Lend Lease Group
Lend Lease Group (officially Lend Lease Corporation Limited, LLC) is a vertically integrated real estate solutions provider group established by Dick Dusseldorp in Australia in 1958 and headquartered in Sydney (1. investsmart). Lend Lease is a primary global real estate and infrastructure group. Its major business deeds are focused on the construction, management and development of both public and private enterprises real estate assets. 2. lend lease). Lend Lease imparts broad array of services for example retail service, design and construction, environmental consulting services, construction management, building structural design, architecture and urban design (3. BBR). Lend Lease also copes and invests equity in public private partnership projects and takes on green-field development and a huge level of urban regeneration projects (3. BBR).
Lend Lease has its own strategic focus and at present LLC is focused on communication and implementation of its key projects, thriving incorporation of the infrastructure sector in Australia, efficient portfolio management and positioning of its international establishments for market repossession (2). Lend Lease’s activities are focused on four major regions: Australia, Asia, Europe and the Americas even though the group operates in over 40 countries. Lend Lease manoeuvres a provincial management structure determined on these four main geographic regions (2).
Furthermore, the group has four lines of business that function in these four geographic regions, as follows: 1. The Development business This business functions in all four geographic regions. This business is basically focussed in the establishment of sophisticated metropolitan communities, metropolitan mixed-use developments, retail and the old-aged living, aged care sector, apartments etc. 2. The Construction business This business provides engineering, project management and construction services and operates in all four major geographic regions. . The Investment Management business This business functions in Asia, Europe and Australia provides real estate investment management, retail property management and asset management services. Through investments in the Group administered finances, this business includes the Group’s ownership interests in property investments controlled directly or indirectly. 4. The Infrastructure Development business This business oversees and invests in Public Private Partnership (PPP) projects which functions in Australia, Europe and the Americas. (2) competencies
Lend Lease states that it is dedicated to meeting the social, cultural and environmental demands of communities around the world to create complete, sustainable communities. The organisation has created an environmentally sustainable development process (ESD), which seeks to deliver ongoing economic, environmental and social benefits to all stakeholders. This is communicated on the company web-site through the following points: 1. Establish ESD performance targets for project in consultation with stakeholders – owners, community, authorities, and experts – relative to local and national concerns. 2.
Formulate management strategy and performance criteria to ensure delivery against the targets. 3. Implement technical modelling and life cycle assessment to confirm performance. 4. Document design solutions and support the building process through technical assistance. 5. Hand-over or maintain involvement over the long term to assist owners and stakeholders to maintain performance. The major areas of environmental focus were stated as “energy and greenhouse emissions reduction” (NatHERS Star ratings). NatHERS is the Nationwide House Energy Rating System now mandatory for any housing development applications in NSW (New South Wales).
It forms part of BASIX which aims to reduce water consumption and effluent flows, improve internal environmental quality (thermal, acoustic, air quality, light quality), and reduce materials consumption with focus on materials that have environmental impacts in their production (see page 17). ” In addition, on the 2 December 2004, Lend Lease Property Management Australia (LLPMA) and EPA signed a sustainability covenant, which was a commitment to the public that both organisations will work together to protect and contribute to a more sustainable environment.
The aim of this declaration was to ensure that Lend Lease is empowered to develop a strategic approach to sustainability issues. With this comes the responsibility to publicly report the progress towards achieving the sustainability outcomes. Although this covenant was signed by Lend Lease, it is now with General Property Trust, which was until 2005 part-owned and managed by Lend Lease and is now independent of Lend Lease. Competencies 2. Strategy Analysis of LLC 2. 1 Strategic Overview of Lend Lease Group
Vision of Lend Lease Group: * ‘To create the best places’. Strategic Direction of Lend Lease Group: * ‘To be the leading international property and infrastructure group’. (Lend Lease) The vision statement and the strategic direction of LLC are guiding overall operation of the group. LLC is devoted to a strategic road map of Restore, Build and Lead. Restoring its high quality businesses and reshaping its business line portfolio, the group has already revealed its capability.
With its versatile business portfolio of property, infrastructure projects, development and investment management projects, LLC is surging and making ways to lead the industry. Working intimately with patrons, shareholders and other stakeholders in Australia, Asia, Europe and the Americas, LLC is striving to create utmost value from the group’s unique combination of capabilities, resources and values. Lend Lease LLC, with its broad and comprehensible Restore-Build-Lead strategy, is brawling hard to achieve the long term potential of the group.
