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Question:
Discuss about the International Trade and Investment of Lend Lease Group.

 
Answer:
Introduction:

Internationalisation is an indispensable strategy for the success of a large-scale business in the current market scenario. It is required to expand the business over the global platform and increase market reach. Internationalisation and foreign investment provide the company with a competitive edge over the rivals. Furthermore, it supports the growth of reputation in the market in which the company operates (Perkins, 2010). The paper has been developed to analyse the international trade policy of Lend Lease Group and observe the nature of involvement of the company in the overseas market. Furthermore, the paper will analyse the rationale of Land Lease Expansion beyond the domestic market. The study observes and analyses the position of Land Lease Group in the international market to explain the theories and techniques applied by the company to invest in international trade. Finally, the study presents the lessons learned from the international exposure of Lend Lease Group and drew a proper conclusion of the study. Hence, the primary objective or aim of the study is to analyse the internationalisation theories implemented by Lend Lease Group to seek success in the global market. 

 
Background of Lend Lease Group

Lend Lease Group is a multinational Company mainly known for its real estate projects all over the world. Along with that, it provides investment assistance to major global leaders across the world. It is basically, a construction and development firm well known for its artistic buildings and infrastructures that include world class hospitals, residential properties, offices, road and bridges. Lend Lease Group is headquartered in Sydney, Australia (Lendlease.com, 2016). Dick Dusseldrop established the company in the year 1958 with a slogan to create best places. Lend Lease Group has its operations in around 40 countries with different businesses using various internationalisation strategies (Lendlease.com, 2016). Hence, it can be seen that the company has implied different tactics and strategies to expand its business in the international market that has been analysed and discussed in the study.

Nature of Lend Lease Involvement in Overseas Market

Lend Lease Group has its operations in forty different countries of the world. It has been recognised as the largest developer in the private-public defence housing in the United States of America (Lendlease.com, 2016). The company also runs an additional business in various markets that include Greenfield residential development, apartment development, property management, investment management, public-private partnerships, property funding, venture capital investment and infrastructure development (Villani and Simonson, 2012). Some of the major international projects of Lend Lease Group include attractive real estate ventures that have made the company gain a good reputation over the global platform (Stadlhofer, 2010). Lend Lease Group has gradually used two different strategies to expand its business in the international market. The strategies are named as merger & acquisition and venture capital investment.

Lend Lease began with the acquisition strategy in the early 1960s when it first acquired the Civil and Civic from Bredero’s Bouwbedrif in the year 1961. In the year 1999, Lend Lease acquired the Actus Corporation (Lendlease.com, 2016). It helped the company to expand its designing and development infrastructure. Furthermore, the company acquired the Babcock and Brown communities in the year 2009 and introduced the Lend Lease Solar in 2010 to foray into the buyer market. The acquisition process continued and at present the company stands at a net income figure of $600 million with a more than 11,000 employees working all across the globe.

Lend Lease has signed a contract with the US government to build a Public-Private partnership to develop various projects in the US regions. For example, the company has been having built the largest Solar Power project at Soaring Heights Communities LCC. Furthermore, the company has developed a partnership with the Urban Land Institute and the United Nations Environment Program Finance Initiative Property Working Group to expand its business in the global market (Parker, 2012). It can be seen that Lend Lease has also gone for Venture Capital Investment with various subsidiary companies to undergo complex and reputed projects in different parts of the world (Wilder, 2014). Hence, it can be seen that Lend Lease has implied the acquisition and venture capital strategy to expand its markets effectively all across the globe. The company has sought success various ventures and have faced various downfalls due to lack of proper decisions (Parker, 2012). The strategies used by Lend Lease have saved it from making an immense loss over the global market. It is due to the control over the investment made by the company (Stadlhofer, 2010). Furthermore, Lend Lease has a separate team for market research to analyse the future opportunities of the ventures. Hence, a good market research before investment and proper internationalisation strategy has helped the company to seek growth and success in the international market. 

