Leadership and Decision Making: Samsung's Ethical Dilemma Analysis

This report examines the ethical dilemma faced by Samsung following the recall of the Galaxy Note 7 due to battery overheating issues. It analyzes the company's leadership and decision-making processes in response to the crisis, exploring the application of ethical theories like utilitarianism and virtue ethics. The report investigates the impact of different leadership styles, including autocratic and situational leadership, on the company's actions and outcomes. It highlights the importance of ethical leadership and transparency in maintaining stakeholder trust and managing a crisis situation. Furthermore, the report discusses potential improvements for Samsung, such as enhancing product safety monitoring and improving communication with customers to prevent future ethical lapses and maintain the company's reputation.

Leadership & Decision Making Value
1/29/2018

Leadership & Decision Making Value 1
Leadership & Decision Making Value
The leadership and decision making leads to the success of the organizations in the
competitive world. The requirement of the effective leaders is increasing the market because an
effective leader can make decisions for the welfare of the company as well as for achieving the
goals of the company. The paper talks about the Samsung Company, as it has been in news
during the past two years. The ethical dilemma was recalling of Samsung Note 7 which raised a
big question on the abilities of the company. Along with this, the paper shows the theoretical
concept related to the ethics and the leadership styles.
Samsung Group is a South Korean international conglomerate with the head office in
Samsung Town, Seoul. The company offers a wide range of products in the market which
includes home electronics, smartphones, tablets, TVs, and many others. The Samsung group is
the largest businesses in Korea and this is clear from the total exports of the country. The one-
fifth of Korea’s total exports is captured by company (Samsung, 2017).
Samsung Company recalled Note 7 as it was not safe to be used by the customers in the
year 2016, this was an ethical dilemma faced by the company. The company declared an
extended voluntary recall on all the new and replacement Galaxy Note 7 devices that are
exchanged and sold in the US. Samsung galaxy note 7 is a unique phone introduced by the
company but in the year 2016 company recalled all the units because the phone caught fire
(Samsung, 2017). Samsung said that the issue took place due to the overheating of the batteries
of the phone. The company recalled the devices posing a fire when they got to know that the
reports related to the fire on the phone. The company recalled approximately 1.9 million Galaxy
Note 7 devices in the U.S. after getting approximately 96 reports of the phones overheating and

Leadership & Decision Making Value 2
some of the phones were fully burned and properly damage. This is an ethical dilemma which
was faced by Samsung in the year 2016 and this raised a question in the mind of the people Is
Samsung is an ethical company or not (Dolcourt, 2017).
The ethical theories are helpful in understanding the different kinds of ethical dilemma
faced by the companies. The ethical theory is the approach which shows how one can handle the
decisions related to the products (Melden, 2013). There are two ethical theories that how
Samsung took decisions when they faced an ethical dilemma. Utilitarianism; this theory shows
how the company makes the fair decisions for their products so that they provide the least harm
to the stakeholders. Considering the outcomes of the action, the company has to make the
decision that provides the least harm to the parties involved in the case (Hamilton, 2018). This is
related to the case of Samsung as, after the launch of the Galaxy Note 7, the company got to
know about the fact that the phone caught fire and these phones were getting a blast. Later the
brand took the decision to recall the phones or batteries so that it will create less impact on
consumers of the phone. The company shared that there was a problem in the batteries of phones.
This shows that the company took the decision after evaluating the action which took place.
Virtue, another theory which is very different from the other theories of ethics in this it
looks at a company’s reputation, not necessarily his actions. In simple words, this theory reflects
the company reputation in the market not about its activities in the market (Murphy, 2010). In the
Samsung ethical dilemma, the virtues of the temperature and courage were violated by the
Samsung products posting as a safety and health risk to end users. Samsung released the new
Galaxy Note 7 in the market in the year 2016 which exploded due to the battery issues. Then the
result of the incident was company recalled the phones. Later the company confirmed that some
of the batteries sourced from Amperex Technology limited were omitted insulation tape in the

