Lendlease Company

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LendLease Company is the brainchild of a Dutch immigrant, Dick Dusseldorp. It was founded in the year 1958. Over the years, Lendlease organization has grown to endeavour the aspects of development, construction, and investment as the major segments of operation. The small company that started in Sydney has currently expanded and grown in size to be a leading property and infrastructure group globally. Notably, the subsidiaries of Lease Land have developed not only in Australia but also into other nations in Asia, Europe, and America. It should be noted that the integrated business model adopted by Lendlease incorporates construction, investment, and development. A perfect blend of these functionalities has enabled the organization to create a niche in the industry, diversify and gain a competitive advantage that is sustainable (Clark, 2002).

Further, these operating segments enable the company to well-integrated innovative solutions to various challenges. Lend lease operates under a set of guiding principles that define their business operations in different locations. One of the principles is the provision of a healthy and safe working environment for the employees to exist at all costs. Such an environment motivates all employees and influences them to be productive at all times. On the same vein, Lend lease focuses on guaranteeing sustainability, as the decisions they make today would affect the livelihood of the future. Consequently, the organization is also guided by a strong focus on the interests of the customers and fostering the essence of diversity and inclusion in all aspects (Lendlease.com, 2018).

Structure of Lend Lease Company

Lend Lease is a well-known property and infrastructure group that has been in operation since 1958. It is worth highlighting that the major operations of Lend Lease are focused in Australia, America, Europe, and Asia. The organization has grown to establish long-lasting relationships and track records in all these regions that guide their sustainability agenda fully. The parent entity of the corporation is the Landlease Group based in Australia and listed in the Australian Stock Exchange Market. Lendlease has its headquarters in Sydney Australia. In total, the corporation has more than 12, 000 employees across all the subsidiaries. Notably, the other regional headquarters include New York, Singapore, and London (Lendlease.com, 2017).

In Australia, there are many consolidated entities that are closely affiliated with the parent entity, Landlease Corporation. These include Capella Capital Landlease Pty Limited, Capella Capital Partnership, Lendlease (Millers Point) Trust, Lendlease Building Contractors Pty Limited, Lendlease Building Pty Limited, Lendlease Communities (Australia) Limited, Lendlease Development Pty Limited, LendLease Engineering Pty Limited, Leandlease Finance Limited, LendLease International Limited, Lendlease Primelife Limited, Lendlease Real Estate Investments Limited, Lendlease Responsibility Entity Limited, Lendlease Services Pty Limited and Lendlease Trust which is an entity group that is not fully owned by the Landlease Corporation.

In Asia, Lend Lease Corporation has about four entities which include Lendlease Japan Inc, Lendlease Project Management and Construction (Shangai) Co., Ltd, Lendlease Projects (M) Sdn Bhd and Lendlease Development Malaysia Sdn Bhd and lastly Lendlease Singapore Pte. Ltd. On the other hand, Lendlease Corporation has five entities in Europe. These include Lendlease Construction (Europe) Limited, Lendlease Construction Holdings (Europe) Limited in Americas, Lendlease Europe Finance plc, Lendlease Europe Limited and Lendlease Residential (CG) plc.

Similarly, In the Americas, there are five units of Lendlease Corporation in operation. These include Lendlease (US) Capital, Inc., Lendlease (US) Construction LMB, Inc., Lendlease (US) Construction, Lendlease(US) Healthcare Development LLC, and Lendlease (US) Partnerships, LLC (Lendlease.com, 2018).

Enterprise Activities

Lendlease provides three major services; these are construction, investment, and development. The corporation believes that at every step of the project, they can always join and create a big difference. The corporation has various experts in infrastructure, designing activities, development, investments, and management to ensure successful completion of any project. The construction team operates on an international platform providing services like project management, project designing, and construction services to meet the unique demands of the clients. The development segment of Lendlease ensures they engage in developments in all regions where the subsidiaries are placed. These developments include construction of apartments, commercials, and retail centres as well as retirement building schemes among others as shown below (Homes By Lendlease, 2018).

