Identify a major business incident that occurred not less than 2 years ago. Briefly, describe the incident and then provide an analysis of the way the company handled the issue drawing on the various theories and strategies.
Samsung group is a South Korean MNC which is headquartered in Seoul; it earned revenue of 174 Billion USD in the year 2016 and is headed by Kwon Oh-hyun. The company is mostly known for its high technology enabled consumer electronics and appliances (Kovach, 2017). The company was pivotal in establishing the operating system android in the market and it also gave major android companies a run for its money. There was a time, in the recent past when Apple feared Samsung and changed its marketing, production and advertising strategy to build up a strong game against Samsung. It can be clearly said that Samsung was the first of the few players to take the smartphone market by a storm (Thandu, Bharti, Malott & Chellapan, 2015)
Galaxy note 7 was a device in a product category of its own; it had many firsts like Gorilla Glass 5 on the front and the back, a water resistant S-pen and HDR video. Samsung launched its Galaxy Note 7 with much of a fan fare among its Target audience. People across the globe were anticipating the product very much, thanks to the brilliant marketing and advertising activities deployed by the brand. Galaxy Note 7 was on the mind of every tech geeks, phone enthusiasts and the population. People wanted to grab their hands on the phone as soon as possible. Early reviews from Technology experts gave the phone thumbs up and people started standing in queues and ordering online and wanted to have the experience provided by the Galaxy Note 7(Tuttle, 2016).The company was sure of the success of its Galaxy Note 7 series and anticipating the fanfare it announced S8 in the year 2017. It was a very bold move, but Samsung was confident about its product and was sure that no competitor can beat or match the competition. The Galaxy note 7 was received well amongst the reviewers of the device, Weird, The Verge, Time and many more sang the device’s praises, and it even earned the prestigious Mashable Choice Award. Everything was going extremely well for Samsung, until, the phone started catching fire while plugged into charging. This was the very moment which untied the company officials, product, marketing team and all the relevant departments to come forward and undo the damage it has already caused to its reputation and legacy(Lan, qiu,He, H & Xu, 2017). The first explosion of the battery occurred on August 24, when a Galaxy Note 7 device exploded while connected to a charging cable, henceforth more such incidents came into light. The company later owed that there were errors in both the designing and manufacturing of the affected batteries by two different manufacturers. Its lithium ion battery which was jacked into a tight smartphone was unable to handle the heat, which caused the explosion, the company accepted in one of the report published last year. (Saini & Austin, 2017)
Receiving the early news of explosion, Samsung delayed the shipment of the Note 7 to have quality control testing, by September it issued a worldwide call of the phone affecting the company in losses to the tune of billions and a tarnished image. Samsung Galaxy Note 7 can be considered as a worst dream for the company, there were banners on the Airport that people cannot fly with Note 7 in their pockets, and hence it was like the worst nightmare for the firm (Hartley, 2017)
The company in the month of September did a worldwide recall of its Note 7 in order to have any further damage to the lives of people, by October 11 the company stopped the production of Note 7, hence the phone which was one of the most anticipated phones in the history of Smartphones was removed from the market in a duration of 2 months(Simley, 2017) Samsung wanted to give a message out in the world about the fiasco and wanted to take a full responsibility for the explosion in the phone. The company wanted to communicate three distinct type of messages; Primary, secondary and tertiary. Primary message was communicated by company intentionally accepting that it was a design and a manufacturing fault that leads to such a troubled state, hence the primary message was clear. The company communicated the secondary message by recalling the Note 7 and stopping the operations in just a span of two months, sending out a strong message that company will not cause any probable harm in the future. Auxiliary message was communicated by Samsung in the form that it gave the buyers a provision to exchange the Galaxy note 7 to either S7 edge or updated Note 7. Hence, the company used Primary, secondary and Auxiliary messages to convey its intention and not to shy away from what have happened. The company was clear in the delivery and the intention of its message, it wanted users to know across the globe that it cares about people’s safety, and it is their priority to take care of its customers. Many statements came out in the process regarding the worldwide call off of the product, asking the carrier and partners to stop sales and exchanges of the Galaxy note 7, taking customer’s safety as the first priority, and statements like that resonated well with the users(Boyce, 2018) They appreciated the efforts of the company in doing whatever it could to control the damage caused by the explosion, they perceived it as an honest mistake which can happen to any company and thus the intent of the communication by Samsung was fairly successful.
Words have two types of meaning, denotative and connotative, attention to both is necessary to reduce the possibility of misinterpretation. The denotative meaning is the common meaning, often found in the dictionary, while the connotative meaning is often not found in the dictionary but in the community of the user itself. Samsung played with the words to manage the Galaxy note 7 fiasco in both denotative and connotative meanings. If statistics are to be believed, there were more than 92 reports of batteries overheating in the phone alone in the US, out of which 26 reports were of burn and 55 reports of property damage, reports surfaced wherein an SUV burst into flames(Maier, 2017). The stocks of the company stumbled by 10% in the entire duration, the entire management was at loggerheads with the tech and the product team, but the company still stood united to control the damage and pose a strong picture in front of its consumers.
