Unit 7: Corporate Social Responsibility and Business Ethics
Case Study Analysis Paper:
Prepare a case study analysis on Case 13, Lennar Corporation’s Joint Venture Investments, found in the Cases section of
your digital textbook.
Closely follow the Case Study Analysis Template by clicking on the hyperlink. Please utilize this template format for this
Assignment. Use titles and subtitles per the format for readability purposes.
Focus upon the idea of the company’s abuse and fraudulent activities with respect to Lennar’s behavior relative to CSR
and business ethics. Please include the SWOT Analysis with the four quadrants in the Appendix of your paper (after the
References page). You can find the SWOT Analysis template in Doc Sharing.
• Conduct a SWOT Analysis on the case study company’s CSR and business ethics practices.
• Create a case study analysis focusing on the company’s abuse and fraudulent activities relative to CSR and
Lennar Corporation’s Joint Venture Investments Case Study Analysis
MT460 Management Policy and Strategy
Lennar Corporation’s Joint Venture Investments
Company Name: Lennar Corporation’s Joint Venture Investments.
Topic of the Week: Management Policy and Strategy Unit.
Synopsis of the Situation
Lennar Corporation is a homebuilding company based in the U.S. The company also provides its customers with financial services as well as ancillary services involving buyers and sellers. To expand its business portfolio, the company engaged in joint ventures in 2008 with other homebuilding companies, financial partners, and landowners (Pearce & Robinson, 2016). In the same year, the company experienced a fall in its stock prices owing to poor performance of the U.S. housing sector. Further details emerged that the company was engaging in gross mismanagement practices involving top members of the organization. The company maintained huge off-balance-sheet debts and engaged in other fraudulent activities involving their joint venture partnerships.
The revelation that the company had engaged in several fraudulent activities resulted in a significant decline in the stock value of the company (Pearce & Robinson, 2016). The top executives at the company had managed to conceal the suspicious activities from various bodies such as the U.S. Securities and Exchanges Commission. This paper critically examines the problems facing Lennar Corporation and provides suitable solutions that the management can adopt. The paper also provides an analysis of the internal and external factors affecting the company.
<Create at least three alternative solutions that are original and not from the case study itself.>
- Increase the affordability of homes. A part of Lennar Corporation’s problem stem from the financial crisis whereby buyers defaulted in home purchases.
- Application of fraud prevention and detection plans. Fraud prevention and detection plans such as use of independent auditors could have curtailed incidences of fraud in the organization.
- Lennar Corporations should develop a strong financial position. The company might achieve this by making stronger its cash and cash equivalents.
Selected Solution to the Problem
<Choose one of the Alternative Solutions that you created that will best fit and describe it.>
The selected solution to this problem is the implementation of fraud detection plans in the company. Fraudulent activities within Lennar Corporation are main contributors of the challenges that the company experienced. The fraud detection procedures implemented within the organization should be made possible to all the employees. The visibility of fraud detection strategies among employees acts as one of the greatest deterrents to fraudulent behavior in the organization. Fraud detection plans should work hand in hand with fraud prevention mechanisms in the organization. Fraud detection plans should receive continuous monitoring and improvements to ensure they are in line with technological advancements in the sector.
One of the approaches that Lennar Corporation may take to minimize incidences of fraud is to implement a strong internal audit department. An internal audit department may help ensure that there are effective measures that can minimize incidences of fraud involving employees and the top management (Biegelman, 2012). Internal investigations as well as independent investigations can greatly help in deterring employees and top management from committing acts of fraud. Anti-fraud programs within organizations may help assess the level of corporate compliance with the anti-fraud programs and give a report of the same (Biegelman, 2012). This can help in eliminating incidences of fraud.
<Discuss a plan in how you intend to implement the Selected Solution on behalf of the company featured in the case study.>
A successful fraud prevention program should involve the top management. The fraud prevention and detection program should ensure that it reduces the risk of fraud, reduces opportunities of fraud occurring, acts as a deterrent, changes the attitudes of employees, and be cost effective. Continuous communication and implementation of fraud prevention and detection programs is a key step in ensuring that such incidences are kept minimum.
The first step in the implementation of the fraud prevention and detection plan is to engage the top management. Fraud prevention and detection plans are most effective when the top management fully supports the plans for a worthy course. The second step will involve establishing a team of internal auditors to check on the affairs of the company. Occasionally, the company will involve independent or external auditors who will examine the financial statements of the company to ensure they reflect the true state of the company. The internal audit department will be charged with introducing a new code of ethics and conducting anti-fraud training.
Recommendations and Conclusion
<Discuss one of the alternative solutions not chosen and express why this would be a good choice as well and wrap up the analysis.>
An alternative solution to the housing crisis that hit the company might be increasing the affordability of homes. A part of Lennar Corporation’s problem stem from the financial crisis whereby buyers defaulted in home purchases. In order to attract more buyers, the company should aim at lowering the cost of homes. Although the company may make relatively smaller margins in terms of profits, it could still be able to make profits by moving higher units of houses. According to Olick (2016), most first time buyers find prices of houses way beyond their range, and hence end up not making purchases. The company can tap into the potential of young and new home buyers by increasing affordability of houses.
Involvement in fraud and the housing crisis that hit the U.S. market in 2008/2009 are the main challenges the company faces. Fraud in organizations can be checked by implementing appropriate fraud prevention and detection program. Such programs can deter employees and the top management from engaging in fraudulent activities. In order to steer away from the housing crisis engulfing the U.S., the company should tap into new and young buyers by offering attractive mortgage rates.
Biegelman, M. T. (2012). Executive roadmap to fraud prevention and internal controls: Creating a culture of compliance. (Executive roadmap to fraud prevention and internal control.) Hoboken, N.J: Wiley.
Olick, D. (2016, May 17). ‘This is a tough market’: Homebuilder Lennar CEO. CNBC.
Pearce, J., Robinson, R. (2016-01-02). Strategic Management, 13th Edition. [VitalSource Bookshelf Online]. Retrieved from https://kaplan.vitalsource.com/#/books/0077807634/
Figure 1. SWOT Analysis based upon the topic of the week for the company case.
- Different land acquisition programs.
- Large market share.
- Exposure to geographical areas in a balanced way.
- Joint venture problems.
- Low earnings.
- Concentration in the domestic market.
- Sustainable construction methods.
- Global expansion.
- There could be rise in demand for single-family housing units due to retiring baby boomers.
- Recession or poor economic performance.
- Low prices of housing units in the U.S.
- Stiff competion from Horton Inc., KB, and others.