Samsung Galaxy Note 7 Crisis - Case Study Example

SAMSUNG GALAXY NOTE 7 CRISIS By (Name) Name of Course Tutor Name of Institution City and State Location Date Samsung Galaxy Note 7 Crisis Samsung is an Electronic company that produces some of the best electronics in the world. Since its inception, Samsung has been one of the global leaders in the electronic business. The company has been able to surpass companies like LG and Apple with its Tablets and Galaxy series phones. Samsung has built its brand over the years through making cheap electronics that are affordable to all classes of people. The company has its presence in many countries around the world which is quickly surpassing the presence of Nokia. However, starting August 2016, the company received reports that its new Galaxy Note 7 phone were exploding. The company had to recall the phones which made the company to lose revenue. The exploding phones crisis caused the company to have to rebuild its reputation in the electronics company and to regain its trust among the stakeholders. Crisis management plan is essential for company to survive a crisis, the paper examines the company’s crisis management plan for its phones Summary On August, 19. 2016, Samsung Electronics company released a new Galaxy Note 7 mobile phone. The phone had features that made to be one of the best phones in the world at the time. The phone which significant edge to edge display, waterproofing technique and an iris scanner captured the heart of phone lovers. The phone had a large battery than its predecessors. After one of its release, reports came from South Korea that the new phones from Samsung were exploding and catching after they were charged (Wee, 2016a). Towards August of 2016 end, South Korea media announced that five of the Galaxy Note 7 had exploded or caught fire which made Samsung halt the shipment of the Galaxy Note 7 phones (Stephen, 2017). On September of 10 of 2016.the aviation authorities banned the Samsung devices on planes. Other authorities such as The Federal Aviation in America issued warnings against the use of these phones on planes. The government of Canada issued a statement that was aimed at ordering the recall of the phones while the government of Thailand restricted and banned the import of these phones. Communication Corporation in America such Verizon Communications stopped selling the devices and recalled the phones from the customers who had bought these gadgets from their stores (Weick, 2016). By September 14, Samsung had a market value of about USD 10 billion wiped from its share of the market share index. Samsung was forced to cancel the launch of its phones in other markets such as India.. The consumer safety agency in America had received 92 reports about the overheating of the phones. The report also showed that owners of 26 phones had burns they received from the phones. The American safety commission said the batteries of the phones were pinched. The pinching was causing short circuitin and overheating in the phones (Ying, 2016). The Chinese consumers accused Samsung of being discriminative for failing to recall the devices that were sold in China. Other reports surfaced that the previous from Samsugn which included Galaxy S7 and the Galaxy S7 Edge had similar problems. These phones were emitting smoke and catching fire in countries like the United Kingdom, the United States and the Philippines. On 23rd September 2016, a cabin crew of the IndiGo flight that was coming from Singapore said that they had to use an extinguisher to douse a Samsung Galaxy phone. As the result of the scandals, Samsung lost more than USD 5 billion worth of revenues after the recall of the phones (Wee, 2017a). Crisis Type Not all the crisis fall into a particular category. To some extent, the kind of crisis was a technological crisis. Samsung said that the batteries in the phones were faulty and they were responsible for the explosion and catching fire that was witnessed in the Galaxy Note 7. The company was thus responsible for the crisis that its products were facing in the market but were unaware of the problem at the time of production (Drennan et al., 2014). The crisis can classify as a technical error product harm. The Galaxy Note 7 crisis affected the company both internally and externally and high impact on Samsung stakeholders. Key players Many stakeholders were involved in this crisis, including Samsung employees, executives, and customers. In particular, Samsung executives’ response to the crisis was inadequate. Samsung halted the production of the phone and communicated to their customers through their website on the need power down the phones as soon as possible and reach out to the store they bought the phones from to get an exchange or a refund. Nonetheless, this communication was wanting as customers needed to access a redirecting link on the company’s home page (Forbes.com, 2017). After the company had received the reports about the explosion of its phones, it did not post instructions immediately on its Facebook page and Twitter account on how to handle the Galaxy Note 7 crisis. Concerning crisis management, the company was passive in the way it handled the crisis (Wee, 2017b). The brand did little to show that it cared about the crisis. Samsung was not visible since it did not offer consistent communication on the homepage, Facebook, Twitter and other social channels. On September 15, 2016, Samsung pinned a tweet on its US twitter account which told customers that they could their phones. The company Facebook wall showed a star using the reality camera of the Galaxy Note 7, the post was supposed to tell customers that the production of the phone had been stopped yet it seemed to advertise the same phone. Samsung was reluctant to accept the information about the Galaxy Note 7. The company recalled a lot of the devices which made customers to applaud its efforts. It was later discovered the company did not work with the consumer safety agency in America. The comapny also made a misleading announcement when it said that the phones in Hong Kong would not be affected only to revert its statement a day later. Samsung had been giving refunds for the phones to consumers, and it was forced to pull the newer version of the Galaxy Note 7 from the market as well. To answer questions about the outreach program, a spokeswoman from the company said that the company would stop phone exchange program they had initiated. To make the matter complex, Samsung was using authorized