Lend Lease Company: Introduction, Market Structure, and Factors of Demand and Supply

This document provides an overview of Lend Lease Company, a renowned organization in the construction industry. It discusses the company's background, its role in shaping city skylines, and its approach to creating the best places. The document also explores the market structure of monopolistic competition and factors influencing demand and supply in the construction industry. Additionally, it provides insights into the Australian construction sector and the company's strategy, expansion, and financial performance.

Higher Education Faculty
Assignment Cover Sheet
Subject Title Economics
Subject Code HI5003
Lecturer Jim Crowe
Assignment Title Group Assignment
Due Date Week 10
Contact Details Student ID NXX2045
SSCS2002
STN2255
Student Name HASSAN ABID
AKSHAT KALRA
SAFIUDDIN
Student e-mail address [e-mail]
[e-mail]
[e-mail]
I acknowledge that:
1. This assignment is our work. We acknowledged and disclosed fully any assistance received in
its preparation and cited any sources from which we used data, ideas, words, either quoted
directly or paraphrased.
2. This assignment was prepared by us specifically and only for this subject.
3. This assignment is identical with the work submitted via Self-Check on Blackboard.

Table of Contents
Lend Lease Company................................................................................................................1
1.0. Introduction and Background information..................................................................1
1.1. Industry Overview........................................................................................................1
2.0. Market structure...............................................................................................................3
2.1. Features of Monopolistic competition...................................................................4
2.1.1. No Substitute.........................................................................................................4
2.1.2. Barriers to Entry....................................................................................................4
2.1.3. Competition............................................................................................................4
2.1.4. Price Maker.............................................................................................................4
2.1.5. Gains........................................................................................................................4
2.2. Market competitor in the industry...........................................................................5
Factors of demand and supply...............................................................................................5
2.3. Factors determining demand....................................................................................5
2.3.1. The Number of customers in the Market........................................................5
2.3.2. Individuals income...............................................................................................5
2.4. Factors determining Supply......................................................................................6
2.4.1. Transport Situations............................................................................................6
2.4.2. Cost of Production...............................................................................................6
3.0. ELASTICITY.......................................................................................................................7
3.1. Elasticity of demand....................................................................................................7
3.1.1. Substitute................................................................................................................7
3.1.2. Income level...........................................................................................................7
4.0. Market analysis................................................................................................................8
5.0. Conclusion.........................................................................................................................9
ii

Bibliography...............................................................................................................................10
APPENDICES.............................................................................................................................12
Appendix 1: Australia – Quarterly Inflation rate (%)..........................................................12
Appendix 2: Australia Foreign Exchange............................................................................12
Appendix 3: Australian Rate of Unemployment.................................................................13
Appendix 4: Australia GDP from 2001-2017......................................................................14
iii

