Nov 5, 2024 · The failure of Samsung’s Galaxy Note 7 has had enormous financial implications. It is estimated that it may lead to a revenue loss of over $ 5 billion. Even though the company could easily deal with the loss of income, the failure has great social and legal ramifications. ... This article is a report of Samsung Note 7 recall in 2016. Relevant literature, annual and news reports are summarized to analyze and assess. Samsung launched the smartphone Galaxy Note 7 on 19th August 2016. However, this product suffered multiple incidents of overheating or explosions around the world due to quality problems. ... Jan 23, 2017 · Samsung builds a test lab to find the root cause of the Note 7's issues. In the last 120 days, Samsung built a new test lab. It staffed it with 700 researchers, 200,000 devices and 30,000 ... ... Dec 4, 2023 · Introduction. Samsung is one of the leading handset manufacturers and is renowned for its cutting-edge technologies. In 2016, the company went into trouble over a battery safety concern and experienced financial and reputational damage. ... paper is the first of its kind case study on a first of its kind incident that hap-pened with Note 7 – one of the most talked about cases of 2016 and can be used as stepping stone for further analysis into this or similar cases. Keywords: Buyer Preferences, Consumer Behaviour, Mobile Phone Industry, Note 7 Explosion, Samsung Case INTRODUCTION ... Jun 6, 2023 · Samsung Galaxy Note 7 Crisis . The Note 7 battery issue marked a significant crisis for Samsung, leading to a widespread recall of the flagship smartphone and causing considerable damage to the company’s reputation. The crisis began in September 2016 when reports emerged of Note 7 devices catching fire or exploding due to faulty batteries. ... This case study has been conducted for learning purposes in terms of the possible issues in risk management related to Samsung Galaxy Note 7 fiasco. Samsung’s leaderships in particular are being scrutinized for their mishandling throughout the process. ... This article is a report of Samsung Note 7 recall in 2016. Relevant literature, annual and news reports are summarized to analyze and assess. Samsung launched the smartphone Galaxy Note 7 on 19th August 2016. However, this product suffered multiple incidents of overheating or explosions around the world due to quality problems. ... 5 This case study will analyze the critical mistakes that led to the Galaxy Note 7's failure, shedding light on the types of risks associated with the project. Moreover, it will explore how effective risk management practices could have mitigated these challenges and contributed to the successful development of the Samsung Galaxy Note 7. ... Jun 18, 2022 · EXECUTIVE SUMMARY The purpose of this case study was to examine the issue of the explosion of Samsung Galaxy Note 7. Research for this case study included a review of the introduction, identification, the main issues, analysis and recommendations. ... ">

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Samsung explains note 7 battery explosions, and turns crisis into opportunity.

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Samsung launched the Galaxy Note 7 to record preorders and sales in August, but the rosy start soon turned sour. Samsung had to initiate a recall in September of the first version of the Note 7 due to faulty batteries that overheated and exploded. By October it had to recall over 2 million devices and discontinue the product. It's estimated that the recall will cost Samsung $5.3 billion.

In a report released Sunday night, the company detailed flaws in battery design and manufacturing that it believes caused the crisis.

Recalling a product is never easy, and yielding returns of more than 30 percent is extremely challenging. Samsung aggressively told the media its goal was a 100% recall. Less than three months later, the company has reached a 96 percent return rate globally.

Tim Baxter, CEO and president of Samsung Electronics America, Inc., called it one of the first digital recalls. The company sent text messages and emails to communicate the recall. Samsung also improved the volume and speed of returned units by working with telecom carriers to issue a software update that would disable the Galaxy Note 7’s charging abilities, rendering it useless as a phone. Since the recall was a safety issue, service providers agreed to distribute the update to dimish device charging.  And when the Department of Transportation (DOT) banned the Note 7 on airplanes, teams of Samsung employees were sent to airports to help consumers and collect the phones.

DJ Koh, President Mobile Communications Business for Samsung Electronics, said in an interview with industry analysts, “Technology innovation is important to Samsung, but our customer’s safety is more important. We want to reinstate trust in the brand." To regain trust, Samsung had to identify the root cause of the issues with the Galaxy Note 7 and apply these learning to future product designs. In a press conference held Sunday night in Korea, Samsung told the world what actions it was taking to remedy the situation as it announced the official results of a months-long investigation into what went wrong with the Galaxy Note 7.

Koh Dong-Jin, president of Samsung Electronics Mobile Communications Business, speaks during a news ... [+] conference in Seoul on September 2, 2016. (KIM HONG-JI/AFP/Getty Images)

Samsung builds a test lab to find  the root cause of the Note 7's issues

In the last 120 days, Samsung built a new test lab. It staffed it with 700 researchers, 200,000 devices and 30,000 batteries in an attempt to replicate the cause of fires in the phones. It tested the whole device, including areas such as the role of wired and wireless charging as well as fast and normal charging. It also tested the water resistance, with and without the back cover.

