Lennar Corporation

Executive Summary

Lennar Corporation (Lennar or “the company”) is one of the largest homebuilders in the US. Lennar is one of the largest homebuilders in the US. The company also provides financial services primarily to its home-buyers. Lennar is an established player in US. Strong presence would not only enhance the brand image of the company but also strengthen its market position. However, challenging home building industry with reduction in new home starts unprecedented price declines etc, poses a threat for the company.

In this paper, we have analyzed the Lennar Corporation's performance and criticized it thoroughly. Our comments include suggestions for their better future performance.

Lennar Corporation

Introduction

Lennar is one of the largest homebuilders in the US. The company also provides financial services primarily to its home-buyers. Lennar is an established player in US. Strong presence would not only enhance the brand image of the company but also strengthen its market position. However, challenging home building industry with reduction in new home starts unprecedented price declines etc, poses a threat for the company.

Findings

Established player in the US

Lennar is a Fortune 500 company engaged in the homebuilding and financial services businesses in the US. The company has over 55 years of experience. The company is the third largest homebuilder in the nation as it closed 11,478 homes in 2009 as compared to D.R.Hoton which closed 18,164 homes and Pulte Homes closed 15,013 homes in 2009. Thus it is ranked number three on the “Builder 100 list” of America's largest home builders. Also, Lennar was ranked as the number eight homebuilder and ranked six in global competitiveness in Fortune magazine's 2009 list of America's Most Admired Companies. Thus the company's strong presence in US has helped it over the years to enhance its brand image and strengthen its market position. (Leon, 9)

Strategy through downturn

In 2009, Lennar focused on refining product offering, reducing the number of floor plans and targeting first time and value oriented homebuyers. The company reworked its products portfolio accordingly. Lennar reduced floor plan average square footage by approximately 300 square feet. Through this Lennar increased efficiency of its products which reduced construction costs. The company reduced number of floor plans by 63% and construction costs per square foot have decreased in excess of 25%. (David, 32)

Diversified program of property acquisition

Lennar follows a diversified program of property acquisition. It acquires land directly from individual land owners/developers or homebuilders; local or regional homebuilders that own, or have options to purchase land in strategic markets. The company also acquires land through option contracts, which generally enables to control portions of properties owned by third parties (including land funds) and unconsolidated entities. In 2004, the company formed a joint venture with LandSource, which has now emerged from Chapter 11 free of its previous bank debt and reorganized itself, thus forming a great opportunity for Lennar at present. Thus with this kind of strategy, the company is able to access lands which it could not have done otherwise and reduce the initial outlay spend in ...