Lend Lease Company
1.0. Introduction and Background information.
The Lend Lease company has its headquarter located in Sydney, Australia. The
company has about 13,000 workers globally (King, 2018). The company head offices
are situated in United States, United Kingdom and Singapore. During operation in
various countries, the company main purpose is to build a rapport with the government,
stakeholders and the residents at large (Clark, 2002). Lend lease company has over 20
main development projects in the world. It is public listed business on the Australian
bourse. The firm acknowledges the individual and associates for their utmost
contribution to their prosperity and supporting their ability to provide the company vision
of creating the best places (Nimmo & Guthrie, 2018). Lend Lease company is one of the
renowned organization that can build metropolitan city from a virgin land which many
construction companies cannot. The company combined method means joining the
knowledge in infrastructure, design, expansion, investments and management to
provide a project from beginning to end (Taylor, 2018). The company has several years
of experience in making places that stimulate peoples and structure that backs and
bonds individual. They deal in shaping city skylines, creating iconic constructions,
breathing new life into forgotten boundaries and creating places and spaces for different
groups to enjoy (Morris, 2019).
Lend lease is dedicated to creation and providing state-of-the-art and justifiable
property and infrastructure problems for upcoming generations. With continuous
increase in expansion and the rising demand for prospect infrastructure. Their strategy
is to develop societies and take full advantage of viable results (Eldridge, 2018). They
engage in deepening their knowledge through numerous segments to regulate and
reply to varying clients demand. The style is compelled by appreciating the clients and
being supported by financial power and capacity to work beside other savings
companions. The business exists for over 60 years in construction field, they struggle to
provide lasting viable value for their stakeholders and creating a society of excellence
for its individuals (Murthy, 2018). Their expansion sector functions through the Asia,
Australia, America and Europe continents. It deals in the growth of societies, residential
settlements, apartments, retail shops, offices and other social and economic structures
(Chen, et al., 2018). They accomplish the whole progress practise through acquiring
land and creation of blue prints. Every year brings new and advanced chances,
intended to improve a prevailing landmark in a society. In the year 2017, the company
generated profit after tax of 758.6 Million dollars and it had a return on equity of 12.9%
with a market capitalization of 9.7 billion dollars (Richardson, 2015).
1.1. Industry Overview.
It was anticipated that there would be an increase in 3 percent rate of
employment in the construction industry in the year 2018. The continuous development
in the industry was expected to open up extra opportunities for work and progression of
the economy in the country. The construction business does not only contribute to
Gross domestic product but it is also beneficial for the overall development of the
1

country (Blakely & Hu, 2019). The industry is committed to expand the technology,
service delivery and financial sector. It is expected that the number of jobs being
created will rise to greater numbers in the near future. The Australian construction
sector is not only developing in magnitude, but it is also expanding in output capacity.
With a rise of 2.8 per cent per annum in output level, the sector is making equal yearly
employment progression rate.
The magnitude of Australian construction sector is indicated by its proportion of
the gross domestic product of 8 per cent to the economy. The industry is the major non-
service linked sector which contribute to 134.2 billion dollars to the nation’s budget. It is
projected that improved construction venture owing to the sector size, value and output.
Expectedly, construction jobs in metropolitan parts of Australia has been rising
progressively due to the increasing population in main towns. Actually, 50 percent of the
population has established in main towns including Sydney, Melbourne and Brisbane
which has the larger population among the major towns. Australia has experienced
balanced population increase with a yearly increase rate of 1.5 percent by the close of
2017. This growth in population is attributed to net foreign migration and natural
childbirth rate and is the causal effect of an increase in demand for more structures for
both residence and commercial structures.
The Australian end year inflation rate fell in the first months of 2019 to 1.3 per
cent in comparison to the earlier months of late 2018 which recorded an increase of 1.8
per cent, this created limited market openings of about 1.5 per cent which was the
lowest inflation rate to be recorded since 2016 financial year, and which was due to a
strike in protest for petroleum products and housing prices (Rees, et al., 2016). The
Quarterly base of consumers prices in March 2017 was constant, which was the
weakest month of inflation witnessed after several years. The Price increased from 1.1
per cent to1.5 per cent all over apart from Hobart where it surpassed 2.0 per cent and in
Darwin where it recorded 0.4 per cent. In the East coast reasonable income progression
and the continuing improvement in dwelling cost is expected to continue to retain
increased prices.
Foreign Exchange Investments in Australia has been ranging around 27,928.37
AUD Million for the past half a century, attaining an enduring greatest level of 88,457
AUD Million in mid-year of 2017 and lowest level of 1126 AUD Million in the end of
1969. In Australia, Foreign Exchange Investments are the overseas assets in
possession of the nation reserve bank. They are made of gold or a particular currency
(Soesmanto, et al., 2015). They can also be exceptional drawing privileges and
marketable securities denominated in overseas exchanges like treasury bills,
government bonds, corporate bonds and equities and overseas money loans. The
United States dollar in contrast to Australian dollar (USD / AUD) is the main exchange
pair transacted in the Australian exchange market. AUD / USD contribute to 45 per cent
of total overseas exchange income, a similar amount to that recorded in the earlier year
valuation. On the contrary, an equivalent pattern was observed in the international
overseas market and the sharing of revenue by currency pair increased in the year
2004.
2

