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The Value of a Listing in Nestle

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Title: Stock Market Decision to List Alcon
Abstract
This paper explores two companies, Nestle and Alcon. The paper also briefly describes the decision based method of analyzing a case study. Since the case study is a decision based, the paper briefly describes the four options available for listing Alcon in the stock market (Desai, Dessain &amp. Sjaman 2006, p 6-7). The paper also proposes the best option among the four options and provides two short term recommendations for the action plan. Finally, the paper discusses the risks involved in each recommendation and alternative plans available for each recommendation, taking in to consideration of each recommendation.
Key words: Nestle, Alcon, Listing, Decision based, Action Plan
Stock Market Decision to List Alcon
The case study provides four options in order to make a decision concerning the listing of Alcon Company. The CEO of Alcon Company, Brabeck decided to list the company in the stock market so the whole financial world would recognize its value (Desai et al., 2006, p4). The four options that were considered by the stock market decision to list Alcon were Swiss stock market, American Depository Receipt (ADR), U. S. Stock Markets and Dual listing (Swiss and U.S. stock Markets).
From the above options, finance criterion, Return on Investment (ROI) can be used.
By using the first option, Swiss Listing, the company can gain a lot and the ROI would be high through the simplification of relationship between Alcon and Nestle. With the dual listing, the ROI would not be so much high since the company would incur a lot of expenses in registering in both countries. With the U. S. listing, Alcon Company can gain average income since it would not incur a lot of expenses in listing in one country. Finally, the last option, American Depository Receipt (ADR), would not result to high ROI due to the fact that the method is most applicable with foreign companies (Desai et al., 2006, p6-7). The best option would be listing Alcon in Swiss Stock Market.
Action Plan for Swiss Stock Market
Short-Term Recommendations
Recommendation One:
The first recommendation would be to list the company in Swiss. This would not cost the company much of its resources and it would also improve the relationship between Nestle and Alcon.
People or Resources Involved
The process would involve both the top management of Alcon and Nestle. The top management from both companies are necessary in order to determine the prices of the shares upon listing.
Budget Needed
The whole process will require like 30% of Alcon total revenue.
Time Frame
The whole process of listing the company would take approximately 3 months.
Risks
One risk that would be involved by listing the company is Swiss is lack of shareholders to buy the shares of the company. The other risk would disagreement between the top management concerning the listing.
Alternative plan
The alternative plan would be to list the company in U.S. in case the recommendation would not be applicable.
Recommendation two:
The other recommendation would be to offer a low price of the shares than those of Nestle in the stock market in Swiss.
People or Resources Involved
The process would involve top management from both companies. The top management can be either Directors or CEOs.
Budget Needed
The whole process would require approximately 20% of the company’s total revenue.
Time Frame
The process would only require one month for deciding on the price and present to the stock market.
Risks
One risk that would be involved by lowering the price is that the investors’ may be afraid and prefer to buy the Nestle shares instead. The other risk would be the rejection of the price by both the Nestle Company and the stock market.
Alternative plan
The alternative plan for this recommendation would be for the Alcon Company to offer the same price for their shares as Nestle Company.
References
Mihir A. Desai, Vincent Dessain &amp. Anders Sjoman (2006, April 26). Nestle and Alcon- The Value of a Listing. Harvard Business School.