Management Failures

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Table of Contents

1. Introduction p. 2

2. Part A: The internal and external environment p. 2

2.1. The external environmentp. 2

2.2. The internal environmentp. 3

3. Part B: Managerial ethicsp. 4

4. Part C: Corporate social responsibilityp. 6

5. Conclusionp. 7

Reference Listp.9

1. Introduction

The purpose of this assignment is to portray and evaluate the main management failures that led to the collapse of ABC Learning Centres Ltd (ABC) under the management of Eddy Groves. Therefore it is to be looked at the following areas: internal and external environment, managerial ethics and corporate social responsibility. Further more it will be shown some examples of managers who had been successful by avoiding the mistakes Eddy Groves made and at some similar management failures within other companies.

Eddy Groves founded ABC as a private child care provider in 1988 and ABC grew steadily and fast, being the world`s biggest child care provider with once about 2300 centres in many countries in the world particularly in Australia and the USA before it collapsed and went into receivership with $ 1.6 Billion in November 2008 (Bita August 2009).

2. Part A: The internal and external environment

2.1. The external environment

The external environment is made up of two components, the specific environment and the general environment. The external forces of the specific environment (mainly competitors, customers, suppliers and pressure groups) have a direct influence on a manager`s decision-making and actions (Robbins et al. 2008, pp. 83). However, the forces of the general environment (economic, political/legal, sociocultural, demographic, technological and global conditions) are broad external conditions and don´t have that direct effect, the specific ones have. (Robbins et al. 2008, pp. 85-89). But they have to be considered by the management. They can have a strong effect on the organisations performance too as it can be seen regarding ABC. Two conditions of the general environment played a crucial role in the raise and fall of ABC Learning Centres Ltd: First Eddy Groves and his ABC profited from the huge rise in working mothers, which caused a great demand for child care (sociocultural condition) in the Australian society (Marsh 2006, Cohen 2010). Second there has been a shift in the Australian government´s subsidies policy that means a change in the political legal conditions. In 1991 the Labour Government extended subsidies for child care to the users of for-profit child care (Brennan & Oloman 2009) In the later half of the nineties the government intensified the marked focus by ending operational subsidies to community based care centres (Brennan & Oloman 2009). In 2008 e.g. ABC received approximately A$ 300 million federal subsidies (Brennan & Oloman 2009). The large amounts of subsidies together with the immense need for child care were the ignition for ABC`s growth.

It is to be asked if Eddy Groves could control external environmental factors or if those factors were outside his control. According to the omnipotent view a manager is directly responsible for the company’s success or failure by his actions, while manager´s actions have no influence on that if following the symbolic view, because a manager couldn´t control external forces( Robbins et al. 2008, pp. 80-81). Indeed the reality shows that there is no black and white, in point of fact it is a synthesis of both views (Robbins et al. 2008, p. 81). One proof that a manager can control external forces to a certain point can be found in our case regarding ABC. With regard to it´s competitors, Eddy Groves has simplified ABC`s specific environment and enforced ABC´s growth by steady acquisition of it´s competitors (Brennan & Oloman 2009) First he acquired competitors mainly in Australia then also in other countries (Brennan & Oloman 2009)...
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