Samsung tested other device features such as the USB-C charger and Iris scanner. It evaluated the software and algorithms tied to wireless charging. It even evaluated how third party applications were impacting the phone. Additionally, it worked with three independent third party test labs - UL, Exponent, and TUVRheinland - to assess issues across software, hardware, manufacturing, logistics and handling. The finding from Samsung tests and the independent labs revealed the same results.

Battery manufacturing issues led to smoking phones

What happened? In short, batteries from two different manufacturers had flaws. The principal root cause of the first manufacturer’s battery problem (Battery A) was negative electrode deflections. The second manufacturer's product (Battery B), suffered from abnormal ultrasonic welding burrs. (For more information on the flaws (see the infographic ) While the principal cause was different in each type of the battery, the result was the same. A small subset of batteries could overheat and potentially catch fire. It’s clear that the smartphone industry’s desire for ever thinner phones with longer battery life has strained battery manufacturing processes.

Infographic Galaxy Note 7, what Samsung discovered. Source: Samsung Electronics

Samsung creates battery advisory group and designs an 8-point battery safety system

The company created a battery advisory group that includes leaders from various universities and specialized consultants. Battery Advisory Group members include: Clare Grey, a professor of chemistry at the University of Cambridge; Gerbrand Ceder, a professor of Materials Science and Engineering at UC Berkeley; Yi Cui, a professor of Materials Science and Engineering at Stanford; and Toru Amazutsumi, CEO of Amaz Techno.

Going forward, Samsung has a new quality assurance process that both Samsung and its component manufacturers must follow. It has implemented a multi-layer safety measures protocol at the product planning and a new 8-point battery safety system. This system includes:

  • Durability Test – Conducting additional durability tests, including battery nailing, stress testing with extreme temperatures and overcharging tests.
  • Visual Inspection – Visually checking the battery to compare it with samples confirmed to be in accordance with standardized criteria.
  • X-Ray Test – Running X-ray tests to inspect any possible battery issue such as a deflection of the electrode, which we found to be one of causes of the Note7 issue.
  • Disassembling Test – Disassembling the battery cell to perform a detailed check of the overall quality, including the battery tab welding and insulation tape conditions, which we found to be an issue with Note7.
  • TVOC Test – Performing a sensing test to detect leakage at the battery component and complete device levels.
  • ΔOCV Test – Inspecting the battery condition by checking voltage change in a normal temperature.
  • Charge and Discharge Test – Applying new large-scale charge and discharge tests to all devices, which we initiated with our investigation into the Note7 issues.
  • Accelerated Usage Test – Engaging in 2 weeks of real-life consumer usability scenarios, which we were able to shorten to a five-day test period.

Samsung will also contribute its learnings and processes for testing Lithium Ion batteries to various global standardization bodies. This act of goodwill also ensures that other smartphone vendors can request the same inspections. If the specifications were Samsung-specific, battery manufacturers might not adhere to the checklist.

What does this mean for the industry?

The smartphone recall sent shockwaves through the industry. Now that we have a definite answer to what went wrong, it’s clear that the recall will have both positive and negative consequences for the entire smartphone industry. Specifically,

  • Samsung customers will get better phones. The upcoming set of Samsung phones should be the company's most highly tested set of devices to date. The software should have fewer bugs and be optimized for battery life. Hardware will also have been battle tested for all types of environments.
  • Samsung processes get a boost. Samsung has taken 120 days to review every aspect of its process from product design through the supply chain. It’s likely that the inspections revealed areas of improvement across every aspect of Samsung’s smartphone business. The external reviews will only make the company’s processes better.
  • Industry safety is improved. If not addressed, these issues would’ve arisen in another smartphone or IoT manufacturer’s product. The focus on testing and battery safety will make the smartphone industry safer overall.
  • Battery makers margins get thinner. The pressure was already on battery manufacturers to deliver thinner products at faster rates. With the latest set of safety checkpoints, battery companies will need to perform deeper inspections, in the same amount of time, for the same revenue.
  • Samsung products timetables get pushed out. The timeframe for introducing new products will be pushed out as the company changes its internal layout to accommodate changes in battery placement. Given it has taken a 120-day testing window, it’s likely that device roadmaps will be pushed out at least 6 months. The upside, Samsung’s 7 Edge product appears to be holding its own in the market.

Samsung isn't the first company to have a major consumer recall, nor will it be the last. It’s how a company handles a product recall that determines its future success or failure. While it’s been a difficult time for Samsung, the company took ownership of the issues, acted quickly and worked diligently to fix its problems. With its new and improved quality assurance processes and design prowess, Samsung should make a strong comeback as the world awaits the arrival of the Galaxy Note 8.