The commercial business activities of Lendlease is diverse. It involves responding to innovation, design and different emerging workplace trends. While engaging in business activities, Lendlease designs and implements diverse workplace property solutions for many businesses. The aim of such designs is to increase the productivity of these businesses, increase their performance, collaboration and achieve inclusion for a diverse workforce. The organization realized the need to adapt the workplace to meet the diverse needs of employees and to retain top talents in organizations (Lendlease.com, 2017). Lendlease provides solutions to organizations that would want their workplaces to be places that would attract prospective employees. Landlease monitors the activities of the organization and provides workplace solutions that reflect on the organization’s culture. Landlease believes that well-designed workplaces incorporate the best technologies that ensure proper relationships are developed, and individuals motivated to perform at their optimum (Gruszka et al., 2017). Landlease achieves this objective by meeting with clients, understanding their needs and activities. Subsequently, the workplace solution experts get into action and deliver beyond the expectations of the customers.

Further, Lendlease engages in partnerships with different companies. The collaborative approach is always fronted for both investors and clients with the aim of maximizing their value. The collaborations are always a success due to the highly enthusiastic and motivated team of experts from Lendlease who are customer focused. The committed team provides solutions to the partner clients and the entire community at large. As such, the partners are at liberty to partner with Lend Lease to leverage their strengths in both value addition, and quality management systems. Notably, Lendlease has partnered with diverse companies and organizations across the regions of operation. Some of the organizations which Lendlease has partnered with include Commonwealth Bank, Sydney, ANZ, Victoria Harbour, NAB, Victoria Harbour and MYER, Victoria Harbour in Melbourne among others (Lendlease.com, 2018).

It should also be noted that Lendlease provides leasing for commercial purposes to businesses. The corporation has a philosophy that they create workplaces for people to make life not just earn a living. Thus, they provide top-notch commercial leasing opportunities in all major cities in Australia.

Competitive Advantage

Lendlease operates on a whole different level from other competitors. They take advantage of their unique integrated business model. Further, the organization has a well-established track record in all the regions it operates which provides the goodwill to operate and expand. Similarly, the Lendlease boasts of a good financial management system that has enabled the organization to sustain a strong financial ability. Focused leveraging of the integrated model enables efficient delivery of services to provide a well-streamlined approach to the concerns and needs of the customers. Lendlease also has the ability to initiate, source funding, and deliver as well as managing major projects in urban areas is a major competitive advantage over other companies in the same industry (Lendlease.com, 2017).

It is worth highlighting that the pillars of value for Lendlease provides a competitive advantage. These values include easy accessibility to third-party capital as well as the presence of a strong balance sheet. These enable the Lendlease to execute their projects in a timely manner to harness enough revenues. The organization has a strong emphasis on health and safety for all their employees. This creates a very committed team that feels cared for by the organization at all times in their lines of duty. The third pillar informing the competitive advantage of the corporation is customer focus. This indicates that they have good relationships with the customers, responding to their needs, concerns and hence giving them value for money. Also, the Lend Lease has a pillar that embodies sustainability at the centre of all decisions to make lasting changes that will impact both current and future generations (Lendlease.com, 2018).

Analysis

The parent company of the Lendlease Corporation Limited is called the Lendlease Group. The group operates three major aspects of property development, construction as well as investment. They operate within the Real Estate and Construction sector. The Unique Selling Proposition (USP) for Lendlease is innovativeness and customer-focused approach. The STP (Segment, Target Group, and Positioning), their segments include operations in Australia, Europe, the Americas and Asia. While their target customers include the middle and high-income individuals within the society. On the other hand, the positioning of Leandlease is marked by a flexible and creative capital approach.