Leadership & Decision Making Value 3
battery due to which the batteries blast (Shamsi, Ali, & Kazmi, 2017). This case highlighted that
the company didn't check the safety of the product as they were in rush to release the product in
the market due to this omission of safety check several incidences took place in the countries and
people suffered due to the blast. For instance; a 4-year girl suffered second-degree burns on her
face when she was sleeping and his dad's phone exploded. These theories show the relation of
the ethical dilemma of the Samsung Company.
Maintaining the ethics in business operations is possible because of the effective leaders
and with their ethical decision making. Leadership is an ability or authority that direct or guide
others in accomplishing the goals and objectives of the company. It has an important impact on
ethical decision making because the leaders have the authority to inspire and implement the
ethical organization's policies and regulations according to their point of view. The leaders are
the one who can manipulate or influence the organization's corporate culture (Selart, & Johansen,
2011). The ethical leaders of the company are the one who is likely to have employees that
follow their example and less likely to have the deviants that lead to the challenges in the
organization. This clearly shows that the ethical leadership and decision making are connected
with each other.
Samsung is well-known company across the world along with this the company has
operations in numerous countries which clearly shows that the company is able to recognize,
analyze and maintain the different laws, practices, and regulations in the countries while
performing the business operations in the ethical and lawful manner (Samsung, 2017). It is
challenging for the companies to analyze and maintain the activities in an ethical manner and this
is the reason some companies might face some of the ethical dilemmas not intentionally. The
company report says that they are able to manage the ethics in their business activities. The

Leadership & Decision Making Value 4
company disclose or share its Global code of conduct to customer, suppliers and other
stakeholders of the company along with the employees through ethics management website and
offer the channel to report on any ruin of ethical standards (Samsung, 2017).
The company is able to achieve the leading position because of the decision was taken by
the leaders of the company. If in case, the shareholders of the company are not satisfied with the
decisions taken by the leaders then the leader will not remain in that position. The former
chairman of Samsung Group, Lee Kun-hee resigned from its position in disagree after 20 years
on the Samsung board after getting suspected for avoiding $ 128 million in taxes. Along with
this, 12 years ago he was sentenced for bribery. After the resignation of the chairman, the
company is able to bring the improvement in its position (Ferrell, Fraedrich, & Ferrell, 2013).
Ken Johnson identified four tightly interrelated components of the ethical leadership
considering the connection between ethics and leadership. Purpose; this is foremost components
which states the ethical leader investigates the acts and reasons with the company's purposes
firmly in mind. The leaders of the Samsung take the actions keeping the objective of the
company in mind. Knowledge; the ethical leader has the information to judge, investigate and act
carefully. Samsung leaders take the steps after collecting and investing the entire positive a
negative aspect of the decisions (PMI, 2013). Authority; authority gives the rights to the ethical
leaders to ask questions, make decisions and act accordingly after identifying the associated
things. Samsung leaders have the right to ask questions from its employees as they have the
authority to be aware of the objective and decisions are taken by the company. Trust; the ethical
leaders is one who trusts the organization and its working and also inspires others to keep trust in
the environment of the company. Leaders of Samsung group motivate the employees of the
company to keep the trust (PMI, 2013).