LLC has nearly attained first stage of the Group strategy, Restore, with its businesses reorganized, updated, and restored across four core regions and stirring towards the next strategy, the Build strategy. The acquisition of Valemus (subsidiaries of Valemus include: Abigroup, Baulderstone and Conneq), is one of the many examples of implementation of Build strategy. The acquisition of Valemus is the most striking triumph in this stage of its strategy which is proved to be the milestone for Lend Lease’s infrastructure business in Australia.
This acquisition has helped the group to escalate in the infrastructure business. Besides, it has provided an incomparable backup in the engineering and construction market to LLC in Australia. (Lend lease annual report, media. corpma CEO ko) (LLC security holders review 2011) In-depth Scanning of Strategies of LLC The main strategy that LLC is following is Growth strategy. The main goal of this strategy is to expand and extend the height of the company’s revenues, employees, market share and other operations.
Growth is possible using various approaches like Concentration, Merger and Acquisition and Diversification. (A). LLC is adopting Acquisition and Diversification strategy as its major corporate growth strategy. LLC is determined to the conception of an international real estate group by organizing a portfolio of four lines of businesses (The Development business, The Construction business, The Investment Management business and The Infrastructure Development business) diversified by risk profile, sector and geography.
By concentrating on the sophisticated real estate and superior urban communities, extending infrastructure construction and infrastructure development capabilities, employing project management and construction skills, and utilizing effective asset creation and capital transaction capabilities, the strategy of LLC is endeavoured at acquiring multiple revenue streams from the portfolio of these four lines of businesses. LLC is assiduously growing its business and taking benefit of opportunities in improving markets through acquisitions and new project development. (case11, investsmart).
Diversification strategies are adopted to extend companies’ activities and business deeds by toting up, services, products or markets to the current business. Diversification helps the firm to penetrate lines of businesses that are different from existing business (3rd book). According to Johnson et al. (2008) diversification can be either related diversification, in which company expands its operation with its current capabilities or unrelated diversification in which company expand without current capabilities and resources. Diversification can be done either through research and development or acquisition (Course book).
Thus when analysing the strategies followed by LLC, it is clear that LLC is following both related as well as unrelated diversification through acquisition. LLC operates in four main lines of business which includes: The Development business, The Construction business, The Investment Management business and The Infrastructure Development business with several business sectors like, Pharmaceutical, Commercial Office, Government, Healthcare, Communities, Education, Mixed Use, Retail, Technology and Data Centres, Telecommunications, Transport.
The most important activities into which LLC diversified through acquisition were property and infrastructure related markets in global scale like Community development, Hotels & Resorts construction, Property Development, Commercial offices, Retirement Senior Living, Apartments, Infrastructure. Whereas, LLC has also diversified into entirely unrelated businesses, which includes Pharmaceuticals, Financial markets, Funds management business, Security business, Financial institutions, Transportation etc through acquisition.
Some of the LLC’s successful strategic acquisition and diversification are as follow: – Lend Lease Group was founded in 1958 to manage funds for Civil and Civic to undertake building contracts; Lend Lease acquired Civil and Civic in 1961. – Lend Lease acquired MILCON and technical service construction management business of Actus Corporation in 1999, and enriched it with infrastructure experts from parent company. – In 1999, LLC extended its business lines by acquiring P&O’s Project Management & Construction division. LLC amplified its investment management capability by acquiring AMRESCO’s commercial mortgage business. – LLC bought Delfin Property Group in 2001 (presently Lend Lease Communities). – In 2005 LLC acquired Crosby Homes (at present Lend Lease Residential Development). – LLC took over Babcock and Brown Communities in 2009 and augmented it -as Lend Lease Primelife. At the time Lend Lease became Australia’s principal retirement village provider by this acquisition. – With Lend Lease Solar, LLC entered into the consumer market in 2010.
However, in beginning of 2011, this division was closed. – LLC bought DASCO, presently Lend Lease DASCO, in February 2011, to grab the benefit of the imminent Health and insurance boom because of Obama administration’s health law. – LLC acquired Valemus Group with its subsidiaries Abigroup, Baulderstone and Conneq in March 2011. Wikipedia LLC The Infrastructure Development business – Communities – Government – Healthcare – Transportation – Telecommunication The Construction business – Infrastructure – Transport Telecommunication – Education – Arts and culture – Apartments – Mixed use -Technology and data centre The Development business – Apartments – Communities – Retail – Commercial offices The Investment Management business – Retail – Retirement Senior Living – Infrastructure – Real estate – Securities – Asset and Property Johnson et al. (2008) described that diversification through acquisition strategy allow the company to boost its efficiency through the exploitation of its resources and capabilities to new markets.
