Managerial Accounting

ADVICE FOR SAMPLE FINAL EXAM

LCBO CASE

REMEMBER TO :

1. READ THE QUESTION(s) CAREFULLY

2. IDENTIFY WHICH SECTIONS/ELEMENTS OF THE COURSE YOU NEED TO CONSIDER IN FULLY RESPONDING TO THE QUESTION

3. YOUR RESPONSES MUST MAKE EXPLICIT REFERENCE TO ANY RELEVANT COURSE MATERIAL (CONCEPTS, FRAMEWORKS ETC. FROM THE LECTURES AND/OR TEXTS).

1. a. Discuss the potential advantages (reasons for) privatizing the LCBO and the potential challenges and risks involved. (15 marks).

THIS QUESTION IS RELATIVELY STRAIGHT FORWARD – AND YOU WOULD NEED TO RELATE BOTH THE ADVANTAGES AND DISADVANTAGES (RISKS) OF PRIVATIZATION – HERE YOU WOULD ALSO WANT TO SIMPLY MAKE REFERENCE TO THE CONTEXT OF LCBO (IE. PRIVATIZING THE SALE OF ALCOHOL).

To review the relevant material from the readings, please see:

For guidelines see texts etc: Karakowsky, p.304-309;

It is also relevant to understand the purpose of the establishment of crown corpos like LCBO in orcer to further suggest what risks may appear with privatization (ie. K text, p.281); LCBO is also mentioned specifically in K text on p.283-284.

KCB book: p.128-129 (brief mention there)..

b. In what way would deregulation also need to be considered in the event that LCBO is privatized? Explain and make reference to one course illustration on that issue (10 marks)

Review the deregulation material in K text on p.297-304. & KCB text p.134-135.

KEEP IN MIND: The basic notion is that since privatization takes control away from government (protector of society) and puts it into private business, there is a danger that society’s interests will not be guarded – particularly if a private monopoly exists. The basic thrust of deregulation is to reduce regulations that might have restricted entry to the industry – ie it should increase competitors in the industry and guard against an abusive monopoly after privatization happens.

Illustrations: K text: any examples from...