growth of 12% per annum.
Alcon’s pharama is Among top 15 products of industry; company should plan or emergence of new market for top 15 products in private health sector of Pakistan.(O-4 , S-8,S-4, )
Using internet to increase sales through advertising and to gain control over sales force lacking and declining sales trend. (W-1, W-3, O-5)
2Highly competitive market comprises of both MNCs and national corporations.
Alcon should introduce new products in contact lens care category and advertise it on internet because internet provide sophisticated publicize and promote facilities.(O-5, S-1)
3Under-developed Healthcare industry in Pakistan with a weak health system underlying the poor health status of the population.
Develop competitive product both in national and international markets using strong trained sales, marketing team and strong distribution centers as distinctive competency. (O-2, S-4, S-6)
4Growth trend of private sector health centers and hospitals in the country, creating health awareness and medical facilities.
Keep launching new products using Strong R & D as there is growth trend in private sectors and health awareness and medical facilities.(O-4, S-2, S-5)
5Internet providing more advanced facilities for advertising of products.
Develop rising markets in underdeveloped health care countries to increase sales by introducing reasonable price category products. (O-3. S -5, S-7)
Globally, the company is one of the largest selling companies in Antiglaucoma. In Pakistan the dedicated team will promote 100% current and70% new launches in this area. (O-3, O-4, S-8, S-2.S-4)
Threats S - T Strategies W - T Strategies
1
The multinationals are facing threat due to the trend of increasing market share of national corporations over the past years. Major contribution to this threat is from Rimigton pharma and berrtt hogson.
Using Strong R & D try to introduce new products in Pakistan as well as new markets in under developed health area of Paki-land at cheap prices so this can overcome the piracy and give medical access to poor population.(T-3, T-4, T-5, S-2. S-5 , S-1)
Using improved formula of Patanol and introduce under other name in Markets that is of reasonable prices that reduce piracy of generic product.(T-2, T-4, W-2)
2Generic products at cheaper prices. Piracy continues to inflict losses in the research-based pharmaceutical industry.
By using strong sales team and strong distribution centers increase the market share than those of national corporations. ( T-1, S-4, S-6)
Give medical and marketing management training to existing sales and marketing people and hire new skilled qualified professional and increase distribution centers numbers to increase the market share than national corporation.(T-1, W-1, W-3)
3
Political uncertainty and Law-n-order issues of Pakistan causing a serious threat for multinationals for their future growth and investment in the country.
4Strict government control over pricing. No increase in prices of drugs over the last 07 years
5
Due to poverty and unawareness of health issues, the patients are inclined towards the cheaper generic products in the market, compromising the quality issues.
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IE MATRIX
Segment EFE IFE
3.25 3.23
INTERPRETATION:
As you can see above in the IE matrix the horizontal and vertical line meets in one OF THE 9 TH
quadrant in the IE MATRIX. In our case the 2 lines are meeting in first quadrant. We should follow a
strategy depending on in which quadrant the Alcon lies in which these two lines intersect and it should
be grow and build. The strategies that are appropriate for growth and build is (intensive market
penetration, product development, and market development) and integrative (backward integration,
horizontal integration and forward integration).
Strategic Management Project Report on Alcon Laboratories, Inc.
I
1.0 to 1.99
IXVIIIVIILow
IV
2.0 to 2.99The EFE Total Weighted Score
VIVMedium
3.0 to 3.99
IIIIIHigh
1.0 to 1.992.0 to 2.993.0 to 4.0
WeakAverageStrong
The IFE total weighted scoreThe IFE total weighted score
Segment
Revenue
EFE
IFE
Passenger
$5.4 B
3.34 3.32 Freight
$1.1 M 3.20 3.80
Harvest Or Divest
Hold and maintain
Grow and Build
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GRAND STRATEGY MATRIX
RAPID MARKET GROWTH
SLOW MARKET GROWTH
INTERPRETATION
In our case the Alcon is lying in 1st quadrant in GSM because of strong competitive
position and rapid market growth which shows that Alcon is maintain the excellent
strategic position. We are confining our self to the current market or product and we are
concentrating on how to penetrate these market and product. We are ready to take risk
aggressively when necessary.
Strategic Management Project Report on Alcon Laboratories, Inc.
