Bio-Plastics Inc and Lanos Island

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.

The stakeholder theory refers to “an idea that a company should have an expanded role and responsibilities to other stakeholders besides its owners” (Pfarrer, 2010, pg.88). This theory believes how the stakeholder’s involvements are crucial in maximising the firm’s profit. Despite the fact that most Marry-Anne’s decision is primarily aligned the shareholder theory, there are some aspects that indicates the implementation of stakeholder theory. Bio-Plastics Inc which is an American-based company, will provide working fields to the Americans in return of disengaging the Lanos partnership. This indicates Marry-Anne had a slight consideration of the American’s stakeholders. On the other hand, Rajesh asserted that the importance of the company’s reputation is vital in maintaining their sustainability globally (Kilkolly-Proffit, 2015). He also added how the island and people of Laos are the firm’s responsibility as well. This indicates how Rajesh position on Bio-Plastic inc.’s future strategy is affiliated predominantly to the stakeholder theory, by ruminating over ethical matters. Generally, Mary Anne’s position emphasised more of shareholder theory with a part of stakeholder theory whereas Rajesh’s position embodied stakeholder theory as whole on the firm’s future strategy.

Given some benefits outlined above from disengaging the partnership with Lanos, there will be some drawbacks that needed to be consider before coming into the final conclusion on whether or not Bio-Plastic Inc. should end their partnership and purchasing American-based plantations in return. I believe Rajesh’s position will be the best solution for Bio-Plastics Inc’s future strategy to be able to sustain in a long everlasting term. In this interconnected world, business which overly concentrated on generating profit and abandoned the importance of sustainability will not be able to survive in the industry. Sustainability is the concept in which providing the needs of the current generation in the absence of compromising the capability of future generations to do the same (Mckee, Kemp, Spenie, 2012). Looking through Rajesh’s position in the business, notice that he fulfilled all the three pillars of sustainability in the business. Firstly, Rajesh signified the importance of social sustainability by considering the island and people of Lanos. The partnership has succeeded in creating woking opportunities as well as a beautiful tourist location. Eventually, this will uplift Lanos’ economy as most income is obtained from the partnership (Kilkolly-Proffit, 2015). The continuation of this partnership created an overlap of economic and social sustainability as well for instance, the income gained in the partnership helps Lanos to build up facilities such as a new hospital and micro-entrepreneurship option for its citizens. Next, the decision to refuse using genetically modified trees will promote environmental sustainability as this kind of trees will have a greater potential to cause soil erosion and degradation. Hence, by keeping the old method, Bio-Plastics Inc. will be able to manufacture their products in an environmentally friendly way.  Applying the stakeholder theory in the Bio.Plastics Inc. will be the wisest and best thing to do in respect to its sustainability being maintained.