dealers such as Verizon and AT and T to sell its handsets. Companies like AT and T were sending messages to customers saying that they will be exchanging the phones on 21st of September which contradicted the message from Samsung spokeswoman. The communication from Samsung was purely bureaucratic, and the executives were awfully quiet about the matter. Samsung primarily wanted to maintain the trust of customers. It tried to communicate swiftly to customers, but the problem was that it did not adhere to American guidelines on product safety. The company addressed the recalls and outlined the causes of explosions in the Galaxy Note 7 phones. The company did not, however, excel in communication. It did compromise on timeliness and accuracy of the information they were releasing to the media houses and its websites and social media. The company, however, used external media as well as an online campaign which gave updating information on the crisis. Samsung did not make a first response statement on the onset of the crisis. Instead, they waited and gave an official response which did not show that they cared and it had misstatements and confusion. Samsung Efforts Basing on the diffusion of innovation theory, Samsung improved its speed to recall the phones by working with the telecom carriers to issue a software that could disable the phones charging abilities. Since the recall of the phones was based on safety concerns, the service providers agreed to distribute the software to diminish the charging system of the phone. When Department of Transportation banned the use of the phones on planes, Samsung sent a team of its employees to help in the collection of the phones. Mr Koh who is the president of Mobile Communications Business for Samsung said in a statement that the company valued the safety of its customers. Mr. Koh said the company was determined to find the root causes of the issues with the Galaxy Note 7 phones. The company built a test lab to investigate the problems with the Galaxy Note 7 (Wee, 2016b). The company announced that the batteries were the issue in the phones. The first manufacturers’ batteries experienced negative electrode deflections while the other manufacturers suffered from abnormal ultrasonic welding burrs. Media coverage of the crisis ranged widely. The recalls and the explosion incidents made headlines as it concerned the safety of people. The media took different viewpoints on the issue criticizing the company about its delay in communication and poor communication strategies. The media applauded the company for recalling the phones. The criticism that arose from the crisis were predominantly from the consumers. Samsung faced an outpouring of criticism from industry analysts, customers, and bloggers. Criticism from the global media was directed to the parent company in South Korea for failing to act with coordination and following proper safety procedures. Many people were tweeting about how the company was discreet in the crisis. Evaluation A crisis refers to a situation in which random event threatens high expectation of stakeholders and can severely impact on the performance of an organization. While the crisis is often classified as unexpected, they are entirely predictable. Samsung had no reason to believe that its phones will have a problem that would make the company recall the phones, the company did not have a management plan for the crisis. Creating a management plan is essential when preparing for a crisis. Samsung did not recognize that its electronic could cause risks to consumers (Booth, 2015). Samsung could have been reactive in its response to the crisis, but it was proactive. Being active means, the company should seek for signs pf defects in the devices and take into account strategies that could be used mitigating the crisis. The company did not comply with the safety standards and could have stopped the production of the phones before launching. The emergency response involves form and content (Booth, 2015). Type refers to consistent and quick response. As shown earlier, Samsung was not transparent. The content of a crisis response should be clear and logical explaining direct information on minimizing the risks associated with the distribution and use of the phone. Samsung agreed to make a sustainable and adaptable crisis management. The company decided to form a plan that would help in the management of the crisis. The company is now prepared to from a comprehensive plan to deal with future crises. The company is trying to come up with a blueprint that will help the company to make the consumers trust the brand again (Coombs, 2014). The company started reviewing its crisis management plan ensuring that it was robust and comprehensive. The crisis has had an impact on Samsung. The crisis threatened to cause a long term reputation impact on Samsung. Samsung thus needs to undertake a critical crisis, reputation, and evaluation of stakeholders which includes its safety and programs that can manage quality risk (Coombs, 2014). These programs will ensure that sustainability is enhanced and organizational resilience and trust. Basing on the structural-functional theory, it is essential for Samsung to review its behavior in the event of a crisis. The company should ensure that it responds to a crisis quickly to show the customers that it cares and is working to make sure that the customers are safe (Coombs, 2014). Conclusion Samsung is a global tech company that produced gadgets that widely used and preferred. The Galaxy Note 7 crisis hurt Samsung’s revenue and reputation. The response of the company on the crisis matter was slow considering the time the company received reports of the explosion of the phones. Samsung did not have a robust crisis management plan which explains why it was not well coordinated in giving information to customers. The company also provided misleading information to consumers in Hong Kong and later reverted the information. Crisis management plan is essential for a company to be able to manage a scandal and be able to keep its reputation among its customers. Bibliography Booth, S. A. 2015. Crisis management strategy: Competition and change in modern enterprises. Routledge. Coombs, W. T. 2014. Ongoing crisis communication: Planning, managing, and responding. Sage Publications. Drennan, L. T., McConnell, A., & Stark, A. 2014. Risk and crisis management in the public sector. Routledge. Forbes.com. 2017. 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