Asikhia (2010) believes that acquisitions produce synergy which in turn helps the company to ‘make more together than separately’. Montgomery and Wernerfelt (1988) claimed that diversification generates synergy which in turn helps the firm to utilize its resources, capabilities and assets like brand name of the company, customer base and technology. Johnson et al. , (2008) also identified that the implementation of a diversification strategy could result in expanding corporate capabilities into new market, thus increasing the operation level of the organisations.
Griffin (2008) suggested that an advantage of diversification for an organisation was the potential growth of an unrelated area during period of decline within the core construction function of the business. Johnson et al. , (2008) argued that diversification would ensure an increase in market power for an organisation, which would result from operating a diverse range of businesses. Diversification Limitations Griffin (2008) believed that an important limitation associated with diversification is the lack of required knowledge associated with unrelated iversified businesses within the corporate management of construction companies, resulting in inefficient allocation of resources and ineffective decision making. Colley et al. , (2002) highlighted that a significant limitation associated with diversification was the difficulty in achieving reasonably stable corporate results, as each industry contains inherent patterns of investment intensity, gross profit margins and degree of market elasticity.
Another limitation associated with diversification was discussed by Griffin (2008) who believed that construction organisations that implement unrelated diversification fail to exploit important synergies, therefore are at a competitive disadvantage to organisations adopted related diversification. Johnson et al. , (2009) highlighted that a limitation of diversification is business unit complexity, as if business unit managers attend to the requirements of other business units, the lack of focus on the original unit could compromise the output effectiveness.
An important limitation associated with the implementation of diversification strategy was described by Hill and Jones (2010) as the bureaucratic costs within a construction organisation of implementation that exceed the potential benefits and profitability. Our success around the world also depends on how we respond to five key growth trends that we believe are impacting our industry. We’re responding to the need for urban regeneration with a number of leading urban renewal projects in Australia, the UK and Singapore.
We’re meeting the needs of our ageing population with Australia’s top senior living portfolio, which includes 70 retirement villages and 30 aged care facilities. To better capitalise on the growth in public and private infrastructure opportunities in Australia in 2011, we acquired the construction and engineering businesses, Abigroup, Baulderstone and Conneq. Conneq is now known as our infrastructure services business. In answer to the growing demand for sustainable developments, we are now commercialising our sustainability expertise.
And through our portfolio of quality projects, we have plenty of opportunities to meet the interests of institutional investors, in line with the need for stable and profitable `growth of our funds under management. Lend Lease’s strategy is underpinned by five major trends. 1. Urban regeneration – By 2030, more than 60 per cent of the world’s population will live in urban areas. – Increasing urban density is creating strong demand for urban regeneration Lend Lease is delivering major urban regeneration projects in Australia, and the United Kingdom.
Ageing population – Australian population aged 65+ is expected to grow by 69 per cent over the next 15 years – Demand for retirement homes and associated services will increase rapidly Lend Lease is the largest owner and operator of senior living communities in Australia. Sustainability – Governments are responding to climate change and providing more support for sustainability initiatives. – Energy costs are likely to increase, creating demand for alternative energy sources and energy efficient solutions.
Lend Lease is a leader in sustainability, constantly researching new sustainable product solutions, technologies and materials to use on its developments and across its business operations. Funds growth – Capital from sovereign wealth funds is expected to increase with a portion being allocated to the property asset class – Institutional capital will continue to increase, with the global ageing population driving growth in superannuation and pension assets. Lend Lease has one of the largest investment management businesses in Australia and has over $10. 9 billion funds under management worldwide at 30 June 2011.
Infrastructure – Urbanisation and growth in the resources industry is creating pressure on governments to deliver extensive social and economic infrastructure. Lend Lease’s acquisition of Abigroup, Baulderstone and Conneq provides significant capability in the Australian engineering and construction market. Lend Lease Group is dogged on particular geographical regions and sectors that provide diversification advantage which amplify the prospect of generating regular return. The objective is to establish strong, unique and viable businesses globally and realise the maximum value and return over the medium and long term.