Risk Management in a Global Context: Samsung Galaxy Note 7 Case Study

This report analyzes the Samsung Galaxy Note 7 product recall of 2016 through the lens of risk management. It evaluates Samsung's organizational structure, risk attitude (identifying it as risk-seeking), and risk appetite. The report identifies key risks such as technical, production quality, reputational, and financial risks, further detailing their consequences, including halted production, health and safety impacts, and reputational damage. The analysis concludes that effective risk management is critical in the competitive electronics industry and that Samsung's response, while costly, demonstrated a commitment to customer safety and brand recovery. This document is available on Desklib, a platform providing study tools and resources for students.

Risk Management in a
Global Context
1


Table of Contents
Risk Management in a Global Context............................................................................................1
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Evaluation of case study organisation....................................................................................3
Risk Attitude...........................................................................................................................4
Risk Appetite..........................................................................................................................5
Risk identification..................................................................................................................5
Risk consequences..................................................................................................................6
Risk impacts...........................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9
ONLINE.................................................................................................................................9
2

INTRODUCTION
In the modern business environment, with the high rise of technological advancements and
globalisation the organisation is under the high exposure of risk on the daily basis. Therefore,
risk management is highly important to the business in order to sustain in competitive business
environment. Risk management is the systematic process of determining the risk and
implementation of the necessary course of action for the mitigation of the risk (Gurtu and Johny,
2021). The risk management activities include gathering of information, analysing and assessing
the risk, developing the actions and strategies for the risk management, regular monitoring and
review of organisational process and results and much more. The risk management plan is the
document that highlights the process of risk identification, examining risk alternatives and
minimising the adverse impact of risk. Therefore, very organisation has risk manager and risk
management policies that are modified timely to stay aware about the new risk and their
implications and solutions. The present report is based on the case study of the Samsung Galaxy
Note 7 Product Recall in 2016. The report will be evaluating the case study organisation. The
report will identify the risk attitude,
MAIN BODY
Evaluation of case study organisation
Samsung electronics co limited is a South Korean multinational organisation. The
company is a part of electronic industry was founded on 13th January 1969. Company is
headquartering at Samsung digital City, Suwon, South Korea. Samsung electronics as the world's
leading mobile and electronic appliances manufacturer aims to inspire the world and shapes the
future with the transformative ideas, innovations and technology that provide people a power to
discover new experiences. The company has a constant focus on innovation and discovery using
the technology advancements there by company keep redefining and reinventing the world of
TV, Smartphone, tablets, wearable devices, network systems and much more. The companies
highly committed in improving the global community and also have efficiency in delivery in the
ground breaking electronic innovations that has potential of enhancing the everyday lives of
people. The mission of Samsung is to follow the business philosophy that is to pay attention to
its talent and technology in order to create explicitly superior products and services that could
build up better global society (Our mission & values, 2022). To achieve such mission Samsung
3

sets high values on its technology and staff members. In terms of mission and the values the
company promise their customers to perform responsibility as a leading and the global company.
Therefore companies highly committed with complaint the local laws and regulations applied by
the global code of conduct to all the employees believes in the ethical management there were
responding rapidly to the changes in the global business environment (Our mission & values,
2022). For company it is very important to build a trust and honesty between the various stake
holders with that companies key is to become most ethical companies of the world there for
company continues to train in developed their employees in operate monitoring systems for fair
and transparent corporate management.
Risk Attitude
Risk and uncertainty's in the business at challenging and they must be handled with the
consistent methods in order to create a proactive and positive culture minute comes to risk
management. Risk attitude means a choosing response to uncertainty but matter which is
impacted by the perception (Defining Risk Attitudes, 2021). Basically risk attitude defines a state
of mind of the business managers that concern that uncertainty that could have positive and
negative effect on the organisational objectives. After analysing the case study of Samsung
galaxy note 7 exploded due to the faulty batteries which were causing the phone to burst when
charging it is analyse that Samsung carries risk seeker attitude in which the behaviour of the
company gravitated towards uncertain activity place of more certain one. Samsung was enjoying
the risk and was effectively taking actions in order to manage the risk as a risk seeker. In risk to
the company’s brand image caused timing after the exploding of Samsung 7 the company has
shown of favourable environment in such situation of the company which is due to the risk
seeker attitude of the company in which company take the uncertain situation as an opportunity
to drive something new in the business environment as a proactive response to the prevailing
situation. With risk seeker attitude of the Samsung the company took the initiative to recall 100%
galaxy note 7 phone of Samsung by demonstrating that customers and their safety are the key
priority for the Samsung. Company recalling all it product was never easy as it was highly
challenging with the yielding return of 30 percentage. Recalling of the Galaxy note 7 of the
Samsung was safety issue for which company improve the volume speed written units (Dvorsky
and et. al., 2021). This turned the company and its recall as the one of the first digital records in
the electronic industry.
4

