Case Study Analysis: Samsung Galaxy Note 7 and Management Theories

This case study examines the Samsung Galaxy Note 7 crisis through the lens of management theories. It details the product's initial success followed by its disastrous recall due to battery defects, impacting Samsung's brand reputation and customer trust. The analysis covers issues such as public safety, crisis management, and ineffective media relations. The report applies management theories, including scientific, bureaucratic, human relations, and systems theory, highlighting the importance of ethical conduct within organizations. It further discusses the impact of the crisis on Samsung's sales and customer loyalty, emphasizing the need for companies to prioritize customer safety and ethical practices. Desklib offers a platform for students to access this and many other solved assignments.

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Foundation of Management thought
9/5/2018

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Executive summary
Samsung is one of the largest producers of electronic products amongst all other
companies worldwide. Despite the effective and smooth functioning of the organisation, the
company faced many problems. Samsung disappointed the customers and made them switch
to other brands because of the issue of the failure of their product i.e. Galaxy Note 7. The
case represented and led to many problems and two major risk issues. These risk
management issues were the public safety and the crisis management issue on the brand
reputation. The case also represented the weakness of the Samsung, in being ineffective
towards managing their media relations. As a result, they took several steps to eradicate this
problem, for better customer relationship. Thus, every organisation must take into account
their customers safety, needs, and expectations to emerge as a successfully competitive in the
industry in the long- run.

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Contents
1. Introduction....................................................................................................3
2. Case study Overview (Samsung Galaxy Note 7)...........................................3
3. Analysis of the case study..............................................................................4
3.1 Issues in the smartphone..............................................................................5
3.2 Management theories...................................................................................6
4. Conclusion......................................................................................................8
4.1 Analysis of the report..................................................................................8
4.2 Future scope.................................................................................................9
5. Recommendations.............................................................................................9
6. References......................................................................................................9

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1. Introduction
The report brings about the discussion of the multinational enterprises and the case study
analysis of the company “Samsung” . The purpose of the report clearly defines the inclusion
of the management theories and practices in the context of the organisations. One of the
common practices affecting the organisational effectiveness and performance includes an
approach to the ethical conduct. It defines about the ethics and ethical principles followed in
the organisation, to ensure long-term survival and success, in the industry. Ethics define the
ways and practices which are the standards stated by the company towards their employees,
customers and the other stakeholders. Acting in an ethical manner describes about the
behaviour that is acceptable for both the company as well as the society (Yun et.al, 2018).
Ethical behaviour or ethical code of conduct is good for every business organisations, and
it accepts the important moral principles, which includes honesty, fairness, equality, dignity,
and the integrity of the diverse employees in the organisation. The case study analysis has
carried out in the report, of “Samsung Galaxy Note 7.” The application of the management
theories and other aspects has taken with respect to the company and the case study chosen
(Crane & Matten, 2016).
2. Case study Overview (Samsung Galaxy Note 7)
One of the notable and the most successful company, Samsung is a South-Korean based
company, one of the largest producers of the electronic products. Samsung founded by the
Lee Byung-chul in the year 1938, as a trading business company. After the establishment
over next three decades, the Samsung group diversified the operations into areas like food,
textile, insurance, securities, and the retail sector. The company is headquartered in Samsung
town, Seoul Korea, and it includes numerous business affiliated, and most of them are
included under the name of Samsung brand (Samsung Newsroom, 2017).
Samsung has been specialising over years in the production of a wide variety of the
consumer and the electronic products. The major products include appliances, media devices,
semi-conductors, memory chips, and the other systems. The case study taken for the analysis
discusses about the ‘Samsung Galaxy Note7”, that was titled as “Samsung’s Exploding Note
7: A Case study in how not to release a smartphone”. The smartphone has been now

