Samsung Galaxy Note 7 Debacle: A Case Study on Business Management

This case study examines the Samsung Galaxy Note 7 debacle, focusing on the battery issue that led to recalls and significant market share decline. The analysis employs Porter's Shared Value framework to understand Samsung's missteps and potential recovery strategies. Alternative solutions, such as enhanced quality control and proactive communication, are proposed. Recommendations include implementing rigorous safety checks, valuing customer feedback, and establishing corrective action plans to prevent future incidents. The study emphasizes the importance of integrating societal well-being with business objectives for sustainable growth and consumer trust. Desklib provides access to similar case studies and solved assignments for students.

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Identification of the role
My role in the case study of the Samsung Electronics Corporation Limited is a participant. A
participant will exchange ideas and thoughts with other participants in the case. I will review the
problems of the company and provides feedback about the products of the company. I will ask
questions and interact with others to discuss the problem solutions. New issues and methods can
be brought by me that I believe are essential for the company. My role as a participant is to
expand my views on the problems. I will be engaged in discussions which would provide more
understanding about the case and also offers new approaches. A participant has the chance to
express his arguments by the case. The participant plays a vital role in the case by providing
knowledge and thoughts regarding the problems (Baganzi, Shin & Wu, 2017). I can challenge
the opinions of others, which I may feel irrelevant, in a pleasant manner.
Identification of the Problem
The Galaxy Note 7 debacle had brought down a harsh situation on the company. Samsung
maintained the top position in 2016 but, its global market share started to fell below 20 percent.
Due to the misstep of Samsung, Apple took the top position of smartphone and also took 18.3
percent of market share in 2016. In addition to this, OPPO and VIVO had also achieved 100
percent growth over the years (Hassler, Pearce & Serfass, 2018). The selling price of
smartphones started to fell, and the revenue of the company decreased due to the debacle of
Galaxy Note 7. This debacle provides Apple iPhone to own 91 percent of profits as well as
increase its sales.
Samsung had an intense competition with Apple Company. Samsung received a litigation file
over the technology patents by Apple. Samsung had to pay 548 million dollars to Apple for
infringement of patents. Huawei, a smartphone maker, sued Samsung in 2016 for violating its
patents. Galaxy note 7 had a fatal flaw, and the battery cells caused excessive heat which leads to
the exploitation of battery (Saadah, 2018). The overheating batteries had caused damage to the
goodwill of the company as well as its customers. The company had to face short-term financial
losses during the recall of the product.

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Analysis of using theoretical tools
Porters Shared Value
Based on shared value initiative Michael E. Porter stated that the purpose of the organizations is
to create shared value not only to gain profit. This will enhance the next wave of productivity
and innovation growth in the global economy. In relation with the case study of Samsung
Electronics Co., Ltd. the company faced the problem of battery manufacturing error related to
Galaxy Note 7 Pro that created excessive heat causing the battery to explode (Serra, Font &
Ivanova, 2017). Therefore, on 11th October 2016, Samsung announced to cease all sales and
production of Galaxy Note 7 Pro. Based on this situation it has been observed that the health of
the society and the competitiveness of the organization are mutually dependent. The theory of
shared value states that the company must recognize and capitalize on these connections between
societal and economic progress that possess the power to redefine capitalism and unleash the
next wave of international growth (Andelin, Karhu & Junnila, 2015). Moreover, Porter described
that economic rationality is regarded as one of the significant tools of smart management with
faith in growth and innovation, where Samsung needs to adjust its capitalism to some extent.
Therefore, Samsung can create shared value opportunities by enabling the development of a local
cluster, redefining productivity in the value chain and reconceiving markets and products (Jones
& Wright, 2018).
Reconceiving products and markets
Reconceiving products and markets creates shared value in various ways, for example, by
improving the nutritional intake of the customers and by expanding the consumer base of a
company. This would, in turn, serve as a forceful driver of innovation and put a positive impact
on productivity. Organizations have the potential to be more successful in generating and
marketing solutions for the problems related to society (Moczadlo, 2015). Thus, new markets
and new needs will provide opportunities to Samsung to innovate, differentiate and grow new
products as per the needs of the customers.
As stated by this theory Samsung must design services and products to address the needs of the
society related to health, safety, financial security and many more. Rather than meeting the needs
of the customer, Samsung must also think in terms of improving the lives of the customers

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(Lahiri, Shah & Dales, 2018). About this particular theory, the organization must recognize the
group of customers those who are overlooked or poorly served by them. Therefore, such type of
market strategies would fir the shared value model based on growth and innovation that would
unlock the potential shared value of the organization.
Proposed alternative solutions
The company had taken various measures to solve the problem. Samsung went through detailed
research on the crisis of the explosion. The cause of overheating batteries was identified that
there was a deflection in the negative electrode in the first batch of battery and melted copper in
the second batch of the battery (Nunes, 2018). The melted copper leads to short circuit and self-
heating. It adopted global recall measures and pre-emptive strategy which helps Samsung to
focus on the safety of the customers. Samsung provided an exchange program in advance of the
recall announcement. A positive or immense recall was the solution adopted by the company to
solve the problem.
The company told that the incident had deeply reflected its process and culture. Samsung
Electronics Corporation limited will work hard to regain the trust of the consumers. It announced
that the Galaxy Note 7 devices which were sold had been taken back by the company. It will take
advantage of the recall to set quality assurance as well as the safety of the new product Samsung
Galaxy S8. Samsung Electronics apologized to the customers in the United States and also
planned to stop sales in the U.S (Chang, Zhang & Xiong, 2019). A qualitative method was used
by the company to collect information regarding the issue related to Galaxy Note 7. The
company sponsored corporate events for the appreciation of the customers so that it would
rebuild trust on the satisfaction of customers.

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Recommendations
To overcome this problem, it is highly recommended that Samsung must introduce eight-point
battery safety check. It is determined to be a process that involves durability tests while the
batteries are subjected to extreme temperatures, charging and discharging scans, X-ray, visual
inspections and overcharged. The organization must examine the designs that will ensure the
customers that there is no possibility of battery leakage. The organization must inspect the
quality of the product that would be delivered to the customers. Throughout the manufacturing
process, Samsung must observe any changes in the voltage. It is strongly recommended that
Samsung must accept and value the feedback of the customers. The feedback from the
stakeholders and the customers must be evaluated, documented and acted upon in time.
Another recommendation is that Samsung must decide an appropriate corrective action plan to
identify the root cause of the problem and prevent the problem from occurring again. The
organization must verify the efficiency of the solution by inspecting, auditing and monitoring the
validated problem resolution. To resolve the problem faced by the customers the company must
make use of efficient problem-solving techniques as well as advanced quality product planning.
This would prevent the organization from making the same mistakes with new product launches
and development. It is essential for the organization to identify and understand the accrual cost of
quality at the time of designing the product, creation, and manufacturing process. Therefore, the
company must follow the right procedures and policies while developing a product.

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References
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