Collapse of ABC Learning: Lessons in Business Ethics and Governance

Ethics and social responsibilities
Business ethics and social responsibility
Ethics and governance
University Name-

The financial and economic distress which arises after global financial crises and of
the negative factors resulted to the destruction of the ABC learning. This essay provides the
several answers to the case study with reasons for its collapse.
Answer to the Question No. 1
ABC learning is the biggest corporation which was indulged in having the profitable
busienss had net profit of $52.3 million. However, due to the increased destructions cost and
increased busienss costing, it had to face lot of trouble and resulted to the destruction of the
busienss. The increased busienss costing and loss of the busienss operations resulted to the
high decline in the share price of company. The financial and economic problems rose in
wake of global financial crisis of 2008 which led to the fall of the ABC ltd.
The increased busienss loss resulted to massive fall and company had to face high loss
in its busienss. In the internal loop holes of the company, some of them like; the manipulated
accounts which was not well maintained and lack of transparency. The decreased profitability
and low amount of return on capital employed resulted to high loss to shareholders and
promoters of company. Moreover the basketball team ‘Brisbane Bullets ‘was sponsored by
ABC and owned by Mr. Groves. In addition to the above this company had liquidated
damages with 123 global groups of companies. They were having poor strategic planning and
inorganic expansion which led the company in huge loan and at one point these loans
exceeded the capacity of the company to repay. They were completely opaque in their
operations. Their working without transparency made them unclear for operating their
centres calculate the viability of each centre to become commercially viable. Their
management was mainly involved in expansion of its operation beyond national boundaries
and considering actual problem at stake.
Answer to Question No. 2
The main stakeholders of the ABC learning ltd were mainly its director, company
secretary. There were Interim director; interim chief executive officer and non-executive
chairman were indulged in undertaking the strategic decisions. The director was Eddy Groves
who was its company secretary and interim director also. Its interim chief executive officer
was Mr. Rowan Webb and the non- executive chairman was Mr. David John Ryan. Its

manger was Mr. Matthew John Horton. These were the main stakeholder of the company. In
the list of board of directors of the company it was Mrs. Sallyanne Atkinson AO chairman
who was former lord mayor of Brisbane,
There were other key managerial person such as Neve Groves, Co-founder, Mr, Martine CEO
and Mr. William Non-exectuive direcors (De Janasz, and Whiting, 2009).
Answer to Question No. 3
ABC case shows the unethical busienss operation and also failed to maintain the transparency
in the books of account of company. ABC learning company’s management depicts the
utilitarian view of ethics. In this ethical decisions were made solely on the basis of its
outcomes and consequences. They were losing their loyalty towards their customer by not
telling them that they were ignoring the basic essential necessities which were necessary to
maintain the quality. They were not employing the quality standard staff for the child care
staff as they were having enough staff in community based centre. Even similarly for better
equipment also they were not providing better equipment in comparison to community based
centre. The subsidy which was subsidised by the federal government for the child care
benefits paid to the parents was not used by the company and resulted to negative quality
standards in its process. The main factors which were affecting managerial ethics were moral
developments, issue intensity, individual culture, structural variables and organisational
culture (Foster, and Shastri, 2010).
Corporate social responsibility can be understood by the way a company plays pivotal role in
the betterment of the society. The social responsibility is the way a company achieve its
balance and integration of social, economic and environmental imperatives while at the same
time fulfilling stakeholders as well as shareholders expectations. By observing the case study
it can be said that Grove followed the classical view for the profit because he was only
concentrated on creating value on its investment. Grove thought that profit maximization will
not fit if company will be more focused on responsibility towards society’s value which was
not correct. In an example of IBM, Nike and Microsoft, they proved themselves as good
corporate and also responsible and socially aware (Francis and Zheng, 2010).