Lennar Corporation’s Case Study

Lennar Corporation’s Joint Venture Investments

Company Name: Lennar Corporation                                                                    

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Topic: Corporate Social Responsibility and Business Ethics

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Synopsis of the Situation

Lennar Corporation is one of the nation’s leading largest homebuilders and a provider of financial services. Lennar was founded in 1954 as a local Miami homebuilder. Lennar does everything associated with homebuilding from improving the land to building homes. They operate in over 14 different states from Florida all the way to California. Over the years Lennar has made joint ventures with other homebuilders, landowners and other strategic partners (Pearce & Robinson, 2016, 13-3-6).  It is important when making acquisitions that they understand the business ethics as well as the corporate social responsibility behind it.  

The joint ventures and off balance sheets started to catch up to Lennar Corporation in 2007.  The Fraud Discovery Institute issued a news statement stating the top 10 red flags at Lennar Corporation. The biggest issue was how they were they obtaining the increase in cash reserves. Lennar went from 642 million to 1.1 billion in one year. People were starting to think that Lennar Corporation was similar to a Ponzi scheme (Weisenthal, 2009).  Lennar was exhibiting patterns of deceptive business practices, by using bad quality material, just to cut cost. Lennar Corporation provided vague answers to the SEC, regarding the joint ventures and off- balance sheet. There has been several lawsuits filed against Lennar Corporation regarding the fraud and breaches of contracts. Something needs to be done to improve the business ethics and corporate social responsibility that Lennar Corporation should be following. I will provide alternative solutions to help try and turn the company around (Pearce & Robinson, 2016, 13-5). 

Alternative Solutions

1. The first solution would be to analyze all accounts within the business.

2. The second solution would be stop subcontractor and do it in house.

3. Last solution would to outsource the financial aspect of the business.  

Selected Solution to the Problem

I think the best solution for Lennar Corporation would be to analyze all the accounts that the business has. Some of their acquisitions and transactions have been done fraudulently. By figuring out what business is fraud and eliminating it, the company can start there selves in a better situation. Lennar Corporation has dug a huge whole by all the fraud and abuse claims.  Taking away the fraudulent activity, the company can start over.

Implementation

Lennar Corporation should go through every account, especially the joint ventures as these are the reasons for the problems. Hiring an outside business to look at the accounts would be beneficial. This would allowed a company to come in and just do the job. Any accounts that would be believed to be related to fraudulent activity would be removed from the books. Once this is all done then the company can start over. 

Recommendations and Conclusion

Another alternative solution would be to outsource some of the financial business that Lennar Corporation does. During the fraudulent activity they were making bad deceptive business decisions that was hurting the company. By outsourcing some of their business to a company that knows how to excel in that field will help the Lennar Corporation improve. Also by outsourcing Lennar Corporation may be able to cut cost.      

Lennar Corporation was a very successful company for many years, being one of the nation’s leading homebuilders. After excelling for several years things took a turn for the worst. The company was under investigation for fraud and we needed to find a solution to fix it. For Lennar Corporation to fix their mistakes, they need to go through all of their accounts and remove any fraudulent ones so the company can start fresh. By doing this Lennar Corporation can try to rectify the bad taste in people’s mouths and help recreate a company that was once successful.

References

Pearce, J., Robinson, R. (2016-01-02). Strategic Management, 13th Edition.

            Weisenthal, J. (2009). Fraud-Fighter calls Lennar A Ponzi Scheme. Retrieved from: http://www.businessinsider.com/2009/1/fraud-fighter-calls-lennar-a-ponzi-scheme

            Lennar Corporation SWOT Analysis. Retrieved from: http://www.mbaskool.com/brandguide/real-estate-and-construction/15011-lennar-corporation.html

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