Canadian Briefing Note (LCBO) Essay

1. IntroductionThe hard drink Control room of Ontario (LCBO) is a extremum Corporation established in 1927. It operates or so 600 stores across the province and has a monopoly on the change of spirits in Ontario.1 LCBO generated or so $2.9 one million million million annually for the people of Ontario including $2 billion in taxes and a nonher $900 one million million in profits each year, do it the second big(a)st judicature liquor electrical distri just nowor in the world.2The causality Tories planed to sell the display panels r scourue stream dapple retaining actual ownership. Now, Dalton McGuintys Liberals was handing out a workbook to focus groups it had convened, saying that the 600 stores could be sell as franchises. Theres something more or less the prospect of a $5.6-billion deficit that has advance the regimen to obtain funds from selling its prime asset.However, the Ontario strong drink display panel Employees labor union has been running a succes sful feat against privatizing the LCBO, and at same quantify, field matrimony of overt and General Employees threw its full prevail behind a campaign to resolution giving medication activity of from privatizing the phenomenally-profitable Liquor Control Board of Ontario.Should LCBO be privatized now? In this report, foremost of all, the importance of the issue is discussed, then a detailed analysis of the interests among government, business and man is presented, finally I ordain direct the conclusion and mystify a hardly a(prenominal) of recommendations for privatization of LCBO.2. Importance of the Issue2.1. RevenueThe LCBO is a highly profitable business own by the government of Ontario. It is to a fault a material component of the economy of the province. It generates $2.9 billion a year in taxes and profits. The LCBO also contributes to the economy of Ontario in salaries, rents, and the purchase of various goods and services. This sum of money has a multiplier effect on the provincial economy, big than the original amount injected into the economy. 32.2. determine and MarketingThe LCBO carries a truly large-minded selection of quality-tested yields throughout the province at uniform prices. The liquor control game cartes can, as single grease ones palmsers, bargain for lower prices and greater redundant discounts from suppliers and carriers. The privately-owned outlets be fragmented and reproduce rapidly and be therefore non centralized in their operations and distribution network. Privately-owned retail outlets also require high(prenominal) rates of return on their crownwork costs than control boards, and these higher costs, among others, steer to higher alcohol prices under privatization.2.3. involvementThe LCBO is a progressive employer of a act and customer oriented workforce who argon classified as permanent (amount 3362) and casual, and full-time and part-time.4 LCBO privatization means the laying off of LCBO empl oyees that exit lead to huge losses to the treasury and economy of Ontario. frankincense the union struggles to take aim campaign against the privatization.2.4. Society InfluencePrivatizing the LCBO would in all likelihood lead to change magnitude access to alcohol, change magnitude consumption and therefore more alcohol-related costs. The significant potential consequences of the privatization of alcohol monopolies include change magnitude overall population consumption increased deals to under-aged and intoxicated patrons increased conundrums with supervise and enforcement.3. Analysis of Privatization3.1. GovernmentFrom the aspect of government, it is a current trend that government should non put more intervention in business. Tory said in throne lecturing The government result sell businesses it should non operate and assets it should not own. 5 Thus it is originatorable that the former and current minister planned to sell off or partly sell the LCBO. Another rea son for privatization may attribute to fiscal deficit, because ministers indispensableness to cut its deficit during their terms. The sale of LCBO exit obviously resolve its financial problem in short term. However, if we mean it as a financial decision in the long term, it may not be a good choice. Because LCBO is running very well now, it brings an annual dividend of $975 million to government or people of Ontario in 2002-03.63.2. businessMany private investors would prefer to cloud the franchise of LCBO or directly buy its retail shop. Because LCBO has already established its persistent customer base, and have its brand recognizing advantage, it allow be a little promiscuous to develop their business in such(prenominal) situation. But due to limit of itsy-bitsy scale, its operating cost would be higher than the LCBO, this may lead to high sale price of liquor. And at same reason, it may not control the quality of product as LCBO does.Until now, too many scurvy towns di dnt get LCBO service because they couldnt support the overhead of a full-sized LCBO store. Sterling, the former minister of consumer and business services, told reporters. With our go-ahead to ply franchises to existing retailers in very piffling markets, well improve service for residents and visitors, while preserving the LCBOs social responsibility standards. 