Assigment1 (1)

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Apr 3, 2024

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Assignment 1 SID: 530752873 INNOVATION OF LENDLEASE 1. LENDLEASE Lendlease is a multinational construction, property, and infrastructure company headquartered in Sydney, Australia. Since its establishment in 1958, Lendlease Group has been driven by a vision to create the best places, striving for world-leading standards in safety, innovation, and sustainability (Lendlease Global Commercial REIT, n.d.). Construction is always changing and evolving to the needs of people. In fact, one of the significant trends in Australia construction for 2021, arising from the COVID-19 pandemic, is the necessity to rethink the built environment to ensure safety, hygiene, and liveability (Latham, 2021). Hence, Lendlease should embrace innovation to differentiate itself and meet the evolving needs of clients and stakeholders. 1.1 COMPETITION The relationship between innovation and competition has been extensively studied in economic literature. One popular way to model this relationship is to assume that firms are engaged in a ‘patent race’, where firms compete to develop new products or processes and secure market dominance through patents (Négassi et al., 2018). On the other hand, Joseph Schumpeter has maintained that organizations that foster innovation are not always the most successful when it comes to competitive marketplaces (Gilbert, 2006). Although there are many arguments about this relationship, they do not diminish the importance of competition as an innovation driver. Lendlease faces strong competition from key players in the construction and real estate industries, both domestically in Australia and on a global scale. In Australia, there were a total of 445,081 construction businesses in operation (Our Industry, n.d.), thus making competition

even more fierce. Despite the most significant company in Australia (Latest List of Top 10 Australian Construction Companies, 2023), Lendlease is currently suffering due to management weaknesses. In fact, the shares of Lendlease fell 14 percent after Australia's largest global property developer reported a 42 percent drop in profit due to decreased development revenue and lowered its earnings guidance (Thomson, 2024). Moreover, Lendlease had to stop development work in Europe and the US due to high borrowing costs; and Lendlease's half-year sales declined 5.1% to $4.8 million, while its pre-tax loss increased to $173 million from $122 million (Thomson, 2024).. In contrast, their competitor - CIMIC, Australia's second-largest construction company (Latest List of Top 10 Australian Construction Companies, 2023), reported an annual net profit of $425 million after revising its share accounting approach in its Ventia services, which are listed on the ASX (Wiggins, 2023). Lendlease needs to simplify operations, choose profitable projects, manage risks, invest in new ideas, and communicate better. By making things simpler and cutting costs, they can work more efficiently. Picking projects that make money will improve their finances. Handling risks well and trying new things will help them adapt to changes. Knowing the policy in the country where projects are undertaken will enhance Lendlease's credibility and trustworthiness among stakeholders. 1.2 TECHNOLOGY Technology fosters creativity and efficiency, which drives innovation in products and services. Embracing cutting-edge technology allows businesses to remain competitive and respond to changing market needs. Resultantly, technology drives growth, moving firms forward and influencing the future landscape of sectors (Calimanu, 2023). The construction industry in Australia and New Zealand has generally been slow to adopt digital technologies, but this is changing, with over 40% of enterprises aiming to build digital transformation roadmaps (Digital Innovation: The Future of Australian Construction Industry - Building Connection, 2022). The biggest challenge in the

construction sector is connecting vast volumes of data and people, and technology helps firms effectively deal with this problem when they can connect people, processes, data, workflows, and project phases. Lendlease has made technological advances such as Autonomous Buildings - buildings that continuously learn, adapt, and respond to the needs of people and the environment - and Lendlease Podium, which aids in design, construction, and operation. However, due to its large scale, maintaining and continually improving technological equipment is necessary for Lendlease. Lendlease should concentrate on maintaining and constantly updating its technological equipment to ensure optimal performance and support its large-scale activities. Lendlease should consider establishing a centralized hub in Australia that serves as a professional command center for equipment systems from various global locations to effortlessly send data for processing. Such a strategic plan would strengthen Lendlease's risk management capabilities while also ensuring effective security measures for the organization. Employees and staff must also receive training in order to adapt to and become proficient in the application of new technology. 2. SUMMARY Lendlease, a well-known construction and property corporation, is driven by two major drivers of innovation: competition and technology adoption. Intense competition in the construction and real estate sectors forces Lendlease to innovate in order to stand out and fulfill changing market demands. Furthermore, using modern technology enables Lendlease to remain competitive, increase productivity, and effectively respond to changing market demands. These two drivers have a substantial impact on Lendlease's innovation strategy and industry position.

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References Calimanu, S. (2023). How technology is changing the landscape of economic development . ResearchFDI. https://researchfdi.com/resources/articles/how-technology-is-changing- the-landscape-of-economic-development/ Digital innovation: The future of Australian construction industry - Building Connection . (2022). Building Connection. https://buildingconnection.com.au/2022/06/27/digital-innovation-the- future-of-australian-construction-industry/ Gilbert, R. J. (2006). Looking for Mr. Schumpeter: Where are we in the Competition--Innovation debate? Innovation Policy and the Economy , 6 , 159–215. https://doi.org/10.1086/ipe.6.25056183 Latest list of Top 10 Australian construction companies. (2023). https://www.blackridgeresearch.com/blog/list-of-largest-top-construction- epc-companies-contractors-in-australia-oceania Latham, D. (2021). The Australian construction trends shaping the post-COVID world . https://www.latham-australia.com/blog/aus-construction-trends- post-covid Lendlease Global Commercial REIT . (n.d.). https://www.lendleaseglobalcommercialreit.com/about/the-sponsor/#:~:te xt=Headquartered%20in%20Sydney%20and%20established,for%20safety %2C%20innovation%20and%20sustainability Négassi, S., Lhuillery, S., Sattin, J., Hung, T., & Pratlong, F. (2018). Does the relationship between innovation and competition vary across industries? Comparison of public and private research enterprises. Economics of Innovation and New Technology , 28 (5), 465–482. https://doi.org/10.1080/10438599.2018.1527552 Our industry . (n.d.). Master Builders Australia. https://masterbuilders.com.au/about-us/our-industry/#:~:text=The %20most%20up%2Dto%2Ddate,businesses%20in%20operation%20across %20Australia. Thomson, M. B. J. (2024). LLC ASX: Lendlease cuts profit outlook, interim dividend of just under 6.5¢. Australian Financial Review .

https://www.afr.com/property/commercial/we-re-not-there-yet-lendlease-s- tony-lombardo-cuts-profit-outlook-20240216-p5f5in Wiggins, J. (2023). ASX CIM: CIMIC annual profit boosted by Ventia Services stake. Australian Financial Review . https://www.afr.com/companies/infrastructure/cimic-annual-profit- boosted-by-accounting-change-20230316-p5csn3