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discontinued which was produced and marketed by the Samsung electronics, due to
numerous issues. Note 7, was officially launched on 19th august, 2016, as the successor to the
Galaxy Note 5. This smartphone was the first the Samsung’s first variant with the
symmetrical order and the last in the series of Galaxy Note with the option of the home
button (Hartley, 2017).
The Galaxy Note7 was the evolution of the note 5, as it consist the hardware components
and improvements from the Galaxy S7. Considering the introduction of the note 7, at the time
of the launch or the release of the smartphone, the demand was high in South Korea. It also
delayed the international release of the phone due to the shortage in the supply. The Galaxy
Note ‘7’ was in the category of the phones that received positive reviews and response from
their critics, who praised about the quality of the construction and HDR support of the phone
(Arya & Verma, 2018).
Galaxy note, after a positive feedback and high demand in the market, brought about a
drastic change in the sale of the smartphone. The crisis of the Galaxy Note 7 considered the
fact that the company Samsung suspended the sales of the note 7 on 2nd September 2016.
After this, an informal call was announced on discovering a manufacturing defect in the
smartphone. The defect in the manufacture of the Note 7 batteries, led to the generation of the
excessive heat resulting into fires. Then, Samsung exchanged about the defected phones with
the issues in their batteries for a new revision that included the resourcing of the batteries
from a different supplier. On 11th October 2016, the company ceased the production of the
Galaxy Note 7 on permanent basis. Due to the continuous battery faults in the Note 7,
Samsung discontinued the production, as these issues observed repeatedly (All techs
considered, 2016).
3. Analysis of the case study
Samsung galaxy note 7, released on 19th august, 2016 has now been discontinued for the
production, due to the issues related to the manufacturing defect in the batteries. Despite the
special features and extra-ordinary qualities, the smartphone resulted into a big crisis, which
hampered the sales of the company. Samsung Galaxy special features included a number of
things which defines about the positive feedback and response received by the company. As
per the negative change of the decreasing sales, which later on resulted into permanent,
abandon of the model, there were few things mentioned by the Samsung officials, which

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described in a detail much about the crisis. Samsung officials stated that the battery of the
smartphone was designed and manufactured from the different companies, in a different
manner. The reason for the failure of these batteries was different from each other, and the
reason identified by the Samsung , was that the fires has been caused due to the defects in the
batteries which led to the short-circuits disturbing the performance (Harding, 2016).
In a broader sense, the analysis of the case study states about the newsletter, dated back in
the later weeks of September 2016, Samsung announced about the improved and updated
Galaxy Note 7 replacement smartphones on the date 21st September 2016. The action directed
towards those who were participating in the exchange program process of the smartphone.
According to the estimation, it was found that almost 500,000 phones or Note 7 was available
for the exchange process. It was also stated that after an exchange program, the new phones
will be equipped by a special feature showing a green light, which will indicate that the
phone is now safe to use , and the issues related to the batteries has been resolved (Park &
Lee, 2015).
After the exchange and the replacement process, of the Note 7, even in the early October
some issues found, even on the ‘new and safe’ Note 7. Then the company called to extend the
status of their original recall and the exchange program with the new or the replaced Galaxy
Note 7’s. Even after such replacements and exchange of the device, there were issues which
are described in a better way in the below paragraph, which analyses the case study in an
optimum manner (Loveridge et al., 2018).
3.1 Issues in the smartphone
According to the words of the President of the Samsung Electronics America, Tim
Baxter, it was mentioned, “The galaxy note 7 is the best phone we have ever built, and it is
made even better by the ecosystem of the Samsung devices that enhance it”. The public
response for the Samsung Galaxy Note 7 was ‘Too hot to handle’. The company received a
backlash from all the social media platforms, about their smoking and defective phones. The
issue covered through the crisis, was used by all the media platforms to make their customers
and other important public aware of the issue. As the company, Samsung published a
research report claiming that the batteries were at the fault. The first explosion was reported
in South Asia and on the same day in China. The public complaints were high which included
the reactions of anger, disappointment, and losing trust, and loss of the loyal customers (Yun
& Kim, 2016).

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Battery Faults
The crisis of the Galaxy Note 7 was identified by the number of issues that included
the defected battery of the Samsung devices, which further led to the major issues or
problems. It included the effect on the many of the note 7 units due to overheating, combust
and the explosion. This led to the discontinuation of the note 7 devices from that time, due to
these repeated incidents. In the beginning, of the issues at the time of original run of devices,
when the note 7 first released in the market, which was manufactured by the subsidiary of
Samsung. The particular situation of these batteries leading to the separation of the positive
and negative tabs of the battery resulting in thermal runaway, and short-circuits (Wu et.al,
2018).
Followed by the official recall on the 12th September 2016, the note 7 was then re-
versioned using the batteries from a third-party supplier. The company mentioned on the 23rd
January 2017, that these batteries faced the problem of defect was due to the fault in the
manufacturing of the wielding process. The initial reports were given by Samsung, which
included the delayed shipment of the Galaxy note 7 and then the discontinuation of the device
after the recall by the company for the battery (Tan et.al, 2018, July).
Issues with the replacement phones
In the month of October 2016, there were several incidents notes even after the
replacement still suffered from the battery failure and combustion issues. Therefore, there
were some issues regarding the device even after the replacement of the note 7. The new and
fresh devices also faced problems, which then called subsequent recalls and then final
discontinuation. Thus, it was analysed that there were number of the issues that disturbed the
functioning of the device, making the customers of the Samsung, to complain or switch to
other products or brand. Therefore, the issues and the management of the company linked to
some of the management theories, which are described below (Dalton, 2017).
3.2 Management theories
The management theories defined in the context of the organisations, which guides
the supervisors and the managers in an organisation to follow up the ethics, fulfilling their
responsibilities and the attainment of their goals and objectives in the long-term. Therefore,