Risk Appetite
This appetite is a term that defines the amount of risk and enterprise is billing to take in pursuit
of objectives it deems have value. In general terms risk Appetite can be described as forms risk
capacity for the maximum amount of residual risk and organisation is willing to accept after the
control and the other measures have been performed (Qazi, Daghfous and Khan, 2021). In
Samsung risk appetite is an integral component during the risk management which is influenced
by the factors like industry in which organisation operates, organisational culture, competitors,
current position in industry, financial strength and much more. For determining the risk appetite
scale of the Samsung on the basis of the case study of explosion of galaxy note 7 due to the fault
batteries. It is important to determine a considered the probability of risk and its impact. In
context of Samsung the company has good risk appetite ask company was willing to take the risk
including the financial and operation in order to innovate something new and most importantly to
find the reason for the explosion of the mobile phones. The company has developed iris
environment within the organisation specific applications to control the risk for which company
provides a capability to manage the appropriate level by enabling the innovations and
transformations to be business systems in mobile technology Samsung is good enough. Samsung
with exploding phones and the product recall was high challenge for its brand and reputation but
there was no option for the brand to slow down there for the risk appetite of Samsung was high
therefore company continue to invest in innovation and to take the risk seeking approach to pull
back its products into the competitive market (Huang, Borazon and Liu, 2021). Company believe
that in order to shine brightly it is important to fight against the enemy of complacency. Also
with this company believe that there able to prepare some of its brand damage created by the
controversy and also stable relationship with the customers.
Risk identification
Under the risk management risk identification is the foremost and the most critical step.
Risk identification is a process of analysing the type of risk that is potentially prevailing within
an organisation that acts as Barriers to the achievement of the goals and objectives. In context of
Samsung the objective of identification the risk was to understand the negative impacts the risk is
creating to the performance in the capabilities of the organisation (Zindani, Maity and Bhowmik,
2021). In context of the Samsung study related to the explosion of galaxy note 7 Smartphone due
to the faulty battery that turning the phone to burn on charging some risk identified are:
5

 Technical risk: it was identify that there is the technology oriented risk with the Samsung.
It was identified that the major cause of explosion of galaxy note 7 Smartphone which due to
be flaw in the battery design and manufacturing that leads to the crisis within the
organisation. There was the flow of negative electro deflection and abnormal ultrasonic
welding blurs in the bed sheets of the Samsung no galaxy 7 that could overheat and
potentially catch fire to the Smartphone.
 Production quality risk: there is huge risk of supplies quality issue that are supplying
batteries to the Samsung as after waiting the root cause of the explosion of galaxy note 7
Smartphone is the supply of bad quality battery by two suppliers (An Analysis of Sources of
Risk in the Consumer Electronics Industry, 2021).
 Reputation risk: in the electronic industries refrigeration for the qualities important part in
order to sustain the Japanese company Samsung has provide the poor quality goods to their
customers on the pre order its has caused huge risk to their reputation.
 Financial risk: Samsung galaxy note 100% rate the company has used risk of finances.
Samsung dollar 5.3 million as there is recall of over 2 million devices and discontinue the
product (Ding and et. al., 2022).
Risk consequences
 These consequences at the possible results of the uncertain event or May involved the laws
of the damage of the valuable products that the organisation was trying to protect (El-Sayegh
and et. al., 2021). Risk consequences are an estimation of unexpected results of the
undesired event. In context of Samsung the consequences of risk identified as per the case
study are:
 To major consequence production of the galaxy note 7 as company has to decide to
temporarily halt the production with the safety regulators and later this was made permanent
causing huge loss of finances to the company.
 The risk of technology has caused the major consequences on the health and the safety of the
customers as they were significant fire is caused to the faulty batteries.
 Higher secondary school identified Samsung has to face the huge consequences on the
repetition as an innovative tech company as company as suffered the major losses due to the
faulty batteries in all so in the competitive market the credibility of the smart phone of the
6

