SIST MBA Ethics and Comm: Samsung Note 7 Case Study Analysis

This essay delves into the crucial role of ethics in corporate communications, using the Samsung Galaxy Note 7 disaster as a case study. It examines the contributing factors to the crisis, including organizational and technical failures, and analyzes whether Samsung adhered to its values and ethical code. The essay evaluates Samsung's crisis management response, assessing how well the company addressed the needs of various stakeholders through its communication strategies. It also explores potential ethical and legal breaches by Samsung's management. The essay highlights the importance of transparency, honesty, and consistent responsibility in ethical communication, contrasting Samsung's actions with ethical principles. The analysis considers the financial and reputational damage suffered by Samsung and the subsequent changes in its business model and communication approach. Furthermore, the essay includes a personal reflection on how the situation could have been handled differently, emphasizing the importance of ethical leadership and prioritizing customer safety. The conclusion underscores the significance of ethical communication for long-term business sustainability.

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ROLE OF ETHICS IN CORPORATE COMMUNICATIONS
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Ethics is considered to be one of the major aspects for the business organisations to
maintain a sustainable business orientation in the market (Pearson 2017). It becomes a pertinent
measure for the business companies because the customers are highly aware of transparency in
business and its relation with the interests of the customers. In other words, it can be stated that
the customers of modern times are liked to prefer brands that are ethically sound. In response to
this, the essay is going to identify the role of ethics in corporate communications (Chaudhri
2016). The given case study is associated with the Samsung Galaxy Note 7 disaster in 2016. The
essay tries to develop an in-depth analysis over the incident and its aftermath that can prove
whether Samsung successfully followed the ethical protocols in communicating both internally
and externally. Furthermore, a personal reflection will also be addressed in the essay.
The disaster was led by a number of contributing factors that were easily influenced the
effective business orientation of Samsung. There are both the lack of effective organisational
factors and technological inefficacies that were solely responsible for the disaster. Form the
report of Mozur (2017) it can be derived that the primary cause of the malfunctioning of the
batteries planted within the mobile phones but there were larger picture on the backdrop of the
disaster in terms of the organisational indecisions and the technical inaccuracies. For instance,
Lopez (2017) stated that the rivalry between Apple and Samsung pushed Samsung to launch its
Galaxy 7 in a hurry before Apple rolled out iPhone 7. It caused lack of monitoring and control
over the manufacturing of Note7. Another important aspect was the inefficacy in the technical
aspect where design malfunctioning was played the role of a catalyst.
There are five core values of Samsung in terms of people, change, integrity, excellence
and co-prosperity. As a matter of fact, the code of conduct policy of Samsung also incorporates
some business principles and commitments like to comply with the ethical standards, to respect,

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customers, maintains a clean organisational culture and care about environment, health and
safety (samsung.com 2016). However, in reality there were no efforts from the organisation to
meet any of the values or commitment. According to Mozur (2017) it was sheer corporate
competition that initiated the disaster in 2016. The organisation did not follow its policies and
ethics properly otherwise it would never stake customers’ lives in danger. As a matter of fact,
during the crisis situation there were also partial representations of the ethical gesture from
Samsung where the organisation is trying to roll back Note 7 from the market (bbc.com 2017).
Nevertheless, in the initial press meeting the management failed to address the exact reason
behind it because they were so busy in the corporate competition that they did not care about the
standard and safety of its customers (News.samsung.com 2016). Customers were getting
paranoid and confused about the issue and the Samsung management tried to avoid its direct
responsibility in the disaster. In such crisis situation, it was highly important for the senior
management to make a press announcement of the situation and gave direction to the customers
to avoid further calamity. As a matter of fact, the press release would also addressed to other
stakeholders so that they could get a transparent picture of the chaos.
From the discussion, it can be stated that there were some serious violations of ethical
and legal standards that Samsung should be followed throughout its business operation. In
response to this, there are some key principles of ethical communication that has to be identified.
For instance, transparency is identified as one of the major features of ethical communication
standards. As per the research of Duthler. and Dhanesh (2018) the ethical communication
standard is attached with honesty and consistent responsibility so that it will be effective for the
organisation to follow the principles of ethical communication. On the other hand, Roberts-
Lombard et al. (2019) pointed out that ethical communication allows the person to deliver the

