LENNAR CORPORATION’S JOINT VENTURE INVESTMENT

CASE 13: LENNAR CORPORATION’S JOINT VENTURE INVESTMENT

Synopsis

Lennar Corporation stands as one among the largest and dominating homebuilders in U.S. Apart from offering homebuilding services; Lennar Corporation offers financial and other subsidiary services to both potential buyers and sellers (Pearce & Robinson, 2013). Some of the homebuilding service operations conducted by Lennar Corporation include construction and sale of attached and detached homes for single families, sale of residential buildings, and development of residential land among other related services.

Citing from the company’s history, it was founded back in 1954 as a locally situated homebuilder in Miami (Pearce & Robinson, 2013). After few years of operation, the company listed its common stock in NYSE back in 1972 one year after completing the initial public offering. By the turn of the new millennium, the company had advanced its operations where in the year 2003 the company had acquired numerous companies such as U.S Home Corporation and other regional homebuilders (Pearce & Robinson, 2013).

As the company continued to advance its operations, it decided to form joint ventures with other financial organizations, landowners and home builders in 2008 (Pearce & Robinson, 2013). Through these joint ventures, the company was able to develop, acquire and trade particular assets within a short time. However, in 2009 Lennar Corporation was caught in the middle of a global recession during the collapse of housing prices. Additionally, the company was facing fraud criticism from FDI with regard to off-balance-sheet debt and huge personal loans that the top executives had taken out (Pearce & Robinson, 2013). Therefore, the management had to find a solution for these challenges that Lennar Corporation was facing.

Alternative Solutions

One of the alternative solutions that Lennar Corporation ought to implement is to outsource finances reviews.
Analyzing homebuilding segment in order to make sure that the company adheres strictly to the provisions of corporate and social responsibility together with business ethics
Lowering the performance in the open market through financial buffering so as to prevent the influence of market crashing to the overall performance of the company

Selected Solution

Analyzing homebuilding segment in order to make sure that the company adheres strictly to the provisions of corporate and social responsibility together with business ethics. This will make sure that the company becomes vigilant on ethical issues together with corporate and social responsibility issues such as those criticized by FDI.

The company can achieve this through implementation of CSR which will act as a guideline for the organization towards serving its market segment and the society in general. Apart from benefiting from the CSR on the basis of adherence to business ethics together with corporate and social responsibility, the organization can also benefit from advantages such as increased profit through increased savings. These benefits are based on the fact that implementation of CSR comes with no additional costs for the company.

Implementation

Lennar Corporation can assess the homebuilding segment and through Research and Development (R&D) it will be easy to adjust to the provisions of business ethics and evade the associated risks. Some business ethics concerns such as fraud can be evaded through implementation of strategies that will make sure that the company does not feature in the regulations of FDI.

Therefore, as Pearce & Robinson (2013) asserts, CSR will act as the principle for the organization in making sure that the business maintains the trust of the stakeholders and the general society by emphasizing on and adhering strictly to corporate and social responsibilities. Thus, assessment of the homebuilding segment will be reinforced by implementation of CSR in order to effectuate the achievement of projected goals on overcoming the current challenges that the company is facing.

Recommendation and Conclusion

Citing from the challenges that Lennar Corporation faced back in 2009, it is recommendable that the company should implement different strategies that will act as solutions for those challenges. Some of these challenges include outsourcing financial reviews, assessment of homebuilding sector in order to identify associated business ethics issues, and minimizing performance in the open market. These solutions will cover all the challenges that the company endured starting from FDI fraud criticism to being affected significantly by the global market recession.

Other solutions that can be executed include cutting out external borrowing and assessing all the accounts of joint ventures in the business area. These solutions will minimize the possibility of fraud materialization by making sure that financial resources are recorded appropriately and with regard to the provisions of the government regulations. Thus, with reinforcement from CSR implementation, the company will overcome all the challenges affecting it today and prevent future materialization of those and related challenges.

DISCUSSION TOPIC: CORPORATE SOCIAL RESPONSIBILITY AND THE FUTURE

To start with CSR can be delineated as the pledge for the business will adhere to the business ethics while fulfilling its responsibilities in order to effectuate its service to the stakeholders and the society at large (Pearce & Robinson, 2013). Therefore, this means that the company in question will have to balance its financial interests and business ethics that might affect its service to the society. Precisely, some of the concerns under implementation of CSR include business ethics, legal matters and environmental concerns. It is noteworthy that CSR appears to depend on the seasonal changes with regard to the technological changes and environmental concerns. This means that the corresponding regulations of the government might also change.

A good example of the change that can occur with regards to society’s expectations for CSR is Exxon Valdez’s case that occurred back in march 1989 (Pearce & Robinson, 2013). Following the spilling of more than 10 million gallons of oil in the sea, the government decided to form the Collation for Environmentally Responsible Economies (CERES) in order to promote environmentally responsible behavior by companies that pollute the environment (Pearce & Robinson, 2013). Thus, one can assert that future changes of society’s expectations for CSR will be achieved as the society attains more concern for the environment with regard to the changes in the technology that might be polluting the environment.

RESPONSES

Response to Classmate 1

It is factual that Corporate Social Responsibility (CSR) can be delineated as the responsibility of an organization to comply with the demands of the society in general and fulfill the interests of the stakeholders with regard to the financial output. Citing from the society perspective, the company is obliged to comply with business ethics provisions and act responsibly. Precisely, the organization has to serve the local community and the environment in order to retain their trustworthiness both in the market and to the general society. Additionally, execution of CSR in an organization is not meant for evading social and responsibility issues but also to evade regulations by government which can result to heavy fines. However, regardless of the benefits associated with implementation of CSR in an organization such as improving the reputation of the company and increasing profit, it is factual that in the next decade, the society’s expectations for CSR might evolve. This might be resulted by the encroachment of technology demanding the government in expand its involvement in the performance of the companies.

Response to Classmate 2

Citing from the contemporary path followed by technology and the general pattern of the encroachment, it is true that general expectations of CSR by the society might change in the next decade. CSR can be delineated as the pledge by the company to be responsible with regards to ethical, legal and environmental provisions. Precisely, the company ought to be compliant with ethical and legal provisions in order to gain trust in the market and in the society. Therefore, with the change in technology the issue of environmental pollution is becoming a concern which means that the expectations of CSR might change in advance.

Reference

Pearce, J. A., & Robinson, R. B. (2013).Strategic management: Planning for domestic & global competition (13th ed.). New York, NY: McGraw-Hill.

APPENDIX

SWOT Analysis

Strengths