 
Rational of Lend Lease Expansion Beyond the Domestic Market

Through the identification of latest growth opportunities in the international market, Lend Lease Group has concentrated on fresh investment opportunities in the emerging economies such as China and India. Being one of the most renowned constructions, infrastructure and real estate industry based organisations, Lend Lease Group has identified that the prosperity in the domestic market will not fulfil the targets of the organisation (Oh, 2009). As a result of the business scenario, Lend Lease Group has targeted towards wider ranging markets taking advantage of massive target demographics. In the contemporary business scenario, Lend Lease Corporation has to deal with significant market challenges in the Australian domestic market. First of all, the increasing market competition with another infrastructure and real estate organisations such as CBRE Group, Jones Lang LaSalle Inc, and Abacus Property Group has reduced the market share of Lend Lease Group in Australia. Therefore, the ever-changing market dimensions of Australian real estate and investing business has forced Lend Lease Group to concentrate on globalisation (Case, Goetzmann and Rouwenhorst, 2010). Moreover, the international merger and acquisition options in the private and public sector have encouraged Lend Lease Group’s management to expand the business in the emerging as well as some of the developed countries. The Strong global presence of Lend Lease Group due to major international tie-ups has significantly contributed towards further decision-making of internationalisation exploring the investment opportunities in the construction sector in the United Kingdom and China (Nwogugu, 2011). The flourishing housing sales data and property investment scenario released by the National Bureau of Statistics of China have also prompted Lend Lease Group to find investing opportunities in the Chinese real estate market. In the first quarter of 2016, the home sales in China are increased by 61.4% to 2.41 trillion Chinese Yuan. Also, the property investment has risen by 7.2% to 2.54 trillion Chinese Yuan (Fung, 2016).

The rosy statistics of the overseas market has signalled towards the massive market opportunities in the international market especially in the Chinese real estate. Apart from that, strong demand of real estate buyers in the countries such as the UK and India has confirmed the decision of internationalisation of Lend Lease Group.  Moreover, one of the recent high-profile concerns for the Land Lease Group is the competitive Circular Quay in the Sydney market area (Baldwin and Yan, 2012). The proposed commercial development has forced Lend Lease Corporation to deal with substantial financial issues regarding relocating of the housing complex. Such adverse market scenario has restricted the market penetration of the real estate business to a certain limit. By considering the profitability margin at the market in China, India and UK, Lend Lease management has agreed to move forward showing promising prospects in the upcoming future (Fung, 2016). The latest boost in the real estate market in the United Kingdom and China has provided significant investment opportunities to Lend Lease Group into the real estate industry. In this way, the organisation can set new highs according to their standards. Also, the decrease in bank loan in the real estate in China will increase the prospects for Lend Lease Group by setting major inroads as an investing firm.

 
Positioning in the Global Market

By utilising the economies scale and capabilities, Lend Lease Group has secured inconceivable global market presence. The Australian-based organisation has established remarkable business standards in the United States of America and the United Kingdom primarily because of the real estate standards and infrastructural efficiency (Chryssochoidis, Millar and Clegg, 2007).  Lend Lease Group with a capitalisation of $6.5 billion has successfully positioned itself in the developed market area providing advanced investing opportunities, asset management services, infrastructural development, and venture management in the US, UK, Singapore, Japan, Malaysia and other countries of Asia-Pacific (Wiggins, 2014). The subsidiaries of Lend Lease Group such as Lend Lease Dasco have been famous for an unmatched leasing and financing management of medically oriented offices. For more than a couple of decades, Lend Lease Dasco has proved its market authentication in the medical real estate industry in the United States of America.  Another subsidiary of Lend Lease Group, Lend Lease Project Management & Construction has engaged in many construction operations in the UK, the US and Asian countries (Hesse, Grotz and Toonen, 2007). The Lend Lease Development Group has focused on large-scale urban construction providing a structural and planned urban regeneration. Currently, the organisation has operated in more than 40 countries on the global platform. Most of the large-scale constructions have been managed by Lend Lease Project Management & Construction (Czechowska, 2013). Apart from that, Lend Lease Group has managed small scale businesses such as property management, investment management, real estate sales and leasing businesses and infrastructure development projects (O’Mara, Page and Valenziano, 2012). Moreover, the organisation has utilised technological innovation to maintain the business standards in the highest possible way.