Lendlease Group Porter Five Forces Analysis

According to Fitzpatrick et al., (2015), Porters Five forces are used to assess and understand the level of profitability in the industry as a strategic management tool. It is quite useful for the planning and execution of decisions in an economy by any company. Notably, the managers at Lendlease can effectively utilize the Porters Five Forces to analyse and understand how the five competitive forces would act to influence the level of profits and productivity of the organization. As such, the Lendlease Corporation can endeavour to develop working strategies that will enable the long-term profitability of the organization into the future. The five forces that define Porters theory are the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitutes and rivalry among the competitive players. From a consultant point of view, the Porters Five Forces can be used to help Lendlease Corporation develop a sustainable competitive advantage in the real estate industry.

1. Threats of New Entrants

It should be noted that any new entrants into the real estate business would work to provide value in unique new ways. These new methodologies of operation for the new entrants include developing and implementing low price strategies, reduction of costs and delivery of new innovative value systems to the customers. Given the imminence of such new entrants, it is important that Lendlease Corporation develop new strategies and remain flexible to sustain their existing competitive niche in the industry.

One of the strategies that can be adopted and implemented by Lendlease Corporation is the development and innovation of new products. The new products will sustain the customer base of the organization by increasing the product variety for the clients to choose from. Moreover, the Lendlease Corporation can utilize the aspect of economies of scale to reduce their costs of operation and increase the profits. Similarly, as noted earlier Lendlease has a strong financial position. They can leverage on the same to promote research and development of their products. The outcome of the research will be a quick response to the needs of the customers that are often dynamic. Such paradigm shifts in strategy would reduce the possibility of threats from the new entrants.

2. Bargaining Power of Suppliers

It should be noted that suppliers are an integral part of any company. For the real estate industry, there are many suppliers. Kotula et al., (2015) notes that the dominant suppliers in the market can act to control the number of margins generated by firms in the industry. Similarly, the major players in the real estate industry, are able to request high prices for the units of production. The impact of the increased costs of acquiring materials for the production process, will highly reduce the cost of production and hence reduce the profit margins of the real estate developers like Lendlease Corporation.

Lendlease Corporation management must formulate a strategy to diversify and build an efficient supply chain system that entails many suppliers. Further, the organization can conduct piloting with alternative designs composed of different materials so that when the prices of one material increases, they can easily shift to another supplier. Importantly, the Lendlease Corporation can develop a strategy to develop a relationship with supplier firms so that the lifeline of the supplier firms depends on the existence of Lendlease Corporation.

3. Bargaining Power of Buyers.

According to the law of demand and supply, it is determined that the level of supply will affect the demand of the consumer and vice versa. The customers are often informed and would want to get the best at the least amount of expenditure. The fact that customers would want lower prices for the products places Lendlease Corporation as the great challenge as it would affect their long-term sustainability. The bargaining power can be so demanding in the case where the customer base is small and powerful. The buyers will initiate a lot of pressure for lower prices from Lendlease and hence lead to lower gains and revenues in the long run.

The challenge of buyer bargaining power can be partly solved by Lendlease through expansion of the customer base. A big customer base will ensure that the corporation streamlines its services as well as reduce the level of bargaining power. Also, increasing the product variety through innovation and development will solve the bargaining issues. This is because customers would want discounts and price reductions on already established products. With the release of new products, it will be difficult for the customers to seek for price reductions always. The new products will also minimize the shifting of customer tastes and loyalty to the competitors that often arise due to lack of variety.

4. Threats of Substitute Products/Services

This threat can be challenging when a new product introduced into the market meets the same customer needs as those that pre-existed. The major concern lies in the reduction of the profit margins that would be realised by the firms that pre-existed. The real estate industry faces many threats of substitution. If the value addition achieved by the product substitute is better than the pre-existing products provided by Lendleasing Corporation, then the profit margins will highly reduce as the customers will change their tastes and preferences. As such, Lendlease would have to be flexible to incorporate services into their products equally. Similarly, the Corporation would have to conduct a survey to deeply and comprehensively understand the needs of the customers (Psaros and Seamer, 2015). The needs would enable tailoring of the products and the initiation of timely product changes that would sustain the competitiveness of the products.

