July 19, 2022 – Chopstix LLC – Maximization vs. Shared Value

Your Name: Taavi Herzog

Focal Organization:  Identify the small business you will focus on in this post.  Briefly describe the business and its basic/underlying business model:

In this post, I am going to discuss Chopstix LLC, a locally serving Kosher Chinese Takeout Restaurant in Teaneck, New Jersey. The basic business model is that customers place their orders either online, on the phone, or in house, and their food is prepared and given to them either in house or by delivery, which they then consume on their own – all in a timely, efficient process.

Financial Performance/Maximization:  What issues and concerns does this small business face with respect to having to pay attention to its financial performance and/or maximize its financial performance outcomes?

              The prices Chopstix has to pay to its suppliers have a direct impact on the profitability of the firm. Chopstix also has to be concerned with its customers, whether this includes their purchasing preferences, their cultural behaviors (a large portion of the customer base is Jewish, and therefore business is put on hold every Saturday and for particular times of the year that coincide with religious holidays), or even their incomes. The customers, as a stakeholder, have an inverse effect on the firm’s profitability compared to that had by the suppliers.

              Another thing to consider could be street parking regulations. At the beginning of the COVID-19 pandemic, the side of the street on which Chopstix resides (a portion of the establishments on this side are sit-down restaurants) was closed off with cement barriers, creating space for outdoor seating. This forced all the parking along the street to bottle-neck onto one side, creating a hassle for customers who were looking to briefly stop the car, run in to get their food, and run back out. Chopstix’s customers had different demands from the customers of the other restaurants, except the town’s accommodation of the other customers caused a constraint on Chopstix’s customers, which in theory could have negatively impacted the firm’s sales. The cross interactions of stakeholders in this scenario involve Chopstix, the neighboring restaurants, the customers of each of the establishments, and the town’s government.

Shared Value For Stakeholders :  Who are the 2-3 most important stakeholders of this small business and what issues and concerns does the small business face with respect to having to generate shared value with/for these stakeholders?

              As a Kosher restaurant, Chopstix needs a hechsher – a label certifying that their food is Kosher. There is an organization known as the RCBC (Rabbinical Council of Bergen County) that is responsible for certifying Chopstix. Several years ago, the RCBC told Chopstix that they had to purchase prewashed and frozen broccoli, rather than the fresh broccoli that they had been using for years. This was because the RCBC was more confident that the prewashed broccoli was bug-free than the fresh broccoli (bugs are not Kosher, and therefore can not be present in Kosher food). This meant that Chopstix would have to pay more for their broccoli, and frozen broccoli is often said to be of an inferior quality to fresh broccoli, as well.

              Culturally, Chopstix had no choice. The RCBC was a representation of the values held by the majority of the community that ordered from Chopstix. Even if none of the individual customers cared whether or not the broccoli had been prewashed, the organization representing the community’s interests made that determination for them. In order to comply with the shared value of the customers and the regulating agency, Chopstix had to buy frozen broccoli.

Other Examples Like This?:  As a future manager facing complex environments, give another example of an organization (large or small) that faces competing pressures between the need for attention to financial performance and the need to create shared value for stakeholders:

              Within the video game industry, there are multiple pressuring stakeholders on game development companies, some of which compete even against themselves. One example is the customer. While customers wish for games to be completed and released as soon as possible, games that are rushed through production eventually release and are met with serious disapproval for lack of content and poor execution.

Another stakeholder of concern is the employees themselves. Video game development is a highly artistic process, but it’s still labor much the same as lifting and moving packages at a port is labor. Sometimes, like in the case of BioWare and their production of the game Anthem, employees can become so overwhelmed by their culture that they leave. Mark Darrah, an executive producer on the game, left the company in 2020, publicly deprecating the work environment that exhausted the developers and that ultimately contributed to a very poorly received product.