The partnership of Bio-Plastics Inc and Lanos Island is a major success in bringing benefits to both sides in the last 5 years. However, there are some concerns arose as other plastics manufacturers started to emerge, risking a higher competition in the industry. The CEO of Bio-Plastics Inc, Mary-Anne, questioned the continuation of this partnership. In contrast, Rajesh, a non executive board members, believed that this partnership should be maintained. This essay will begin with the discussion stakeholder and shareholder theories relating to the firm. Then analysing both Mary-Anne and Rajesh’s positions in respect to the firm’s future strategy. Following this, i will clarify my view to support Rajesh’s position that would be most advantageous to Bio-Plastics Inc.
The shareholder theory focusses on maximising the shareholder wealth and stated that government is fully responsible for the social problems(Pfarrer, 2010). Mary-Anne believes her decision to purchase the American-based plantation, “will mean that the company will enjoy record profits and financial gain” (Kilkolly-Proffit, 2015, pg 4). This points out how the shareholder theory dominates her strategies in running the firm. The current partnership has been promoting all of the three pillars of sustainability to Lanos, thus by ending the partnership will cause a disturbance of Lanos’ sustainability. Mary-Anne’s brought up her idea without taking account of the any social problems that might occur for instance, the lost of significant employment in Lanos. This again, shows the correlation of shareholder theory, which neglects the social problems occurred. Purchasing and owning the American-based plantations will help the firm to compete in the fast-paced industry and giving a much lower transportation costs will definitely boost up the firm’s profit. Nevertheless, the firm might have consider how this will effect Bio-Plastics Inc. sustainability in the foreseeable future. From the discussion above, it concludes that Mary-anne applied shareholder theory in her position on Bio-Plastics Inc’s future strategy.