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.

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.   

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.  

 

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.