Quadrant IVQuadrant III
POSITION
STRONG COMPETITIVE POSITION
COMPETITIVE
WEAK
Quadrant I
Market PenetrationMarket DevelopmentProduct DevelopmentHorizontal Integration Backward IntegrationForward IntegrationRelated Diversification
Quadrant IIALCON
LAB INC.
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QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
QUANTITATIVE STRATEGIC PLANNING MATRIX
Key Internal Factors WeightMarket
DevelopmentMarket
PenetrationProduct
development
AS TAS AS TAS AS TASStrengths
Providing a variety of Original Research
0.10 3
0.30
4 0.40
4 0.40
Emerging markets expanded to 18.3% of total sales from 15.5%
0.10
3 0
.30 3
0.30
3 0.30
Providing the highest standard of quality products
0.10
4 0
.40 4
0.40
4 0.40
Continued to incrementally launch key products in new market
0.05
3 0
.15 3
0.15
3 0.15
Emphasis on the Health & Safety of workers
0.05 - - 3
0.15
- -
Strong distribution center
0.10 4
0.40
3 0.30
- -
Effective and efficient Research and MIS software used
0.05
2 0
.10 3
0.15
3 0.15
Highly motivated employees
0.10 - -
4
0.40
4 0.40
Strong and trained marketing/sales team
0.10 2
0.20
4 0.40
- -
Increased focus on employee development and succession planning
0.10
1 0
.10 3
0.30
- -
Weaknesses
Failed to gain FDA approval of Patanol in 2009
0.04 2
0.08
2 0.08
4 0.16
Sales people of Pakistan lacks skills of smooth communication
0.05
3
0.15 2
0.10
- -
Lack of internal control and declining sales trend over last two years in Pakistan
0.06
- - - -- -
TOTAL WEIGHT 1.0
0
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QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
Key External FactorsWeight
Market Developme
nt
Market Penetrat
ion
Product developme
nt
AS
TAS AS
TAS AS TAS Opportunities
High market growth of 12% per annum
0.15 3 0.45
4 0.60
3 0.
45
Highly competitive market comprises of both MNCs and national corporations
0.15
3 0.45
3 0.45
3 0.45
Under-developed Healthcare industry in Pakistan with a weak health system
0.15
3 0.45
4 0.60
4 0.60
Growth trend of private sector health centers and hospitals in the country
0.10
3 0.30
3 0.30
4 0.40
Internet- providing more advanced
facilities for advertising of products.
0.20 2
0.40
3 0.60
4 0.80
Threats
Strict government control over pricing
0.05 - -
- - 1 0.05
No product patent protection in Pakistan
0.10 - -
- - 4 0.40
Generic products at cheaper prices
0.10 - -
- - 4 0.40
TOTAL WEIGHT 1.00
TOTAL 4.28 5.80 5.51
INTERPRETATIONThe highest attractive score is of “Market Penetration” and Product development” so
according to QSPM institutive judgment the Alcon Lab Inc. will go for Highest score
Strategies these are Market Penetration and Product development.
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ALTERNATIVE STRATEGIES
The above situation and analysis reveals that Alcon Lab Inc. has some major competitive
edge to be successful in the market, including strongest R&D and high production
capabilities. Moreover, the industry analysis shows that the market has a fairly growing
trend and investments, in this respect, are appreciable.
The major weakness, appearing over the last few years, is the lack on internal control and
monitoring, lack of sales skills of sales team causing a decline in sales and profitability.
The company has paid serious attention to this issue and has made internal structural
changes. It is, therefore, anticipated that the issues of internal controls would be improved
by the new structure and the company would be able to sustain its position.
Despite of the decline of overall sales and average launching of new products, the
company is successful in maintaining its pharmaceutical market leadership of about 15
products, and also sustaining Leadership in Ophthalmic industry which is definitely an
achievement. This shows the potential of company’s brands.
Keeping in view the all above factors, the company should adopt “Intensive Strategies”
as intensive efforts are required to maintain the competitive position.
The three alternative strategies are:
1. Market Penetration:
The market penetration strategy seeks to increase market share for present products or
services in present markets through greater marketing efforts. It includes increasing the
number of salespersons, increasing advertising expenditures, offering extensive sales
promotion items, or increasing publicity efforts.
The strategy is suitable to be implemented by Alcon Lab Inc. because of the following
reasons:
Current markets of products, offered by the company, are not saturated.