5. Rivalry Among Existing Competitors

Intense competition among the players in the real estate industry affects profitability in the long run. Lendlease Corporation is among the firms in the real estate that are affected by the intense competition in the investment, development and infrastructure segments. The intense competition and rivalry in the real estate industry dictate that Lendlease develops sustainable differentiated products and entering into strategic collaborations with competitors to increase the size of the market (Vella and Lake, 2014). These strategies can enable Lendlease to survive and exist in the face of the tough competition and rivalry.

PESTEL Analysis of Lendlease Corporation

1. Political Factors-Lendlease faces a challenge as a result of instability in many countries internationally. The wide market exposes the corporation to unfair tax regimes and unfavourable government policies in relation to structures.

2. Economic Factors-In many nations, there is an upward trend in the income levels of employees and entrepreneurs. The high income stimulates demand for property especially in the real estate industry hence favouring Lendlease Corporation. However, situations like Brexit and other economic actions that affect the economic wellbeing of countries in the international platform affect the Lendlease Corporation (Vella and Lake, 2014).

3. Socio-Cultural Factors-The great shift in the attitude of people regarding possession of houses and property provides an opportunity for growth in revenue for the Lendlease Corporation.

4. Technological Factors-There is appreciable knowledge existence in the public that relates to technology. The availability of knowledge is a good opportunity for Lendlease who borrow on a lot of technology to innovate their products and conduct developments in property (Gruszka et al., 2017).

5. Environmental Factors-The focus on the environment has changed over the recent past. Lendlease is spending a lot of investment to ensure they remain compliant to the new environmental laws (Lendlease.com, 2017). This is also because many nations in the international arena have tightened their environmental regulations.

6. The legal Factors-The legal environment remains to be very dynamic and unpredictable especially in the international arena. The legal regulations for development, infrastructure and investment dictate that Lendlease have to remain flexible always to factor in for the legal changes within the working environments. At times, these legal ramifications may affect their capacity of operation as some maybe too elaborate like in New York where they had to pay fines and penalties as reported by Rashbaum, (2012) in the New York Times.

SWOT Analysis

Strengths

1. The organization has more than 50 years of experience

2. They enjoy an international recognition through their segments and partnership programs.

3. Lendlease has a diversified portfolio of assets

4. Lendlease has in place a strong financial foundation as well as brand recognition internationally.

5. The Lendlease Corporation has an operating model that emphasizes good governance and risk management.

6. The organization has a group portfolio management system that they use to stimulate and execute future growth and diversification plans in a disciplined manner (Retirementbylendlease.com.au, 2018).

Weaknesses

1. Vulnerabilities to local operating economies.

2. Fluctuations and Uncertainties in the value of their assets.

Opportunities

1. There is greater room for growth and expansion in the developing countries.

2. The Corporation should exploit urbanization opportunities with local partners in different countries to save on cost and other logistics.

3. Opportunities for bidding for the existing government land sites and mastering development to opportunities with governments in countries in places like Singapore.

4. The increased demand for the construction and development of green buildings and properties.

Threats

1. The United Kingdom has a fragile economic situation.

2. Lack of enough skilled labor to steer the company in all segments.

3. Fluctuation of the prevailing interest rates internationally.

Financial Analysis of Lendlease Corporation

According to the Integrated Annual Report presented for the financial year ended on June 30th,

2017, the group registered a strong financial performance. The profit of Lendlease Corporation after tax during the period was $758.6 million. The figure was a great increase from the previous value of $698.2 million generated during the previous financial years by the corporation. The security holders during the period received a contribution of 33.0 cents per security, which marked the total annual contributions to 66.0 cents per security held by the holders. The report also notes that the payout ratio for the year 2017 was standing at 51%. Notably, the payout rate of 51% is within the range stipulated by the board which is within 40-60% of the total earnings. The return on equity according to the report released in December 2017, stood at 12.9% down from the returns which were 13% for the financial year 2016. Further, the market capitalization for the Lendlease Corporation rose from $7.3 billion in the financial year ending December 2016, to a record of $9.7 billion during the financial year ending December 2017. The performance and the figures indicated that Lendlease Corporation got into 2018 with a very healthy financial position. Such resilience in the balance sheet, as well as continued capital partnerships, have continued to enable the financial flexibility capacity of the Lendlease Corporation. Thus, the group has always been flexible enough to capitalize on al growth and expansion opportunities realized through the integrated business model (Lendlease.com, 2017).