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right and proper information regarding the event. However, in case of Samsung failed to create a
proper ethical communication practice. In the aftermath of the disaster, Samsung misguided the
customers by stating that there were plenty of reasons for the customers to stick with the device
despite of knowing the vulnerability of the situation. In fact, using words like ‘isolated cell issue’
or showing the sales figure of Note7 was definitely a violation of ethical standard and legal
regulatory.
The Note7 disaster crushed the global mobile phone business of Samsung massively
where the company had to recall its 2 million devices. The worth of the recall cost was $5.3
billion and definitely it made Samsung back foot whereas its archrival Apple got the opportunity
to encapsulate the market further. The report of bbc.com (2017) revealed that in the aftermath of
the disaster 30% loss had been incurred by Samsung globally estimated $26 billion of value in
the stock market. It is true that the Note 7 disaster did not end entire mobile phone business of
Samsung but the setback was clearly visible where the sales were declined to 15% by October
2016 (Tsukayama 2018). Nevertheless, the company overcame its fatal blow over sales and next
year it received a 9% increase in its brand value. Despite of all the fact, it can be stated that the
brand image was undoubtedly damaged due to the Note7 disaster and it took time to get healed
(Tsukayama 2018).
Apart from the negative approaches in Samsung that were revealed in the Note7 disaster,
it was also a lesson for the organisation to rebranding and reshaping its organisational culture to
such an extent which was going to be more effective and customer oriented. According to Lopez
(2017) there were some consequential changes that the management had has to made for the
sustainability of the organisation and the focus was vested on not only the R&D division but also
within the organisational culture. For instance, the Samsung management became more concern

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about the safety and value of the customers so that they designed a detailed process of safety
checking of each mobile phone. As a matter of fact, they also tried to maintain a transparent and
symbiotic relationship with the customers by facilitating transparency in product details in lieu of
increase the sales growth to a great extent.
The disaster was definitely a lesson for Samsung to not only resolve the technical
malfunctioning but also reshaping its ethical standard to a great extent in a practical manner. For
instance, in the communication strategy the management clearly corroborated the fact that it was
a failure for Samsung to develop the product perfectly and it was not the intention of the
company to create vulnerability to the life of its customers. The press release in 2017 showed
that the organisation was apologetic for its failure and at the same time revealed all the technical
faults and managerial indecision making to the public so that people could understand the true
motive of the organisation and the keep on trusting the benevolent and ethical measures that
Samsung has practiced (News.samsung.com 2017). In the business model also a careful step has
been taken by the company and it revoked its previous aggressive business strategy as a part of
competitive rivalry with Apple. The new model provided enough insights for the organisation to
not only gain a strategic advantage in the competitive market but also takes responsibility for the
safety and development of the customers as a part of the sustainable approach.
From my point of view, I can say that definitely I would have handled the situation in a
different manner. For instance, at first I would apologize to the customers for such an
inconvenience because it is mart of my responsibility as the CEO of the Company to take credit
for both good and bad. Moreover, the official declaration would never misguide any customers to
swap their Note 7 phones. It is important from the ethical standpoint that assisting the customers
with relevant information is also considered to be a part of ethical communication. Moreover, I

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would never follow any unhealthy business competition that could compromise the quality of the
product. For an aggressive competition I put more focus on the R&D program so that a unique
value of the product was generated for the sake of the organisation and the betterment of the
customers. Overall, I prefer sustainability in business through ethical means.
From the above discussion, it can be concluded that the essay rightly justifies the needs
and importance of ethical communication in corporate organisations. As a matter of fact, the
discussion also elucidates the relation between ethical consideration and sustainability in
business. It is true that Samsung successfully recovers its loss over the year but the damage it had
made in 2016 took enough time and resources that would make a fortune for more development
and success for the organisation. Therefore, ethics played a major role in building a strong and
effective corporate communication for long term benefits.

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Reference
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