2.0. Market structure
It is a Monopolistic Competition, in this type of market structure there are several
minor businesses who all have negligible segments of the market. Businesses have
numerous participants and each business trade in differentiated products and services
in terms of brand and quality (Bertoletti & Etro, 2016). The business operating in this
market are neither perfect competitive market nor are they monopolies.
Monopolistic competition in the short run
In the short run, the graph for monopolistic competition is the similar to the graph for a
monopoly market structure. The business makes the most of gains where Marginal
Revenue = Marginal Cost. This is at production level indicated as quantity Q1 and price
P1, this results to supernormal gains.
3

Monopolistic competition in the long run
Demand curve moves to the left direction owing to new business companies joining the
market. In the long-run, the business makes supernormal gains and this inspires new
businesses to join the market. As a result of new businesses joining the market
condenses the demand for surviving businesses and causes the businesses to get
normal profit.
2.1. Features of Monopolistic competition.
2.1.1. No Substitute.
In monopolistic competition the firms in the market manufacture products which are
differentiated in nature. The products are usually unique and have no perfect substitute.
2.1.2. Barriers to Entry
There are substantial obstacles prior to joining which is agreed upon by the
monopolist. When new business joins the market, the monopolist does not have
a whole authority of a business on the supply. This indicates that under monopoly there
is no change among a business and market (Shaikh, 2016).
2.1.3. Competition
In Monopolistic Competition, there are no close participants in the market for particular
product which reduces the competition in the market.
2.1.4. Price Maker
The monopolist chooses the cost of the good, ever since it has the market control.
Hence, they are called price makers.
2.1.5. Gains
Despite the fact that monopolist can retain supernormal gains in the long run, it is not a
must for them to make profits. A monopolist is either making losses or making the most
earning from the business which is not likely in perfect competitive market. If abnormal
gains are obtainable in the long run, other business will enter the market with the
intention to make profit and as a result of flooding the market the abnormal gains will
reduce (Zeuthen, 2018).
4

2.2. Market competitor in the industry.
Buckeridge Group of Companies (BGC) is one of the best privately-owned
businesses in Australia by revenue. The BGC Construction division was established in
the year 1994 to encounter increasing demand for Quarrying, contract mining,
manufacturing, residential and commercial construction in parts of Australia among
other tasks, and ever since then it has been in operation for projects traversing the
entire country. BGC Construction was awarded non-residential Australian contracts
totalling 1.3 billion dollars in the fiscal year 2015-2016. The company has wider
collection of vertically combined tasks and hires more than 5,500 staff and contractors.
The company enjoys BGC Group strategy which has propelled the company to meet the
ever changing demand from customers. The strategy serves a guiding principle for the
company it includes supplying high quality goods, flexibility in achieving clients need,
investing back the gains for the growth of the company among other strategies
introduced by the company initiator Len Buckeridge (Odell, et al., 2018).
Factors of demand and supply
2.3. Factors determining demand.
2.3.1. The Number of customers in the Market
The market demand for a commodity is achieved by totalling up the separate
demands of the current as well as potential customers of the commodity at different
likely costs. The higher the total customers of a product, the bigger the market demand
for the product. The question comes on what factors the number of buyers for a product
depends on. If the customers substitute one commodity with another, then the number
of customers for the commodity which has been substituted by the other will fall and for
the commodity which has been used in place of the others, the number of customers
will rise. Besides, when the trader of a commodity thrives in discovering a new market
for his products and consequently the market for his product grows the number of
customers for that product will go up. Another essential reason for the rise in the
number of customers is the expansion in population (Kim, 2018). For example, in China
the demand for numerous important commodities, particularly food rice, has rose owing
to the rise in the population of the country and the subsequent growth in the number of
customers for rice.
2.3.2. Individuals income.
The demand for commodities is also influenced by the earnings of a person. The
higher the earning of the individuals, the higher the demand for commodities. When the
outcome of the increase in the earnings of an individual is factored in the demand curve,
then the demand rises and the entire demand curve moves upward and vice versa. The
higher the revenue implies that a higher buying authority. Hence, when revenues of
individuals rise, they will be able to buy extra commodities. For this reason, a rise in
earnings has a progressive influence on the demand for commodity. When the earnings
of individuals fall, they would demand little of the commodity and this will result to the
demand curve moving downward direction. For example, owing to economic
development in Sri-Lanka the earnings of individual have significantly improved due to
5