Current Operations

It should be noted that Lendlease creates places that leave lasting marks in the minds of the customers and users (Homes By Lendlease, 2018). The organization has a major focus on innovation, safety and the need to remain sustainable. Some of the recent developments for the Lendlease Corporation include 2533 residential apartments, 3236 community and retirement lots done for 24 projects, 109, 000 square metres of commercial spaces and $12.6 billion worth of construction. The organization has also increased their presence to the major gateway cities internationally. Similarly, Lendlease Corporation has significantly increased their funds under management by a value of 11% to the current $26 billion (Lendlease.com, 2017). They also engage in the construction of retirement living homes in different regions (Towart, 2017)

Future Plans/Directions

Lendlease confesses that their projects are often long-term and may take many years to fully complete. As such, the organization is always keen to maintain their pipeline of work as a way of guaranteeing their earnings and business success. The Lendlease Corporation has set aside $49.3 billion for the development pipeline in areas like Melobourne, London, Chicago, and Kuala Lumpur among others. Further, $20.6 billion has been set aside for the construction backlog revenue to be effected in places like Sydney, Singapore, and New York. The report on the investor relations presentation also indicates that the organization has set aside more than $3billion in secured funds from the management for the various urbanization projects being delivered in various locations (Lendlease.com, 2017; Lend Lease (US) Construction, 2018).

The Lendlease Corporation has an eye to invest and increase their market coverage into the future. One of such opportunities as identified by a report on Asia briefing as available on the Lendlease Website (Lendlease.com, 2018), is the increased investment in the gateway cities like Singapore, Kuala Lumpur and Tokyo. Lendlease will likely embark on the urbanization of their projects. Further, the Lendlease would invest in senior living especially in Shanghai. This would be done by focusing on how to deliver a modern maiden project within Shanghai. Moreover, Lendlease is focused towards developing the Telco Infrastructure with the completion of two 40 meters with a capacity of dual tenancies. These are successful pilot projects that will guide the operations of the Corporation in the future. Lendlease Corporation has also been identified as the preferred bidder in various projects which include development for example in the Heringey Development Vehicle in London. On the same note, Lendlease is a preferred bidder for construction in Kuala Lumpur, Sydney and in Google Headquarters in London. According to the AGM minutes Transcript the Lendlease Corporation is eyeing an opportunity in the telecommunications sector. The organization has an eye for developing a telecommunications infrastructure in the United States and Australia due to increasing demand (Lendlease.com, 2017).

Corporate Social Responsibility/Public Profile

Lendlease has a notable sustainability framework that has enhanced their relationship greatly with the public. They have a focus to meet the future needs of the clients through the creation of the best places. Lendlease has a commitment to deliver long-term value to the clients in a resilient manner. As such, Lendlease delivers services and products that are social, economically and environmentally responsible (James, 2001). The sustainability framework that has been in operation was introduced in the year 2014. Some of the pillars contained within the framework include high community engagement before the commencement of different projects, development of community capacity towards resilience and affordability of the properties, construction of healthy infrastructure and development and promotion of strategies for mitigating climate change as well as environmental conservation. For instance, in the year 2017, the following milestones had been achieved 18% energy reduction, 6% reduction in the use of water, 15% waste generation reduction and 98% of the projects by the company acquired the green certification requirements (Lendlease.com, 2017). As such, the Lendlease Corporation has been committed to providing the best to the public and hence remains a preferred organization by many.