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there are four management theories, which can be applied with respect to the company,
Samsung, and the operations carried out in the organisation. The management theories
include scientific management theory, bureaucratic management theory, human relations
theory, and the systems theory. One of the most important and crucial aspects of these
theories include the “approach to the ethical conduct”. The concept of ethics and the ethical
management in any organisation is essential and significantly affects the smooth functioning
as well as the effectiveness of the organisation in the long-run (Bratton & Gold, 2017).
Ethical conduct in Samsung
Samsung adopted fair and transparent corporate culture, following the ethical code of
conduct, which established it amongst the largest producers of electronic products. As the
company spans across many different countries around the globe, therefore it recognizes and
accepts the laws, regulations and practices in their operations; conducting their business in
lawful and ethical manner. The company also developed the global data security policies to
keep the confidentiality of the data of their customers and the employees working in the
organisation. To manage the compliance and the ethical risks are followed by the Samsung
code of conduct, also it included compliance with the Business conduct guidelines which
states about taking action and the value judgement by their employees (Samsung, 2018).
The company through their ethics management website, disclosed their Global Code
of Conduct, i.e. Samsung Business principles, to their suppliers, customers, or the other key
stakeholders. It states about the compliance and the violation of the defined ethical standards.
The organisation focused upon ensuring that all the Samsung electro-mechanics and the
executives are given the anti-corruption training and education, which enables them to
identify and improve vulnerabilities in the organisation processes (Marin, Mitchell & Lee,
2015).
In the case of the ‘Galaxy Note 7’, there were two approaches were followed, which
ensured upon following the ethics and taking action to improve the situation of loss. The
approach of individualism and utilitarianism were followed. It was stated, according to the
individualist approach that the owners behaved in the ethical manner in organisation.
According to modern individualist, Samsung adopted the ethical system and focused on not
sending the replacement phones again as it would hurt and make their relationships with their
customer’s unhealthy (Lee et.al, 2015).

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On the other hand, the utilitarianism approach stated that it was unethical, as they
faced the consequences because of the Samsung’s mistakes and the lack of awareness.
Samsung put more attention to the deadline of the product launch rather than the safety and
the satisfaction of their stakeholders; therefore, they violated the ethics, in their operations
(Choi et.al, 2018).
Bureaucratic and Human relations theory
The other three theories included Bureaucratic management theory, which focused, upon
the clear designation of the roles of their employees and the management, based on the
hierarchy and the management defining who is supposed to do what work and in what
manner. The human relations theory focused the shift in the management of the organisations
to the human-centred approach that focuses on identifying the capacities of the individuals
and acting autonomously and creatively (Vu, Abel & Morizet-Mahoudeaux, 2015).
It emphasized on the alignment of the potential of the employees with the needs of the
organisation. The system theory is the holistic approach to ensure the work and the processes
carried out in the proper systematic manner. The approach focuses on the organisation as a
whole, included identifying the functional elements to achieve organisational goals and
objectives. These all theories are effectively implemented by the diversified functions of the
Samsung (Shafritz, Ott & Jang, 2015).
4. Conclusion
To conclude the overall assessment of the report that focused upon the Samsung’s
effectiveness and the performance, with respect to the case study there were number of things
were discovered during the analysis. Samsung is considered as one of the largest producers of
the electronic devices, in the industry with the larger market share.
4.1 Analysis of the report
It has been analysed from the report about Samsung’s Galaxy Note 7 Crisis, that the
phone depicted the manufacturing defect, which led to the subsequent recalls of the note 7.
The analysis also included the note 7, issues in the batteries even after the replacement or
exchange program processes. Thus, Samsung made several recalls and strategies to improve
the situation, but even then, there were manufacturing defects in their device.