The largely based construction projects all around the international arena have provided a sustainable global market presence to Lend Lease Corporation. In international operations management, Lend Lease Group has efficiently utilised smaller contractors to meet the costs of construction projects in an affordable way. Currently, identifying the greatest real estate bubble in the emerging economies such as China and India has encouraged Lend Lease Group to explore the massive real estate and infrastructure oriented markets of the target countries. Though the organisation has headquartered its business in Australia, the company is yet to control the significant portion of market share within the country. The prospects are more encouraging in the international arena where the sustainability of Lend Lease business looks significantly constructive (Dabbah, 2013).  As a result, the organisation has engaged with the foreign contractors to establish more foreign subsidiaries in order to explore the real estate markets of the overseas countries. Lend Lease growth seeking internationalisation business model has successfully achieved a substantial portion of global market share in different markets. Recently, the diversified business model of the group has helped to increase its market share in the European countries by signing latest large-scale construction based projects. Moreover, the significant operational model in directed towards Chinese and Indian market can influence the revenue margin of the construction company in a positive note (Lenaghan, 2016). Through the identification of existing opportunities in the developed as well as developing economies, Lend Lease Group must go for mergers and acquisitions at the global front lessening of the market competitiveness.

 
Lessons Learned from Lend Lease Approaches in the Global Market

Lend Lease approaches in the global market has taught several lessons that must be kept in mind while expanding business over the globe. First of all, it is important to have the support of the political power of the country in which the company is expanding its business. Lend Lease has applied the Public Private Partnership strategy to seek growth in the US market. Currently, the partnership with the US government supported the development of various projects in the US regions. Along with that, the company has used the acquisition strategy to develop the organisation in the perspective of technology advancement (Dickson, 2014). It has acquired various technologically advance companies provided the company with a good opportunity to grow over the international market (Hudson, Xia and Yeboah, 2015). Furthermore, Lend Lease also implemented the tactics of venture capital investment to start new projects in the international market. Hence, the internationalisation strategies used by the company reduces the risk of losses in the global market (Dickson, 2014). In addition to internationalisation strategy, the company has undergone thorough researches before investing in the international projects (Hudson, Xia and Yeboah, 2015). The in-depth researches reduce the chances of failure and ensure quality investment over the international market. Hence, it can be seen that the tactics and strategies used by the company to grow its business in the international market can be used as role models by other small organisation to develop their business over the globe.

In the modern business scenario of Lend Lease Group, the organisation has seemed to be focused on finding latest investment opportunities on the emerging economies such as China and India. Through the identification of current globalisation model of Lend Lease Group, it can be realised that the organisational management of the firm has voted for internationalisation in the Asian countries such as China where the real estate bubble is seemed to be improved (Dickson, 2014). Moreover, in context to the current domestic market condition in Australia, the market share is not improving on a consistent basis for the Lend Lease Group. Hence, the organisation has identified business innovative model to support the international business structure (Dickson, 2014). Being one of the significant real estate and construction business organisations of the globe, the organisation has improvised diversified asset portfolio to manage the massive business structure of the firm (Hudson, Xia and Yeboah, 2015). By moving to the developing market such as China and India, Lend Lease Group has sent a message towards the rest of the competitors how to deal with the global business competitiveness (Dickson, 2014). Meanwhile, the proper use of opportunity must be identified at the globalisation prospect so that a business organisation can continuously upgrade its current business market to explore new entities and prospects.

