Quiz: 2

Name: Afroz Zaman

Id: 18364049

Date of submission: 19/04/2021

Question 1: Critically evaluate the main reasons for ABC Learning’s collapse.

Answer: ABC Developmental Learning Centres, also known as ABC Learning, was established
by Eddy Groves and his partner, Le Nave, in Ashgrove, Brisbane, Queensland, Australia, in
1988. The company started its modest beginnings in Australia in 1988, but has since grown to
become a globally recognized brand. Around the globe, they provide educational and
developmental services to children.

ABC Learning specializes in offering long-term support, before and after school care, and
holiday care. The organization's mission was to “ensure that each child is loved, nurtured, and
taught in order to give them the best possible opportunity in life.”

Reasons behind the collapse: ABC Learning Centres expanded at such a rapid rate over the
course of 20 years that it was quite remarkable. The massive collapse of this immense
organization was caused by several internal flaws within the group.

Lack of Transparency: Without a doubt it is true that the company's financial bookkeeping has
basic shortcomings and was not properly maintained. There seem to be considerable
inconsistencies between the company's sales, earnings, and statistics. A large number of
investments had to be written down, and pretax profits were ambiguous. During the receivership
process, after the corporation was turned over to the management, new auditors Ernst & Young
told creditors that ABC Learning's finances had been heavily compromised and that the accounts
would need to be reestablished.

Inept Management: The Company’s management was too preoccupied with expanding its
activities outside national borders to address the real issues at hand. Furthermore, the Board's
members were mainly lawmakers who lacked the necessary experience and skills to work with
the childcare industry.

Poor Strategy: ABC Learning is a heavily leveraged organization and proper risk analysis was
not performed prior to massive foreign expansions. It is a word that's used in company to
describe the expansion of businesses by mergers and acquisitions, as well as the development of
market control on the commodities of other businesses. ABC Learning Centres used this method
to plan their growth plans. They crossed international borders and acquired several daycare and
nursery services in New Zealand, the United Kingdom, and the United States through numerous
mergers and acquisitions. As a result, the firm took out large debts, which eventually exhausted
the company's ability to repay them.

Damages in Liquidation: ABC Learning engaged in liquidated damages contracts with the 123
Global Group of Companies. ABC Learning will have 123 Global buy properties, create centers,
operate them until occupancy rates were adequate, and then buy the centers from 123 Global at a
high price.

Invisible Operations: Additionally, ABC Learning's corporate processes were opaque. It wasn't
well thought out, and it wasn't clear how each center would function, what the expenses would
be, how well those centers would do, or how long it would take for a center to become
financially viable.

Question 2: What are the lessons learned from ABC’s mistakes?

Answer: ABC Learning Centres have already identified a market with a high appetite for high-
quality childcare facilities. However, the childcare behemoth had to crumble due to a lack of
adequate management, preparation, and oversight.

The childcare sector is relatively young, having only existed for around 20 years. It is currently
unregulated by the authorities and requires immediate intervention in order to be monitored, not
just in terms of the facilities it provides, but also in terms of those who work in the sector. The
responsible authorities must concentrate on the individuals who are still working, examine their
background, expertise, and interests, and begin to devise a compensation scheme based on their
required skills and knowledge.

The sector is still in its early stages, and there are many opportunities for expansion and
development as the market for high-quality childcare grows. It is beyond time for the
government and local governments to investigate the situation and put it under tight control.

Question 3: What compensation policy regime do you recommend for a viable childcare
industry?

Answer: The childcare sector is still in its infancy. Government regulations and laws are yet to
have a significant impact on the market. It is also still lightly supervised, which explains why
there are so many loopholes and gaps that cause childcare centers to depart from the path of least
resistance.

Even full-time childcare employees are not subject to any stringent labor laws or regulations,
which is why they are victims of the many wrongdoings of childcare center operators.
The most critical part of standardizing the pay process for childcare workers is to choose the best
people to serve as childcare workers and employees. Until recruiting anyone, the search process
should look at the following factors:

 Early Childhood Education and Development is my educational experience.

 Years of Experience in Early Childcare o Childcare Worker's Interests
 Worker's Age & Parental Status.
 Any health issues that the Childcare Worker might have, as well as whether or not it
is contagious.
 The Worker's References.

It would be simple to define the merits and flaws of every childcare staff after all of the above
considerations have been addressed. Then, depending on the outcomes, the ‘skilled based
compensation' system will be the most suitable way to introduce in this sector. This isn't a one-
size-fits-all solution. For childcare professionals, but also for all other practical staff in the
sector, accountants, human resources, maintenance providers, and support personnel are only a
few examples.

Based on the qualifications required to meet the industry's needs, the skilled-based system can be
split into two divisions. They are as follows:

Specialist: among those who will be working in the childcare sector. The level of pay will be
determined by their extensive expertise, training, and skills in dealing with children of different
ages.

Generalist: This compensation would apply to everybody else in the industry, from the CEO to
the accountants, HR personnel, construction employees, cleaners, and security personnel, among
others. This is because these individuals will be participating in a variety of events and will have
a broad understanding of the childcare industry's overall activities and needs.

While this payout regulation regime is much nuanced and would necessitate a great deal of study
before being applied at a national/international level to the sector, it is also the most acceptable.
This is because, in most situations, childcare providers are charged a bare minimum wage,
considering the fact that childcare centers charge large prices to parents for childcare servi ces.