Major competitors are having a very marginal difference in the market share and
it is easy for Alcon Lab Inc. to beat them to be the 1st largest company.
Market penetration is the best strategy to be adopted for the newly launched
products to gain market share in their respective therapeutic group.
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The difficulties in implementing this strategy are:
The usage rate of current customers can not be increased significantly.
The market share of major competitors has not been declining.
2. Market Development:
Market development involves introducing present products or services into new
geographic areas. The strategy is suitable to be implemented by Alcon Lab Inc. because
of the following reasons:
New untapped or unsaturated markets exist.
The company has excess production capacity.
Pharmaceutical industry has global scope.
The difficulties in implementing this strategy are:
The company’s position in the current markets for the last few years is not really
well.
Due to decline in sales and profitability, it would be difficult for the company to
manage required capital for the expansion operations.
3. Product Development:
Product development seeks increased sales by improving or modifying present products.
Product development usually entails large research and development expenditures. The
strategy is suitable to be implemented by Alcon Lab Inc. because of the following
reasons:
The company has the strongest R&D capabilities.
The company competes in an industry that is characterized by rapid research and
development to improve medical facilities.
Pharmaceutical industry is a high growth industry.
World leader in ophthalmic pharmaceutical products.
Larger world manufacturer of lens care products.
The difficulties in implementing this strategy are:
Offering more products without compromising on quality and price.
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CHOOSING THE BEST STRATEGIES
As Alcon Lab Inc. is having a wide range of products in different therapeutic groups,
each having a different market, it is not possible to choose a single strategy for all
products.
The major objectives of the company are to gain market share through increasing sales
and introducing new products by utilizing its strong R&D capabilities. Keeping in view
all the above analysis, following two strategies are suggested for implementation:
1. Market Penetration:
This strategy should be adopted for the existing successful products to increase market
share and sales. It will help in achieving long-term objectives of the company by
increasing annual growth rate and market share. Also, it is very important to maintain the
market leadership of the leading products.
This strategy will also help the company in improving its profitability and financial
situation, which has been reined over last two years.
2. Product Development:
Alcon Lab Inc. has a strong R&D function and as there is huge growth rate in the
research product business, the company has planned to introduce new research products.
Moreover, research of a large number of new compounds will make the company capable
of meeting the future needs of the industry through launching new products as per the
customers’ needs.
This is a major competitive edge of Alcon Lab Inc. on its major competitors as they do
not have such a developed R&D function and the company should maintain this
competitive edge in future. Besides introducing new products, the company should
emphasize on the marketing and aggressive sales techniques in order to regain the
successful launching capabilities.
Moreover, the concentration on high quality and customer service should remain there.
This strategy would be supported by the company’s production facilities and would
definitely help in attaining long-terms objectives.
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CONCLUSION
Alcon Lab Inc. is the world's leading eye care company. Fortune magazine has named
Alcon "One of the 100 Best Companies to Work For".
Alcon is facing the difficulties to get more and more business in Pakistan due to increase
number of local and national pharama companies and Alcon can get it improved by smart
marketing efforts and explore new products to do the business in this marketplace.
Alcon is the largest manufacturer of contact lens care products in the world and is widely
known for its artificial tears for dry eye therapy and eye vitamins to help protect eye
health Alcon should concentrate upon consumer vision care business. This is the sort of
industry in which locally many Companies involved, because it is most growing industry
which is 22% growth per year.
Though Alcon has been in staid catastrophe due to decline of sales and marginal
profitability for the 2009 as compare to 2008 in Pakistan Region because of lack of
internal control and management, the company can regain its position by emphasizing on
its core competitive edge and improving its internal controls.
The sales force for a pharmaceutical industry is considered to be its back-bone if it is
trained proficiently, professionally and also the company is thriving to develop a
successful sales force to progress its future prospects.
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REFERENCESWebsites
www.alcon.com
www.alconlabs.com
www.pataday.com
www.infinitivision.com
www.acrysofrestor.com
www.acrysoftoriccalculator.com
www.bssplus.com
www.alconretina.com
www.opti-free.com .
www.systane.com .
www.icapsvitamins.com
www.piribo.com
www.ibisworld.com
Strategic Management Project Report on Alcon Laboratories, Inc.