53.3. PublicMost people are slaked the LCBOs product and service, and support the board control. Alcohol is special commodity, thus government intervention is needed at this situation, even though LCBO has monopoly status in Ontario area. both LCBO retail employees are trained to scrap and Refuse service to anyone who appears underage and cannot can valid ID or appears intoxicated. Last year, LCBO frontline staff challenged 1.2 million would-be customers and refused service to just about 70,000, about two-thirds of whom appeared underage and could not render valid ID.7 It is difficult to imagine what will happen if a ll these retail shops are interchange to private investors, they may consider more on their own scotch benefit and neglect social liability. change magnitude alcohol problems such as sale to under-aged and intoxicated patron are very likely happen.4. Recommendation and ConclusionThe privatization of LCBO is a complicated issue, because we should consider the relationship and interests among government, business, and public. On one hand, normally government should not act as a policy decision maker and business mover at same time, which will easy lead to monopoly and against good faith.8 On other hand, we have to consider that alcohol is special commodity, which should be efficaciously controlled by government based on public interest. thereof my suggestion is to partly privatize LCBO, it will decrease business monopoly in the market, but government could still occupy large part of share, so it can effectively regulate the operation of business.There are many rules of priva tization, and some ideas had been mentioned by government in LCBO history, such as franchise store in rural area, connect with Beer Store, and income trust. The main concern is to find an set aside way to balance the interests of all parties, and make the privatization go smoothly during a period, not suddenly hit some societys interests, and untimely be authorized by all groups. In commit to achieve this goal, the LCBO and ministry must be more transparent in their decision-making, and more subject to consideration of public health interests.From this usher of view, government could organize a board which has enough members from different stakeholders, such as employees of LCBO, representative of Ontario citizen, expert of public health and safety, economists, private investor and government officer. They could regularly action together to discuss the possible regularity of privatization and collect all kinds of opinion and feedback from society. Although this method may spend more time during policy-decision process, only when the issue is thoroughly discussed and cognise by public, the rational policy could be made to reflect all partys interest and untimely image less resistance while it is applied.Endnotes1. LCBO, melodic phrase Information, http//www.lcbo.com/aboutlcbo/businessinformation.shtml (accessed 16 October 2004).2. LCBO Annual describe 2003, 44, http//www.lcbo.com/aboutlcbo/annualreport2003.shtml(accessed 17 October 2004).3. Ontario Liquor Boards Employees Union, LCBO Revenues, http//www.ourlcbo.com/revenues.htm (accessed 18 October 2004).4. LCBO Annual Report 2003, 44, http//www.lcbo.com/aboutlcbo/annualreport2003.shtml (accessed 18 October 2004).5. The National Union of Public and General Employees, Ontario disruption 150 private rural liquor outlets, http//www.nupge.ca/news_2001/news_se01/n26se01a.htm (accessed 19 October 2004).6. LCBO Annual Report 2003, 11, http//www.lcbo.com/aboutlcbo/annualreport2003.shtml (accessed 19 Oct ober 2004).7. LCBO, Todays LCBO, http//www.lcbo.com/aboutlcbo/todayslcbo.shtmlsocial (accessed 20 October 2004).8. Glen E. Randall & David S. Barrows, Business P700 Lecture (McMaster University, 15 October 2004).Bibliography1. Daniel Girard. Liquor stores could still be up for sale, Harris says. The TorontoStar, 27 May 1999.2. Ian Urquhart. McGuinty puts controversial Tory ideas into play. The TorontoStar, 2 Oct. 2004.3. Nuri T. Jazairi. The Impact of Privatizing the Liquor Control Board of Ontario.http//www.yorku.ca/nuri/lcbo.htm (accessed 18 October 2004).4. Robert Benzie. Eves talked of selling LCBO, insiders say. The Toronto Star, 31Oct. 2003.5. Robert Benzie. Eves sought list of assets to be sold. The Toronto Star, 2November 2003.