Lennar's Joint Venture Investment Case Study Analysis (Case Study Sample)

Unit 7 Lennar’s Joint Venture Investment Case Study Analysis Kaplan University School of Business MT460 Management Policy and Strategy Author: Professor: Dr. Date: Name of Case Study: Lennar’s Joint Venture Investment Company Name: The Lennar Company Topic of the Week: Abuse and fraudulent activities relative to CSR and business ethics at Lennar Company. Synopsis of the Situation Lennar has been in operation since its inception. The company began in Florida as a single-family home builder. The company has concentrated in land purchases and construction of both attached and detached single family homes. The firm also has a part named Rialto Capital Management, which helps the company manage its funds and in real estate. It also plays a pivotal role in the provision of title insurance and mortgaging financing. This part has therefore been a critical part of Lennar. Lennar experienced tremendous growth in the early 2000s and by 2008, it only lagged behind DR Horton in the homebuilding industry. By this time, it had constructed numerous houses until the 2008 U S housing market crashed. This incident affected the company financially and brought more woes to the enterprise. (Wissoker, 2016). Woes were evident during this period when the CEO stated that government help was needed to save the situation. Within the next one year, things had gone wrong for the firm as it suffered a major credit crunch and problems caused by the market crash. What worsened the already bad situation and threatened the well-being of the company was a statement by Fraud Discovery Institute that the corporation’s operations were fraudulent. This agency accused the company of using joint venture to develop and sustain the interest of the top officials at the expense of the stakeholders. They used the joint ventures to finance the building of homes as well as financing loans that most of the company’s top officials have taken. This activity constitutes a failure to observe corporate social responsibility and constitutes abuse (Dhir, 2015). Alternative Solutions 1. The company should create an independent department that will act to promote responsible behavior among the officials. Such body should have the power to report fraudulent activities within the enterprise. 2. The company should take the statement by FDI positively, investigate all claims of fraud, punish those involved and refund the stakeholders the money they lost due to fraud. 3. The company should create policies that compel officials to act in an ethical manner. The legislation should allow actions to be taken against any person who works for the company’s requirements. Selected Solution to the Problem The best approach that the company can use to clean its tainted image and correct its practices of inappropriate behavior is to create an independent department. This office will handle all matters relating to corporate social responsibility and business ethics. This committee will form a critical turning point as the stakeholders should demand that the department is independent so as to promote responsible behavior among all officials. If the department existed before, it could have discovered the unethical practices within the company and reported them. This move could have enabled the firm to avoid problems such as those that emanated from the 2009 statement by FDI. Once the department is operational, it will have the powers to regularly monitor the behavior of the firm in various fields including accounting, disposal of waste, and other activities that constitute corporate social responsibility. The department will monitor all activities for inconsistency and advice the shareholders and the company management appropriately. Through this approach, the company will be able to maintain ethical practices during its operations. Implementation For the company to create the new department, it will have to consider the needs of all stakeholders. The unit creation process will start with the company forming an independent committee through a shareholder’s meeting that will spearhead the process of creating the unit. The committee will involve shareholders and the company’s management officials. Once the board comes up, they will research and identify key areas that may affect the business in future through irresponsible behavior by the people entrusted with those areas. They will document those areas and discuss the areas among themselves. Once the areas are well documented, the committee will identify people within or outside the firm who can manage the named areas well, for example, to promote ethical accounting practices; the department will have a minimum of one accountant practitioner. Once such people for all areas get identified, they will come together, and choose the department head. This department head will coordinate the activities of this team. This move will allow the department to be operational within little time. The department will then be operational to handle its mandate. Recommendations and Conclusion Another excellent solution to the woes of this firm is to create strict policies that will compel all employees, top management, and shareholders to behave in an ethical way. These plans should provide penalty and punishment to any employee or official involved in unethical behavior. Use of such rules combined with the US laws will be sufficient to point out fraud and unethical practices among the employees. The laws will instill fear among most of the company’s employees as they will fear punishment and hence behave in an ethical way. For the case of Lennar, the company lacked a clear approach to handling fraud. This move allowed the officials to misuse the money while stakeholders continue to obtain losses from their investment. This step ...