Overall, Samsung recalled 2.5 million of the new notes across 10 markets, including one million in the US alone. The management and tech team at Samsung came up with a Software update for the Note 7 which helped the users to distinguish if there smartphone is affected or not, the software displayed a green battery icon in the phone’s status bar to indicate whether the phone has been affected. It was certainly a good strategy by management which was both defensive and combative at the same time. The representatives were vocal about this strategy and the consumers accepted the move by Samsung (Mboga, 2017) The company urged its users to return the device as soon as possible; it announced over the air that it would limit the charging of the phone to 60% of its capacity to reduce incidents of catching fire, another bold communication strategy by Samsung. Samsung’s communication strategy post the explosion have been very open and it acknowledged and accepted its mistake, it did not run away from the incidents and took full responsibility of it, certainly a sing of a customer centric company.
The staff at Samsung had sleepless nights, they cancelled their holidays, heated boardroom meeting, frequent brainstorming session and a constant social media monitoring were some of the high lights at its Seoul office. Samsung after halting the production of the phones asked the users to shut down their devices permanently, it also shipped the users fireproof boxes with the instructions on how to pack the device and send it back to the company. All this communication was made public through all the channels possible, Social media, TV, Radio ads, Print, Samsung websites and so on, in short an entire plethora of communication channels were used to put out the communication in the market and do the best to control any further damage. One of the flaws in Samsung’s communication strategy was that it was not the same for all the countries. For example, India was a huge market for Samsung, there were thousands of Pre orders which the company failed to ship, and Indians were simply told that there shipment is delayed, and nothing else. Some of the customers got a complementary VR headset to compensate for the delayed time. However, Samsung loyalists still believed that it was just one-off incident and not a big deal; this went strongly in favour of Samsung.
Samsung’s Note 7 Fiasco basically exposed the dangers and the limitation of the lithium ion batteries in Smartphones, it certainly was a lesson learnt for other smartphone manufacturers, as the explosion could have happen with any other phone as well. Even after facing such troubled times, where the company losses were in thousands of million, it did not cut any jobs, retained all of its employees and supported them throughout. In the month of December, Samsung completed its detailed investigation about the explosion and made the report public and sent out to the regulators. Another example of company being transparent in its business findings, it wanted to gain the trust of its users and hence made all the records public. Despite all the efforts company did, certain corporate crisis managers still believe that the company could have handled the situation in a much better way. They believed that Samsung kept allowing information coming to it piece by piece which did hurt it more than it should have. A spokesperson pointed to the way Samsung communicated with the public during the early days of explosion, it was unable to explain the cause of explosion which was mocked in several daily in the US and other states. It was also felt that Samsung initially suspected it was the design flaws which lead to explosion but later on further investigation it realized it was battery problems. Hence, the company was a laughing stock at several tech meets due to its changing communication to the users.
The world with a throbbing population of 7 Billion, internet penetration of more than 3.75 billion has connected the world seamlessly. People are connected regardless of border, language, caste, creed and all the information of the world is available online for public use. Hence, keeping a clean reputation becomes really important in such a fast pace world, where the information can be consumed with just a click of a button. Online reputation management is therefore the key word which is trending in the social circles and companies are taking good care of its online image. Samsung, whose business mostly depends on learning the consumers behaviour and creating products based on their demands, it becomes extremely essential to take care of its target audience. The company not only maintained its image in the press releases or in TV commercials, it took it to whole another level on Social media platforms. It curated content in-house explaining to the users about the causes of explosion, ensured that people knew what the company is doing to redo what has already happened and in the due process built a strong connection with them. Samsung realized that communication is the key to success and any fiasco can be overturned if the company is proactive, not concealing anything from its users, posing a strong face in front of the users and drawing in contingency plans in case any of its future phone encounter such problems. Samsung’s S9 is in for a release and the company realizes that all the eyes are on the phone; hence company is coming up with another interactive communication strategy and also doing multiple testing of all the hardware and software in the new phone. Samsung has shown support towards its users, by being open and transparent in the communication, its time that its users extend the support to Samsung and make up for all the losses the company underwent.
References
Boyce, S., 2018. The Science Behind Lithium Cell Characteristics and Safety. Science.
Hartley, S. (2017). The case of the exploding Samsung phones. Busidate, 25(1), 9.
Kovach, S. (2017). Samsung announces what caused the Galaxy Note 7 to overheat and explode.[online] Business Insider.
Lan, W., Qiu, S., He, H., & Xu, W. (2017). A continuously growing dataset of sentential paraphrases. arXiv preprint arXiv:1708.00391.
Maier, M. S. (2017). Corporate diversification strategies and their effects on firm performance-the case of Samsung’s venture into healthcare (Master’s thesis, BI Norwegian Business School).
Mboga, J. (2017). ELICITING MILLENNIAL PERSPECTIVES ON ETHICS IN SAFETY PRODUCT RECALLS TO ENSURE CONSUMER PROTECTION AND INDUSTRY SUSTAINABILITY. European Journal of Economic and Financial Research.
Saini, A., & Austin, M. (2017). Manufacturing Li-ion batteries for safety and performance. MRS Bulletin, 42(6), 414-415.
Simley, J. L. (2017). Teaching Software Testing Concepts Using Learning Objects.
Simley, J. L. (2017). Teaching Software Testing Concepts Using Learning Objects.
Thandu, S. C., Bharti, P., Malott, L., & Chellappan, S. (2015, June). On the feasibility of leveraging smartphone accelerometers to detect explosion events. In Mobile Data Management (MDM), 2015 16th IEEE International Conference on (Vol. 1, pp. 191-196). IEEE.
Tuttle, H. (2016). Samsung’s vertical integration challenge. Risk Management, 63(10), 6.
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