the huge investment spending on the expansion structures by the Government and the
private sector. For this reason, there is a rise in earnings, the demand for commodity
gains and another consumable have essentially rose. Similarly, due to famine in a year
the agricultural output significantly falls, the earnings of the farmers dropped to a large
extent. The consequences of a fall in earnings of the farmers will result to demanding
less of the product manufactured in industry like clothes and other products.
2.4. Factors determining Supply.
2.4.1. Transport Situations.
This suggest that improved transport services rise the supply of commodities.
Transport is usually a restrictive factor to the supply of commodities, this is because the
commodities will not be available on time owing to poor transportation services. Hence,
even if the cost of a commodity rises, the supply would not rise. In Kenya traders
usually use road transport and the below par retained road makes it challenging to
arrive the end point on time, the commodities that are produced in one part of the town
require to be distributed to other parts of a country using road transport (Kim, 2018).
This eventually results in the loss of most of the goods on transit, this may lead to huge
losses for a trader. Additionally, the trades may also lose clients due to delay in the
distribution of goods.
2.4.2. Cost of Production
This Suggests that the supply of a commodity would drop with rise in the cost of
producing the commodity and supply would increase when cost of producing the
commodity drops. The supply of a good and cost of producing a commodity are
contrariwise connected to each other. For instance, a trade would supply little amount of
a commodity in the market, when the cost of producing the commodity surpasses the
market cost of the commodity.
In such a situation the trader would wait for an increase in cost of the product in later
days. The cost of producing an agricultural product increases owing to many aspects,
which include as infertile land, increased wage rates of labour, inflation, transportation
cost and tax rate.
6

3.0. ELASTICITY.
Elasticity is a measure of the proportional change of a variable in response to
change in another variable. It shows how easy a seller and customer can change their
behaviour and go for another commodity owing to the authority of inspiration over
choices per the relative value of the opportunity cost (Gostkowski, 2018). This is elastic
service, this is because when the cost of the service goes up their supply goes down
and vice versa. When the residents of a country are in dire need of construction
services the demand goes up and the supply goes down.
3.1. Elasticity of demand
3.1.1. Substitute.
Demand is elastic for the commodities with substitute and inelastic for the
commodities without substitutes. The availability of alternate commodities adopts the
flexible demand. For instance, Coca cola and Pepsi are alternate Products. The change
in the price of Coca cola impact on the demand for Pepsi. Thus, the demand for Coca
cola and Pepsi is said to be elastic (Dorich, et al., 2018).
3.1.2. Income level.
The demand is inelastic for high and low income persons and elastic for middle
income person. The rich person with great income do not care a lot about cost of
commodity. They may continue buying the equivalent amount of goods regardless of
the cost. The underprivileged persons with little earnings will remain buying the least
they can afford; therefore, they buy extra at a little price and less at higher price
(Costinot & Rodríguez-Clare, 2018).
7

