The daycare schools have long been in the society. The schools are aimed at providing training and supervision for small children in the preschool age and also for the old and the disabled. (Daycare, n.d.). The concept of the child care centers were conceptualized in a big way in Australia when the ABC Learning centers were established in 1988. It soon became the largest of the child care centers in Australia. It operated in the form of a company and the corporate management at its helm accelerated its growth in a short span of time. The growth accelerated in the latter half of the 1990s. In 1997, the ABC centers were only 18 in number in the whole of Australia. The number rose to 800 centers all over Australia which was 20% of all the child care centers of the country. The growth of the company reflected in the market price of the shares. The share price went up to 300% in the space of 5 years from 2001-the year in which the shares were traded in the Australian Stock Exchange. In the financial year of 2004-05, the company had profits of $50 millions.(Rush & Downie, June, 2006). However, from the highs of financial gain, the company’s fortune fluctuated and it faced trouble. There were many reasons for the fall of which many were related to the macroeconomic factors of the country. Some of the reasons were because of the mismanagement of the company. The paper will reflect on the issues that brought about the downfall of the company from such a tremendous track record. For this purpose, the paper will discuss the background to the rise of the ABC centers and divulge on the possible reasons for its dipping fortunes. Background to ABC Learning Centers
The daycare programs in Australia have been a significant service provider in the case of the children below the age of five. Some of the centers are operated in the semi-Government mould or in the community based programs. In the latter half of the 1900s, the corporate sector took stock of the opportunity of the situation and entered the market. Some of the corporate houses operate in the market but they are not listed in the stock exchange. Some of the bigger names in the industry like ABC Learning has been enlisted in the stock exchanges and operate in the form of corporate chains. It has to be noted that ABC only got access to the stock exchange in 2001. Before that they operated like any other small corporate houses. However, the entry of ABC has revolutionized the industry like never before. At the time of listing of the ABC, there were other companies in the stock exchange like Future One, Peppercorn Management Group, Kids Kampus etc. ABC successfully acquired the companies and its size only grew bigger. The number of centers rose from 43 in 2001 to 1037 in 2008. At its peak point, ABC provided service to 100,000 children and employed 16,000 staffs. (ABC Learning Centers, n.d.). The growth in the number of learning centers can be understood by the graph below:
Source: Parliament of Australia, n.d.
More amazing has been its rise in the stock exchange. In 2001, the shares opened in the ASX at $2 which rose to $13.94. The growth of the ABC was also helped by the Governmental tools. The Government had the policy of “child-care benefit schemes” and fee subsidies that were given to the centers. Before that the income of the parents of the children were tested. The day care centers were eligible to get the benefits. Therefore, the centers like ABC got the amount from the Governments if the parents of the children were not able to pay the fees. (Child care benefit, n.d.). This essentially meant that the industry was recession proof as the cash flows were constant whether from the parents or that of the Government. The growth of the corporate chains in the day care centers accelerated the growth of the other sectors like that of the real estate that were related to the industry. The growing number of centers needed to be supported by the growth in the real estate sectors....
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