Leadership & Decision Making Value 5
The leadership styles of the leaders in the company can also influence the ethical decision
of the leaders. The leadership style affects the organization's transmission and monitoring values,
norms and code of ethics. Ethical leaders of the company need to understand the firm's vision
and values. One of the leadership styles is autocratic leadership style and situational leadership.
Autocratic leadership style is known for the individual control over all the decisions, the leaders
who follow this style of leadership make decisions according to its ideas and judgment and rarely
take the suggestions from the team members (Grimm, 2010). At the point of the time, there was
need of the autocratic leadership style in Samsung. Once the company found the report related to
the blast of phones then the leaders of the company took the decision to recall the phone and to
inspect the decisions. In this kind of situation, there was need of the leaders who can take the
instance step as it was the matter of reputation of the company in the market.
It was one of the big decisions of the company to recall the batteries and phones due to
which the leaders didn’t ask for the suggestions from the employees. Though, there is also a
negative aspect faced by the company. The leaders took the decision to introduce the Galaxy
Note 7 phones in the market without the safety check which leads to the issue (Apitanawit,
2016). Another leadership style that can be used by the leaders while making the decisions in the
ethical dilemma situations is situational leadership. This style of leadership is developed by the
experts mainly Paul Hersey and Ken Blanchard in the year 1969 (McCleskey, 2014). This is the
style in which the leaders make use of the diverse range of styles depending upon the ethical
dilemma and the situation of the organization.
The ethical dilemma faced by the Samsung is very sensitive due to which the leaders of
the company have to ensure they are not harming any stakeholder of the company. After the case
the company has to show that they are concerned about the safety and security of their customers

Leadership & Decision Making Value 6
to whom they offer the product and services and their intention was not to provide the harm to
them (Todd, & Krueger, 2016). The company's leaders took the decisions to refund the amount
of the customers who faced the problems with the sets of the phone. Along with this, the leader
needs to handle the issue by doing proper communication with the customers and employees.
This style might create the negative impact on the image of the company. For instance, after the
incidence, the company performed the activity of research as the company relies on in-house
testing ability rather than a self-regulating one. After conducting the research, the company
found the problems in batteries but there was lack of transparency in the decision shared by the
company. Due to the lack of transparency, the stakeholders of the company were not able to
believe that there was a fault in batteries (Selyukh, & Elise, 2016).
Considering the scenario, Samsung needs to implement the new processes so that the
company can become ethical in the practice. The company can resolve the current problem by
providing them the honest dialogue to the customers, these dialogues will also help the company
to leave the worries related to the future products of the company (Asteriaa, 2017). To provide
them the honest dialogue company needs to communicate with the customers effectively. The
company should hire the independent parties for the business procedures for proper monitoring
of the safety of products. Currently, the company has in-house monitoring team which is not able
to monitor the safety of products that is essential for the company (Asteriaa, 2017).
Apart from this, the company should ensure that there is no underage worker is hired for
the company and the workers of the company are not being exploited. It is recommended to the
company to create a new department as a product safety department so that communication with
the product testers for the safety risks can be done effectively. The company should identify the
suppliers who can provide them quality products with safety (Crane, & Matten, 2016). Samsung

Leadership & Decision Making Value 7
should sign the agreement with the suppliers after implementing the strict safety checks on their
material. This will communicate the fact to the customers that the company is abiding by the
ethical guidelines presented by the virtue theory and maintains its integrity.
Lack of transparency might affect the company's sales, not the product sales. There is a
huge difference between the company's sales and the product sales. A customer with the bad
experience will not only stop buying the Galaxy Note 7 but might also stop buying the products
of Samsung. One bad experience of the customer can lead to the fear and trust issue for many
other customers. This is the human psychology that most of the people rely on the rumors and
hearsay when it's about the well-known brands in the markets, the same goes for the Samsung.
It can be concluded; from the paper that Samsung Galaxy Note 7 blast was not
intentionally done by the company but it took place because the company didn't check the Note 7
as they were in hurry to introduce the product in the market. The company was not able to fulfill
the customer needs related to the safety of the product (Thiel, Bagdasarov, Harkrider, Johnson, &
Mumford, 2012). The blast of phone leads to an ethical dilemma for the company as the
company should ensure that the products they are offering in the market are safe for use. Later
on, the company recalled the phone because they believe that the consumer safety remains on the
highest priority for them. According to the ethical dilemma of the company, the ethical theories
are stated in the paper which is linked to the product of the company. Moreover, the paper shows
that the ethical leadership and decision making are connected with each other in the company.
It also shows how leadership styles can influence the ethical decision making of the
leaders. The ethical leader of the company has to bring the changes in their leadership style
considering the situation of the ethical dilemma faced by the organization (Crossan, Mazutis, &
Seijts, 2013). Some of the recommendations to the company are given in the paper that helps the

Leadership & Decision Making Value 8
company to regulate the ethical business practices. Though, this ethical dilemma taught many
things to the company which includes how to react or handle the tough situations and what all
they can do to bring changes in the suppliers and in their business processes.

