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Abc Learning Case Study

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Overview of the Business:
ABC Learning Ltd was an Australian provider of early child hood education services, founded in Queensland in 1988, that through its 18 centres was the largest single operator of early childhood education services in Australia by 1997. Led by founder Eddy Groves, ABC Learning Ltd continued to grow, through the opening of new centres and the acquisitions of rivals i.e. peppercorn Childcare in 2004 in which 450 centres were purchased for $340 million. “By 2008, ABC Learning was the largest provider of childcare, holding around 20 per cent of the long day care market and providing care to over 100 000 children” (Senate education, employment workplace relations committee, 2009).

In 2005 Mr Groves began an …show more content…

Mr Groves’ corporate governance practices were poor, and is currently in legal proceedings regarding interparty transactions, this was certainly news worthy, and damaged the company’s reputation and slowed investor confidence. Additionally, the price paid to companies was deemed to be above market norms, siphoning more money from the companies depleted coffers.
Critics are focused on the “mess” of the books for ABC Learning Centres Ltd, specifically the complex way in which revenue and profits were accounted for, “particularly the way compensation payments from centre developers were counted as revenue” (Thompson 2008). The Financial position of ABC Learning centres was misrepresented and projected a positive image of the financials, until Auditors Ernst and Young were required to pour over the books after the collapse.
All of these issues are summed up in Thompsons (2008) assertion that Groves was the right man to grow the business but not the right man to manage the business, had the right manager been in place then the organization may have been able to turn its fortunes around.
The Ethical Issues of the case: Firstly there is a significant Ethical and morale lapse in a share floated company when the CEO engages in related party transactions. The moral issues arise

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