Conclusion

Convincingly, the road map of Lend Lease business proposition has seen so many ups and downs since the global recession of 2008. Currently, the organisational leaders have identified influential business innovation models to remodel the structural framework of the construction and real estate oriented business at the global front. The remarkable disciplined regulatory framework of Lend Lease Group has actively played a massive role in emerging market development. Under the current business circumstances in the Australian domestic market, the organisation has decided to shift the focus on emerging markets to meet the growth structure. Furthermore, the financial stability of the group and massive real estate improvement in the Chinese market in the first quarter of 2016 has enhanced the proposition of the organisation. Along with that, the higher rate of growth in the construction, real estate and housing industry in the developing countries have increased the investment opportunities of the firm to strengthen the business structure in countries such as China and India. Moreover, the diversified asset based portfolio and sustainable large-scale construction and investing projects around the globe have shown the growth proposition of Lend Lease Group. Broadly, the efficient technological advancement and skilled labourers of the organisation have successfully supported the business framework of the firm to become one of the best in the real estate and infrastructure businesses. 

 
References

Baldwin, J. and Yan, B. (2012). Market Expansion and Productivity Growth: Do New Domestic Markets Matter as Much as New International Markets?. Journal of Economics & Management Strategy, 21(2), pp.469-491.

Case, B., Goetzmann, W. and Rouwenhorst, K. (2010). Global real estate markets--cycles and fundamentals. Cambridge, MA: National Bureau of Economic Research.

Chryssochoidis, G., Millar, C. and Clegg, J. (2007). Internationalisation strategies. New York: St. Martin's Press.

Czechowska, K. (2013). Level of Foreign Direct Investments and Transparency of Polish and Global Real Estate Market. Real Estate Management and Valuation, 21(2).

Dabbah, M. (2013). The internationalisation of antitrust policy. Cambridge, U.K.: Cambridge University Press.

Dickson, F. (2014). The Internationalisation of Regions: Paradiplomacy or Multi-level Governance?.Geography Compass, 8(10), pp.689-700.

Fung, E. (2016). China Housing Revival Buffers Economy. [online] WSJ. Available at: https://www.wsj.com/articles/china-housing-revival-buffers-economy-1463288631 [Accessed Aug. 2016].

Hesse, J., Grotz, F. and Toonen, T. (2007). Crossing borders. Berlin: De Gruyter Recht.

Hudson, D., Xia, T. and Yeboah, O. (2015). Foreign Direct Investment and Domestic Industries: Market Expansion or Outsourcing?*. Review of Agricultural Economics, 27(3), pp.387-393.

Lenaghan, N. (2016). Lendlease gets $1b Melbourne Quarter nod. [online] Financial Review. Available at: https://www.afr.com/real-estate/lendlease-gets-1b-melbourne-quarter-nod-20160824-gqzyoo [Accessed Aug. 2016].

Lendlease.com. (2016). Design & Development Of Iconic Construction Projects | Lendlease. [online] Available at: https://www.lendlease.com/expertise/ [Accessed Aug. 2016].

Nwogugu, M. (2011). Risk in the global real estate market. Hoboken, New Jersey: Wiley.

O’Mara, M., Page, E. and Valenziano, S. (2012). The global corporate real estate function: Organisation, authority and influence. Journal of Corporate Real Estate, 4(4), pp.334-347.

Oh, D. (2009). Dynamic Analysis on Domestic Demand Expansion and Labor Market Reform in China.Journal of East Asian Economic Integration, 13(2), pp.231-262.

Parker, D. (2012). Global real estate investment trusts. Chichester, West Sussex: Wiley-Blackwell.

Perkins, R. (2010). The Internationalisation of Managerial Environmentalism: Globalisation, Diffusion and Territorialisation. Geography Compass, 4(8), pp.1069-1083.

Stadlhofer, G. (2010). Corporate real estate performance. Journal of Corporate Real Estate, 12(2), pp.96-116.

Villani, K. and Simonson, J. (2012). Real Estate Settlement Pricing: A Theoretical Framework. Real Estate Economics, 10(3), pp.249-275.

Wiggins, J. (2014). Leighton and Lend Lease's market share a concern, says Productivity Commission. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/leighton-and-lend-leases-market-share-a-concern-says-productivity-commission-20140312-34ngs.html [Accessed Aug. 2016].

Wilder, N. (2014). Reverse Lend-Lease in the Pacific. Far Eastern Survey, 13(19), pp.179-181.

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