Prepared By: 1. Shakil Naheyan Payel (ID: 0610065) 2. Chowdhury Md. Imran Kadir (ID: 0320467) 3.

Nazmul Anwar (ID: 0420220)

ABC Learning Centers Limited (ABC Learning) wasAustralias largest corporate child care provider Founded in Brisbane in 1988 by Eddy Groves and his wife, Le Neve. On high peak 4,700 childcare centers and provide care services to more than 1,10,000 children throughout Australia, New Zealand and the United States and the UK Stock Exchange in March 2003, with 43 centers Offered child care for children from six weeks up to pre-school age, before and after school and vacation care.

The vision was to ensure that each child was loved, nurtured and educated and thus given the best possible chance in life. As per Annual Report, 2005 it controlled between 20 and 25% of the Australian child care market In October, 2008, backdrop of severe debt and financial crisis Go into voluntary administration as on November 06, 2008 40% of their centers were unprofitable In April, 2008 the CEO of ABC Learning was forced to sell his US business to pay down debt

The objective of this report is to find out the answers of three questions. Those questions are given below: Identify & discuss the main business features of the childcare industry. Critically evaluate the main reasons for ABC Learning collapse. What policy regime do you recommend for a viable childcare industry?

Industry refers to the production of economic goods (either material or a service) within a given economy of a particular country.

Child Care or Day care Industry

Child care or day care is care of a child during the daytheamain business the child's legal Question 1: Identify & discuss by person other than features of guardians typically performed by someone outside the child's immediate family. the childcare industry. The service is known as child care in the United Kingdom and Australia and child care or day care in North America. Day care appeared first in France about 1840, and the Socit des Crches (means Society of Day Care) was recognized by the French government in 1869. Originating in Europe in the late 18th and early 19th century, day cares were established in the United States by private charities in the 1850s, the first being the New York Day Nursery in 1854.

The major expenses are the salary of staffs which is almost 85% of total expenses. In addition to that there are also few expenses as food, equipment, toys, administration and

maintaining premises.

The vast majority of childcare is still performed by the parents, in house nanny or through informal arrangements with relatives, neighbors or friends.

In Canada among two parent families with at least one working parent, 62% of parents handle the childcare themselves, 32% have other in-home care (nannies, relatives, neighbors or friends) and only 6.5% use a formal day care center.

Customers: The industry consists of establishments that provide paid care for infants,
toddlers, preschool children, or older children in before- and after-school programs.

center-based care family child care

HR requirements for the industry

Preschool teachers, teacher assistants, and child care workers are required. About 45 percent of all child day care workers have to have a high school degree or less, reflecting the minimal training requirements for most jobs.

Employment
Child day care services provided wage and salary jobs and there are a large number of self-employed and unpaid family workers in the industry, most of whom are family child care providers. day care centers are less common in rural areas, where there are fewer children to support a separate facility

Types of Daycare

Non-profit daycare :A nonprofit organization is an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals and objectives.

For profit daycare: includes centers that operate independently or as part of a local or national chain. For-profit day care corporations often exist where the market is sufficiently large or there are government subsidies. Local legislation will regulate the number and ages of children allowed per family child care home . Some localities have very stringent quality standards that require licensure for family child care homes.

Parents are typically the legal owners some non-profits day care operated by a board of directors non-for-profits are much more likely to produce the high quality environments in which children thrive. Local governments, often municipalities, may operate non-profit day care centers

Some home day cares operate illegally with respect to tax legislation
It is beneficiary for Day Care providers to be licensed so that they can have access to financial benefits from their state government, or the federal government Family childcare may be less expensive than center based care because of the lower overhead in family childcare.

 ABC Learning collapsed late in 2008 after several months

of financial trouble which started on February 2008 share value fall from 8.80 to 54 cents in august 2008 The main reason behind the collapse was the ABC learnings rocketing debt levels from the companys rapid expansion overseas mainly from acquisition in USA & UK

 Opaque operation The business model of ABC Learning was not well devised, The economics of the individual sites were not fully coasted No proper analysis for site selections. No organizational hierarchy & not decentralized properly. Hence, no

supervision was there from the supervisor for the subordinates. Huge lack of transparency in every operation. Inaccurate income statement in terms of their sources of profit. A big part of ABC Learnings net profit was generated through an unusual system of Liquidated damages & compensation from developers of its new centers.

 The expansion was based on borrowing & equity margin. No risk management before merger & acquisition which increased their

debt up to 1.7 billion within 18 months. Lack of systematic accounting practice which means a professional accountant was not hired by the company. No professional recruitment for the finance department such as internal auditor. The role of Australian government was inadequate against merger and acquisition

 Experienced a serious problem with a relief staff provider named as 123

Careers with an outstanding of $9 million to 123 Careers Faced problem with compensation package of 16000 employees of $31 million which made the high turnover & lack of efficient employees. Employees were unsure about their job security. The employment throughout all centers were not well distributed which means the ratio between children & careers was well managed. There was also casual employment which doesnt support the industry standard.

 The CEO of ABC Learning practiced nepotism by involving his former

brother in law in the major expenditure by providing the maintenance & refurbishment work to Queensland maintenance service owned by that brother in law.

The CEO of ABC Learning Eddy Groves was fully inexperienced in this particular industry

The board of directors was the politicians.

Totally inexperienced management whereas management needs to have hands-on knowledge as there was no well developed service quality benchmark in this industry. Those inexperienced management could not recruit the right persons for the right places who might forecast & protect the collapse.

 Lack of human resource practices No HR planning as job analysis, recruiting & selecting the

right person, proper training and development. No performance management which could do the performance appraisal of the employees.

 Franchise is not a popular option for childcare industry They started regional management companies (RMCs) as

ABC Learning franchises. ABC Learnings staff ran the near about 800 RMCs to avoid payroll tax.

Job Analysis

Job Specification: Job Description: 1. Helping children grow, learn & gain new skills. 2. Workers constantly stand, walk, bend, stoop, and lift to attend to each childs interests and problems. 3. Employees have to be there until all of the childrens parents come & pick up their children. 1. Minimum age of 18 years should be required for teachers. Assistants may work at age 16 2. Directors or officers should be at least 21. 3.Teachers must have a college education and experience and assistants and child care workers may need a high school diploma. 4. Directors must have at least graduation.

4. Sudden Overtime.

Because there is no service quality benchmark for childcare industry, so training & performance management is essential for a viable childcare industry. Each and every employee should be carefully supervised through performance appraisal.

 Should be aware of site selection for new centres.

Conduct feasibility study.

Borrowing within a limit. Effective franchise management.

The collapse of ABC learning was not basically because of the severe debt and financial crisis but also there were many more things related behind it. The role of the government was also a vital point, as well as the inexperience CEO, the unprofessional Board of Directors, the wrong decision of management in every step, untrained and ineffective human resource department, and many more. The vision was perfect for the ABC learning but the way of achieving the vision was wrong and resulted as the collapse of the organization. So every organization before entering into a service industry which is highly specialized as childcare industry they should consider all those mentioned fact and will hire each and every employee in every department after matching with industry standard. The forecasting has to be done by highly specialized so that the operations move smoothly and soundly. The financing has to be secured by their expected revenue so that they can pay off their debt and does not fall in bank crafty.