4.0. Market analysis.
Lend lease was contracted to build the National September 11 memorial
museum, which was built to commemorate 10 anniversaries since the terrorist attack in
United States. It will be an exhibition monumental artefacts related to the actions of
September 11, 2001 terrorist attack in US, while offering close stories of injury,
sympathy, reckoning and regaining that are important to the story of the 2001 and 1993
terrorist attacks and the outcome. This event remains a marketing strategy for lend
lease company and they attracted and built confidence in many public and private
sectors who would like to construct residential and commercial office
8

5.0. Conclusion
In a nutshell, the construction industry is very important as it contribute to over
8% of the Australian GDP. Lend lease company is also very important because it
employs many people in different categories ranging from casual labourers to
engineers. The company records a big profit margin and also contribute to GDP of
Australia.
Bibliography
9

Bertoletti, P. & Etro, F., 2016. Monopolistic competition when income matters. The Economic
Journal, 127(603), pp. 1217-1243.
Blakely, E. & Hu, R., 2019. Australian Cities in Competition. In Crafting Innovative Places for
Australia’s Knowledge Economy. s.l.:Palgrave Macmillan, Singapore.
Chen, L., Elliehausen, G. & Wicks, M., 2018. Survey of Finance Companies, 2015. Federal
Reserve Bulletin, 104(3), pp. 1-14.
Clark, L., 2002. Finding a common interest: the story of Dick Dusseldorp and Lend Lease.
s.l.:Cambridge University Press.
Costinot, A. & Rodríguez-Clare, A., 2018. The US gains from trade: Valuation using the demand
for foreign factor services. Journal of Economic Perspectives, 32(2), pp. 3-24.
Dorich, J., Lepetyuk, V. & Swarbrick, J., 2018. Weakness in Non-Commodity Exports: Demand
versus Supply Factors. s.l.:Bank of Canada.
Eldridge, G., 2018. Lend-Lease and Soviet Aviation in the Second World War. Air Power
History, 65(3), pp. 51-53.
Gostkowski, M., 2018. Elasticity of Consumer Demand: Estimation Using a Quadratic Almost
Ideal Demand System. Econometrics, 22(1), pp. 68-78.
Kim, M., 2018. Impacts of supply and demand factors on declining oil prices. Energy, Volume
155, pp. 1059-1065.
King, S., 2018. Elephant memory. Journal of Writing in Creative Practice, 10(2), pp. 249-266.
Morris, A., 2019. The Build-Up to the Displacement. In Gentrification and Displacement: The
Forced Relocation of Public Housing Tenants in Inner-Sydney. s.l.:Springer, Singapore.
Murthy, N., 2018. Ethical Issues-Linkage With Economic Degradation. JIM QUEST, 14(1), pp.
38-40.
Nimmo, A. & Guthrie, B., 2018. International House Sydney. Architecture Australia, 107(2), pp.
68-73.
Odell, S., Bebbington, A. & Frey, K., 2018. Mining and climate change: A review and
framework for analysis. The Extractive Industries and Society, 5(1), pp. 201-214.
Rees, D., Smith, P. & Hall, J., 2016. A Multi‐sector Model of the Australian Economy.
Economic Record, 92(298), pp. 374-408.
Richardson, D., 2015. Corporate tax avoidance. The Australia Institute, pp. 1-16.
10

Shaikh, A., 2016. Capitalism: Competition, conflict, crises. s.l.:Oxford University Press.
Soesmanto, T., Selvanathan, E. & Selvanathan, S., 2015. Analysis of the management of
currency composition of foreign exchange reserves in Australia. Economic Analysis and Policy,
Volume 47, pp. 82-89.
Taylor, L., 2018. The Shadow Tiger: Billy McDonald, Wingman to Chennault. Air Power
History, 65(3), pp. 52-53.
Zeuthen, F., 2018. Problems of monopoly and economic warfare. s.l.:Routledge.
11

APPENDICES.
Appendix 1: Australia – Quarterly Inflation rate (%)
Appendix 2: Australia Foreign Exchange.
12

Appendix 3: Australian Rate of Unemployment.
13

Appendix 4: Australia GDP from 2001-2017.
14