Leadership & Decision Making Value 9
References
Apitanawit, M. S. (2016). Influence Of The Samsung Galaxy Note 7’s Battery Problem On
Consumer Perception And Intention To Purchase Samsung Smartphone In The
Future (Doctoral dissertation, THAMMASAT UNIVERSITY).
Asteriaa. (2017). Is Samsung an Ethical Company?. Viewed on 29th January 2018,
https://soapboxie.com/misc/Is-Samsung-An-Ethical-Company
Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Crossan, M., Mazutis, D., & Seijts, G. (2013). In search of virtue: The role of virtues, values and
character strengths in ethical decision making. Journal of Business Ethics, 113(4), 567-
581.
Dolcourt, J. (2017 April 16th). Samsung Galaxy Note 7 recall: Here's what happens now, CNET
News. Viewed on 29th January 2018, https://www.cnet.com/news/samsung-galaxy-note-7-
return-exchange-faq/
Ferrell, O.C., Fraedrich, J. & Ferrell, L. (2013). Business Ethics: Ethical Decision Making &
Cases. Ninth Edition. South-western: Cengage learning.
Grimm, J. W. (2010). Effective leadership: making the difference. Journal of Emergency
Nursing, 36(1), 74-77.
Hamilton, V. (2018). Types of Ethical Theories. Viewed on 29th January 2018,
https://classroom.synonym.com/types-of-ethical-theories-12083413.html

Leadership & Decision Making Value 10
McCleskey, J. A. (2014). Situational, transformational, and transactional leadership and
leadership development. Journal of Business Studies Quarterly, 5(4), 117.
Melden, A. (2013). Ethical theories. Read Books Ltd.
Murphy, P. E. (2010). Marketing, Ethics of. Wiley Encyclopedia of Management.
PMI. (2013). The leader's choice--five steps to ethical decision making. Viewed on 29th January
2018, https://www.pmi.org/learning/library/ethical-decision-making-trend-5788
Samsung. (2017). About us. Viewed on 29th January 2018,
http://www.samsung.com/in/aboutsamsung/home/
Samsung. (2017). Ethics. Viewed on 29th January 2018,
http://www.samsung.com/in/aboutsamsung/sustainability/ethics/
Samsung. (2017). Samsung Expands Recall to All Galaxy Note7 Devices. Viewed on 29th January
2018, http://www.samsung.com/us/note7recall/
Selart, M., & Johansen, S. T. (2011). Ethical decision making in organizations: The role of
leadership stress. Journal of Business Ethics, 99(2), 129-143.
Selyukh, A. & Elise, H. (2016). In Samsung's Messy Phone Recall, Lack Of Transparency Takes
Center Stage. Viewed on 29th January 2018,
https://www.npr.org/sections/alltechconsidered/2016/10/18/497949435/in-samsung-s-
messy-phone-recall-lack-of-transparency-takes-center-stage
Shamsi, A. F., Ali, M. H., & Kazmi, S. S. (2017). Samsung Note 7-An Unprecedented Recall
That Created History: Exploding Phones Recovered–Exploded Trust?. International
Journal of Experiential Learning & Case Studies, 2(1), 44-57.

Leadership & Decision Making Value 11
Thiel, C. E., Bagdasarov, Z., Harkrider, L., Johnson, J. F., & Mumford, M. D. (2012). Leader
ethical decision-making in organizations: Strategies for sensemaking. Journal of Business
Ethics, 107(1), 49-64.
Todd, J. R., & Krueger, D. M. (2016). Air Transportation. The Transportation Lawyer, 18(3), 32.