Samsung was adversely impacted. Also with this brands value in the trust of customers is the
big consequence that company has to face (Lee and Singh, 2021).
Risk impacts
Impact is defined as an estimate of potential losses that are correlated with the identified risk it is
in standard risk analysis practice that helps an organisation to develop an estimate of profitability
and impact. In context of Samsung the major impact of identify risk was on the health and safety
of the customers as due to the fire explosion of the galaxy note 7 which was identified risk of
technology the customers health has been impacted.
 Risk identified as for the case study of Samsung it is recognise that there is a major impact
on the financial of the company as company has major impact on the lost revenue cost in
expenses of the company’s larger impact due to the recall of the products 100% rate. The
company has also losing with technology edge of the company in the competitive electronic
industry (Vidal and et. al., 2021).
 There was major impact on the repetition of the Samsung is customers of the Samsung was
not happy with the recent turn off event due to which more than 500 galaxy note 7 were
asked to enter recall process and also due to this company has to face lawsuit over handling
its devices to recall process also the company has to plaintiff the compensation amount to
the customers as the transfer data from the faulted devices to the new phone using the
products.
CONCLUSION
It is concluded from the above report that in the highly competitive electronic industry the risk
and the uncertain events are highly challenging as this cause major problem to the company's
reputation and financial resources. Analyse that risk management process is an essential for the
electronic industry in order to manage the risk effectively and derive the solutions that could help
the organisation to reduce the negative impact caused by the risk. Analyse the risk attitude as it is
not necessary that every time a company can become a risk seeker or beer moderate risk attitude
there for the company must also increase their capital in order to handle there is effectively and
to gain an opportunity of innovation from it. Identification of risk is essential in order to measure
their impact and consequences to rebuild the new solution for a system as an alternative option
for the risk.
7

8

REFERENCES
Books and Journals
Ding, Y and et. al., 2022. Large uncertainty in individual polygenic risk score estimation impacts
PRS-based risk stratification. Nature genetics, 54(1), pp.30-39.
Dvorsky, J and et. al., 2021. Business risk management in the context of small and medium-sized
enterprises. Economic Research-Ekonomska Istraživanja, 34(1), pp.1690-1708.
El-Sayegh, S.M and et. al., 2021. Risk identification and assessment in sustainable construction
projects in the UAE. International Journal of Construction Management, 21(4), pp.327-
336.
Gurtu, A. and Johny, J., 2021. Supply chain risk management: Literature review. Risks, 9(1),
p.16.
Huang, Y.C., Borazon, E.Q. and Liu, J.M., 2021. Antecedents and consequences of green supply
chain management in Taiwan's electric and electronic industry. Journal of Manufacturing
Technology Management.
Lee, M.S.A. and Singh, J., 2021. Risk identification questionnaire for unintended bias in machine
learning development lifecycle. Available at SSRN.
Qazi, A., Daghfous, A. and Khan, M.S., 2021. Impact of risk attitude on risk, opportunity, and
performance assessment of construction projects. Project Management Journal, 52(2),
pp.192-209.
Vidal, R and et. al., 2021. Assessing health and environmental impacts of solvents for producing
perovskite solar cells. Nature Sustainability, 4(3), pp.277-285.
Zindani, D., Maity, S.R. and Bhowmik, S., 2021. A concurrent decision-making approach toward
uncertainty, vagueness and risk appetite for sustainable manufacturing systems. Clean
Technologies and Environmental Policy, 23(2), pp.597-620.
ONLINE
We finally know why Samsung's Galaxy Note 7s 'exploded', 2017. [Online], Available Through:
< https://www.wired.co.uk/article/galaxy-note-7-issues-what-happened/>
Samsung Explains Note 7 Battery Explosions, And Turns Crisis Into Opportunity, 2017.
[Online], Available Through: <https://www.forbes.com/sites/maribellopez/2017/01/22/samsung-
reveals-cause-of-note-7-issue-turns-crisis-into-opportunity/?sh=71c655df24f1/>
Defining Risk Attitudes, 2021, [Online], Available Through:
<https://www.laevo-services.com/post/defining-risk-attitudes/>
Our mission & values, 2022, [Online], Available Through:< https://www.samsung.com/in/about-
us/company-info/>
An Analysis of Sources of Risk in the Consumer Electronics Industry, 2021, [Online], Available
Through:<https://www.supplychain247.com/images/pdfs/samsung_an_analysis_of_sources_of_r
isk.pdf />
9