Competitive Performance

The competitive advantage of Lendlease that differentiates them from other organizations in the real estate industry is three. These include their well-known integrated business model that incorporates all the aspects of construction, investment and development together. Secondly, the Lendlease has large access to funds and capital. The financial strength allows them to initiate projects, develop, and manage to completion without any difficulties. Lastly, the track record of Lendlease is a major competitive advantage. The organization has had a tremendously successful past experience with their projects. Their level of commitment coupled with their pillars of value has ensured sustained performance over the years. It is worth highlighting that the availability of strong governance and risk management systems also influence greatly their competitive advantage. There are three major competitors of Lendlease in the real estate industry according to Hoovers.com, (2018), these include CBRE Group Inc., Jones Lang Lasalle Incorporated, Skanska AB. The Hoovers provide solutions to customers from simple data solutions to strategic data management issues (Hoovers.com, 2018).

Bibliography

Clark, L., 2002. Finding a common interest: the story of Dick Dusseldorp and Lend Lease. Cambridge University Press.

Fitzpatrick, B., Nguyen, Q. and Cayan, Z. (2015). An Upgrade To Competitive Corporate Analysis: Creation Of A Personal Finance Platform To Strengthen Porters Five Competitive Forces Model In Utilizing. Journal of Business & Economics Research (JBER), 13(1), p.54.

Gruszka, A., Jupp, J.R. and De Valence, G., 2017. Digital Foundations: How Technology is Transforming Australia's Construction Sector.

Homes By Lendlease. (2018). About - Homes By Lendlease. [online] Available at: https://www.homesbylendlease.co.uk/about/ [Accessed 11 Aug. 2018].

Hoovers.com. (2018). [online] Available at: http://www.hoovers.com/company-information/cs/company-profile.lend_lease_corporation_limited.ba84e3fad7c9a11a.html [Accessed 11 Aug. 2018].

James, M., 2001. North lakes confirms benefits of community/environment planning. Australian Property Journal, 36(8), p.680.

Kotula, M., Ho, W., Dey, P.K. and Lee, C.K.M., 2015. Strategic sourcing supplier selection misalignment with critical success factors: Findings from multiple case studies in Germany and the United Kingdom. International Journal of Production Economics, 166, pp.238-247.

Lend Lease (US) Construction, I. (2018). Lend Lease (US) Construction, Inc.: Private Company Information - Bloomberg. [online] Bloomberg.com. Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=49848058 [Accessed 11 Aug. 2018].

Lendlease.com. (2017). [online] Available at: https://www.lendlease.com/au/-/media/llcom/investor-relations/annual-reports-and-securityholder-reviews/2017/2017-annual-report-for-lendlease-group.pdf [Accessed 10 Aug. 2018].

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Lendlease.com. (2018). Australia's Largest Building, Design & Construction Company | Lendlease. [online] Available at: https://www.lendlease.com/expertise/what-we-do/building/ [Accessed 11 Aug. 2018].

Lendlease.com. (2018). Investor Reports, Presentations & Securityholders Review | Australia | Lendlease. [online] Available at: https://www.lendlease.com/au/investor-centre/reports-and-presentations/#/reports-and-presentations/reports [Accessed 10 Aug. 2018].

Psaros, J. and Seamer, M., 2015. Ranking Corporate Governance of Australia's Top Companies: A Decade On. Australian Accounting Review, 25(4), pp.405-412.

Rashbaum, W. (2012). Lend Lease Admits Overbilling Millions on Major New York City Construction Jobs. [online] Nytimes.com. Available at: https://www.nytimes.com/2012/04/25/nyregion/lend-lease-expected-to-admit-to-fraud-scheme.html [Accessed 11 Aug. 2018].

Retirementbylendlease.com.au. (2018). Retirement Villages, retirement living options by Lendlease. [online] Available at: https://www.retirementbylendlease.com.au/ [Accessed 11 Aug. 2018].

Towart, L.C., 2017. Australian retirement living & aged care investment performance.

Vella, M. and Lake, N., 2014. Process improvement and managing complexity on the front line: A lend lease approach in civil engineering (1101). In Mastering Complex Projects Conference 2014 (p. 33). Engineers Australia.

January 19, 2024
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