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4.2 Future scope
Samsung is in a curious position, that determines about the strategies and plans
carried out by the performance of their operations. The future scope or the mission of the
Samsung focuses upon satisfying their customers worldwide, and improving the work
practices, and the achievement of goals and objectives.
5. Recommendations
It can be recommended or suggested from the case study analysis , of the Galaxy Note 7,
that despite the number of trials and recalls, the phone faced discontinuation , therefore the
company should focus on initiating new strategies and plans, towards ensuring the safety and
good of their employees as well as the customers. They should have proper check, testing and
examining the quality before the launch of the product in the market, keeping the goals and
needs of their customers aligned.

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6. References
All techs considered. (2016). In Samsung’s Messy phone recall, Lack of transparency takes
centre stage. Retrieved from:
https://www.npr.org/sections/alltechconsidered/2016/10/18/497949435/in-samsung-s-
messy-phone-recall-lack-of-transparency-takes-center-stage
Arya, V. & Verma, H. (2018). Social Networking Sites and Brand Attachment. SCMS
Journal of Indian Management, 15(1).
Bratton, J. & Gold, J. (2017). Human resource management: theory and practice. United
Kingdom: Palgrave.
Choi, H., Cho, S., Seo, J. & Bechtoldt, M. (2018). The joint impact of collectivistic value
orientation and independent self-representation on group creativity. Group Processes &
Intergroup Relations, 21(1), 37-56.
Crane, A. & Matten, D. (2016). Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. United Kingdom: Oxford University Press.
Dalton, M. (2017). Men who manage: Fusions of feeling and theory in administration.
United Kingdom: Routledge.
Harding, X. (2016). Samsung's Exploding Galaxy Note 7: A Case Study In How Not To
Release A Smartphone. Retrieved from: https://www.popsci.com/samsung-note-7-
catching-fire
Hartley, S. (2017). The case of the exploding Samsung phones. Busidate, 25(1), 9.
Lee, M. H., Park, H. S., Hong, K. U., Jung, J. B., & Lee, G. Y. (2015). U.S. Patent
Application No. 29/453,939.
Loveridge, M. J., Remy, G., Kourra, N., Genieser, R., Barai, A., Lain, M. J., & Ellis, M.
(2018). Looking deeper into the Galaxy (Note 7). Batteries, 4(1), 3.
Marin, A., Mitchell, R. & Lee, K. (2015). The Vulnerability and Strength Duality in Ethnic
Business: A Model of Stakeholder Salience and Social Capital. Journal of Business
Ethics, 130(2), 271-289.

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Park, C. & Lee, H. (2015). Value co-creation processes—early stages of value chains
involving high-tech business markets: Samsung–QUALCOMM semiconductor foundry
businesses. Journal of Business-to-Business Marketing, 22(3), 229-252.
Samsung Newsroom. (2017). Samsung Changing for the future. Retrieved from:
https://news.samsung.com/in/innovation-feature-part-1-samsung-changing-for-the-future
Samsung. (2018). Fair and Transparent Corporate Culture. Retrieved from:
https://www.samsung.com/us/aboutsamsung/sustainability/ethics/
Shafritz, J. M., Ott, J. S. & Jang, Y. S. (2015). Classics of organization theory. United States:
Cengage Learning.
Tan, C. C., Loveridge, M. J., Dixon, S., Remy, G., Kourra, N., Genieser, R. & Williams, M.
A. (2018, July). Pushing to the Limit: Samsung Galaxy Note 7 and Fitbit Flex 2.
In Meeting Abstracts (No. 7, pp. 482-482). The Electrochemical Society.
Vu, Abel & Morizet-Mahoudeaux. (2015). A user-centred and group-based approach for
social data filtering and sharing. Computers in Human Behaviour, 51(PB), 1012-1023.
Wu, Y., Saxena, S., Xing, Y., Wang, Y., Li, C., Yung, W. K. & Pecht, M. (2018). Analysis of
Manufacturing-Induced Defects and Structural Deformations in Lithium-Ion Batteries
Using Computed Tomography. Energies, 11(4), 925.
Yun, J. Y. & Kim, C. (2016). Convergence innovation in the management of large firms:
Samsung Electronics. In Managing Convergence in Innovation (pp. 71-86). United
Kingdom: Routledge
Yun, J., Jeon, J., Park, K. & Zhao, X. (2018). Benefits and Costs of Closed Innovation
Strategy: Analysis of Samsung’s Galaxy Note 7 Explosion and Withdrawal
Scandal. Journal of Open Innovation: Technology, Market, and Complexity, 4(3), 20.