Michigan Liquor Control Commission - Research Paper Example

Case Study: Michigan Liquor Control Commission Introduction The state of Michigan passed a bill on the prohibition of liquor in May 1918, nearly 18 months prior to the enactment of federal prohibition. In the beginning of 1930s, people throughout the country demanded the Federal Government to repeal the prohibition. In early 1933, Congress authorized the 3.2 percent beer by passing a bill. In the same year, a similar bill was passed in the state of Michigan along with the introduction of a state board known as the Michigan Liquor Control Commission (MLCC). The MLCC is responsible for dealing with the liquor distribution system in the state of Michigan. This paper will discuss the issues associated with the Michigan liquor distribution system. It will also explore the best possible solutions to the problems from managers’ perspectives. Case Analysis If the government had properly redesigned Michigan liquor distribution system, current issues in the distribution process would have been resolved to some extent. The state of Michigan maintains a three tier liquor distribution system that builds strong legal walls between state-approved wholesalers, suppliers, and retailers (legal issues…, 2010). This traditional liquor distribution system imposes more costs on consumers as it limits the chances of market competition which may end up on price cuts. It is advisable for the state of Michigan to ensure the private sector involvement in liquor distribution process as this practice would be beneficial for ultimate consumers. At the same time, authorities must ensure that the private sector operations fully comply with the state liquor distribution policies. From the case study, it seems that the number of state stores has remained fairly constant over the last years and this situation raises difficulties to both the state of Michigan and the consumers. In order to resolve such issues, opening more stores in different cities of the state would be reasonable. Similarly, the existing three state owned and operated warehouses may not be adequate to effectively and timely meet the needs of 12,000 retail licensees that serve the consuming public throughout the state. Hence, the Michigan Liquor Control Commission might conduct a detailed market study to identify the proper distribution channels that would improve the operational efficiency of the state liquor distribution system. It is also recommendable to close the existing 75 smaller second-tier state warehouses and allow the retailers to directly get liquor products from the state owned warehouses. The elimination of second-tier state warehouses from the liquor distribution system would be helpful for the MLCC to trim down the current distributional cost of $20 million per year. It is evident that the alternative designs for distilled liquor distribution offer ranges of benefits to the state of Michigan. The case study reveals that the MLCC directly and notably contributes to the state’s general fund which is used for improving the living standard of the general public. Since the alternative designs may assist the MLCC to reduce operational costs; and, it would be beneficial for the state government to earn more net profit from distilled liquor distribution. As discussed earlier, the private sector oriented proposed designs would be capable of providing price benefits to consumers throughout the state. Moreover, this system restructuring may be helpful for the consumer to get liquor products when they required. Similarly, a well structured distilled liquor distribution mechanism may assist the state of Michigan to exercise well control over retail licensees and thereby to effectively prevent illegal alcohol distribution and consumption. However, changes in the existing liquor distribution system may raise some risks factors also. If the MLCC fails to effectively implement the designed alternatives, the distribution system restructuring process would adversely affect the profitability of the state of Michigan. When the government allows private sector participation in the distilled liquor distribution, it involves chances of fraud and other illegal activities. The cost of the system implementation may impose a huge burden on the MLCC once it is practiced ineffectively. Hence, the MLCC must be vigilant while selecting and implementing an alternative design for the existing liquor distribution system. The historical conditions which the current liquor distribution system based is still important today. Historically, beer and wine are legally defined as fewer than 21 percent alcohol by volume whereas distilled spirits are defined as over 21 percent alcohol by volume (Case 5, given PDF). The traditional laws recommend that all distilled spirits have to be purchased by the state of Michigan. According to Michigan “come-to-rest” laws, stocking and transportation of liquor in state bailment warehouses should be handled by state employees although any hotel or established merchant can sell packaged liquor. The state of Michigan also exercises more public control over distilled liquor distribution due to a number of reasons. These laws have considerable significance even in modern days as they are vital to ensure effective and legal liquor distribution in the state. If the government allows other private organizations to purchase liquor, it may sometimes cause illegal liquor distribution practices in the state. Similarly, if individuals are freely allowed to stock or transport liquor, this situation may lead to price hikes and intensive alcoholism. A liberal approach towards liquor distribution system would cause the emergence of unfair practices in the state of Michigan including middleman profiteering and bootlegging. However, some additional factors exist that require immediate consideration. The existing traditional liquor distribution system of the state is not capable of meeting modern marketing requirements. Hence, the modernization of the Michigan liquor distribution system must be immediately discussed. Through the control and distribution of liquor, the state of Michigan generates considerable general revenue. The contributions from distilled liquor tax go directly to the General Fund in the Executive Budget for meeting various needs of the state of Michigan including educational programs. At present, out of the 11.85 percent of the liquor distribution taxes, 6 percent is used for Michigan school-aid fund. However, it seems that an inherent social conflict exists when state governments rely upon tax contributions from liquor sales to fund educational programs. Anti-alcohol groups such as MADD (Mothers Against Drunk Driving) and other social groups argue that the practice of financing educational programs by using distilled liquor tax contributions would hurt the ethical concerns of education. Social reformers have opined that when liquor tax contributions are used for educational purposes, it questions the primary objectives of education systems. Many people believe that this adverse practice would persuade the future generation to take a favorable approach towards alcoholism. Some other social bodies are of the opinion that school based alcohol awareness programs would not be effective when the state’s educations system use distilled liquor tax contributions as a source of finance. At the same time, some individuals strongly say that it is not unfair to utilize liquor tax contributions to fund educational needs as it is a potential source of finance. Organization of the final report on distilled liquor distribution in Michigan would be a cumbersome task for Joseph Duncan as it has two distinct aspects. Firstly, the process of distilled liquor distribution brings noticeable revenue for the state of Michigan and secondly, this process is the central point of a social conflict. If I were the place of Mr. Duncan, in order to reduce distribution costs and inefficiencies, I would adopt modern transportation techniques and supply channels. In the view of Singh (2007), Management Information Systems (MIS) have largely developed and these improvements would be of great help to deal with inventory management (pp.1-3). I would initiate improved service packages to customers as part of promoting sales and thereby increasing the state’s return from liquor distribution. While designing service packages, I would be careful not to pass wrong messages that would influence people to be alcoholic. It is also recommendable to take advantages of improved accounting software to trim down administrative expenses. For this purpose, I can also recruit expert managerial persons who can effectively run organizational activities with less time and cost. The case study indicates that the MLCC employs nearly 620 people, and majority positions are low skill jobs. As part of the implementation of new liquor distribution system, the MLCC may cut down payment to low skill jobs. In short, the final report on distilled liquor distribution in Michigan must meet the economic interests of the country as well as the social requirements of individuals. Conclusion Evidently, the Michigan liquor distribution system is presently struggling with a sequence of issues. In the state of Michigan, the liquor distribution system has two aspects; firstly, it generates a significant volume of revenues for the country and secondly, it is a central point of social conflict. Private sector participation would be a recommendable strategy for the MLCC to make the distribution system more effective. In addition, by using modern organizational tactics as well as technological developments, the MLCC can resolve the current issues to a great extent. References Case study: Michigan Liquor Control Commission. Singh, S. R. (2007). Information system management. New Delhi: Nangia. Goole books. Legal issues concerning state alcohol regulation. (March 18, 2010). 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