Introduction: In this assignment, I will analyse the corporate governance practice of ABC leanings and briefly explain about the business of the organisation, location, size, market, customers and employees. I will also discuss about the structure of the organisation and its divisions and its subsidiaries. Corporate Governance in ABC Learning: ABC learning was one of the largest providers of early childhood education services. It was founded in 1988 in Ashgrove, Brisbane, Queensland. Since its inception, ABC Learning expanded rapidly with 43 childcare centres in 2001 and rose upto 697 centres in 2005. Learning Care Group Inc, third largest childcare operator in the United States and La Petite Academy, second largest childcare operator in the …show more content…
The organisation was not able to foresee where the organisation is headed to and according to Matthew Horton, former chief lawyer of ABC Learning, the committee responsible for overseeing the company’s growth is merely a rubber stamp exercise. ABC Learning, being the largest childcare provider in 2006, collapsed due to market concerns which include improper corporate governance. When ABC was listed as a public company, its market capitalisation was A$ 25 million which rose to A$ 2.5 billion in 2007. After a rapid growth, ABC faced many financial struggles which made the company to be overwhelmed by the debt payments. ABC Learning had to sell 60 percent of its US subsidiary and its entire UK subsidiary. Once the subsidiaries are sold, ABC learning was taken out of the ASX listing and went into receivership. Once ABC was collapsed, the reports showed that the company’s failure is because of the opaque business model which let the different departments of the company to be unaware of the company’s direction. ABC’s acquisitions lead to the recognition of intangible assets the company possessed at fair value on its balance sheet which would lose their worth when the company runs into …show more content…
Parents paid these childcare monetary benefit to the childcare providers. Childcare providers indirectly had the luxury of having millions of dollars provided to the public as childcare benefit. Improper cash flow and opaque governance of the ABC learning lead to its fall. ABC was not able to generate the cash flow which is needed to pay the suppliers, staff, dividends and interest. As the cash flow was not proper, Mr. Groves, CEO of ABC learning and other board members had to pledge their shared to borrow money. Just as they pledged the shared, there was a huge fall in the price of the shares that they had to sell 5.6 percent of the company to satisfy the margin. Number of shares in the market rose enormously and the share price fell down further. Although global economy crisis and real estate market declination is one of the reasons of the ABC learning falling, bad management is the most important reason for it. The environment decides the future of the company. Internal environment of the company has to be good for the workforce to give their best. In that aspect, ABC did not have good environment. Its employers are not encouraged to express their views. Organisational structure is the backbone of the any company’s success. This is also a major reason for the fall of ABC learnings. Managers and executives are the one who defines the culture of the organisation. The decision taken by them determines the