Maribel Lopez

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Exploding of Samsung Galaxy Note 7: A Case Study Report

Introduction, identification of key issues, lessons learnt, recommendations for enterprise risk management (erm), reference list‌.

Samsung is one of the leading handset manufacturers and is renowned for its cutting-edge technologies. In 2016, the company went into trouble over a battery safety concern and experienced financial and reputational damage. On August 2, 2016, Samsung introduced its latest top device, the Galaxy Note 7. A South Korean user reported the Galaxy Note 7 exploding on August 24, just a few nights after the phone’s release.

Several customers claimed their gadgets were overheating and crashing shortly after the incident. The following day, Samsung launched the preliminary withdrawal of 2.5 million smartphones due to defective batteries (Heathman, 2017). Therefore, this report aims to determine and evaluate risk management challenges based on the Samsung Galaxy Note 7 suspension altercation. Furthermore, the paper offers a range of suggestions for strengthening Samsung Company’s business risk administration functions that it should pursue to establish its enterprise preparedness abilities.

First, the smartphone market competitiveness has increased in recent years. Samsung, a market leader, competes with Apple with its Galaxy Note series. In addition, certain new entrants, such as Huawei, are expanding rapidly. Therefore, the competitive threat could be Samsung’s most apparent worry. Secondly, shifting consumer preferences resulting from technological progress pose dangers for Samsung. Samsung is renowned for its innovative technology, and the corporation is compelled to regularly update and improve its expertise due to the ever-shifting preferences of consumers and the intense rivalry in the marketplace.

Notable is the possibility of defective items, and the fundamental attribute of cellphones is their performance. Since Samsung aims to provide superior gadgets and solutions, merchandise quality might be a greater priority for the company. Additionally, Samsung outsources the production of product elements; therefore, third parties’ incompetence could harm Samsung. The technique reduces Samsung’s risk associated with controlling its items’ general effectiveness. In addition, the preceding risks may result in reputational damage, which is inextricably linked to customer loyalty. Consequently, if a company’s reputation is compromised, sales income could be significantly affected.

Recent Note 7 explosions have destroyed Samsung’s reputation for reliability, like a residence of chips on fire. There is no verification as to the precise cause of Samsung’s catastrophe. Initially, the business attributed the incidents on a specific battery cell fault, but it came out that not even Samsung knew the precise cause of the blasts. While it appeared that Samsung was steadily gaining control of the situation, a few more Note 7s burst, but this time the circumstances were distinct. Where did Samsung go awry with the Note 7, and was it too premature to cease smartphone operations? The following conclusions can be inferred from the explosion of Samsung’s Note 7.

There is no Gadget Immune to Explosions

In the past, there have been countless incidents of exploding devices, and while none attracted as much publicity as the Note 7, most were hazardous. In fact, every lithium-ion battery-powered equipment is vulnerable to accidents. One of the explanations why mobile phones became so popular was their long standby duration without taking up much room. Therefore, this was the product of tightly populated batteries, which represented a technological breakthrough and increased the chance of short circuits. Currently, all smartphones are driven by these cells, and although the likelihood of exploding is exceptionally low, even a little design flaw can result in an accident.

Expensive does not Guarantee Safety

The Samsung Galaxy series has traditionally dominated the luxury smartphone product category. After the release of the Galaxy S6 and Galaxy S6 Edge, the handsets have even chipped into Apple’s market share due to their superior build quality. However, this does not imply that they are safer than less expensive devices. These handsets continually push the technological envelope; mainly, battery expertise has not kept pace with the progress of other mobile hardware, so producers are introducing capabilities such as fast charge and high-density packs to meet consumer demands. In contrast, most flagship models showcase the corporation’s newest, least-tested innovation regarding the actual customer experience. Note 7’s context leads to modest safety concessions that could very well end in a catastrophe.

Revised Safety Legislations

The present smartphone safety laws are not as stringent as they should be. Most nations have their regulatory agencies to establish safety processes, but with the explosive rise of smartphone adoption, these restrictions are inadequate for ensuring the gadgets are thoroughly tested. Specific absorption rate (SAR) estimates have proven ineffective in examining real-world impacts and changes, even in the context of mobile radiations. The majority of testing assumes there is no direct skin interaction with the equipment. The Federal Communication Commission (FCC) asserts that any smartphone subjected to routine radiation assessments while in direct proximity to human skin will underperform.

Battery Innovation requires Special Changes

When it comes to smartphone advancement, battery invention is on the rise. Power is essential for all electronic devices, and the most effective method for energy storage was discovered in 1991 (Aykol et al., 2020). Since their conception, the lithium-ion batteries driving people’s smartphones have remained virtually unchanged. Even though the battery sector has increased by 5 to 10% annually, there has been no innovation to maintain the increasing need for power (Aykol et al., 2020). With every smartphone, there is a desire for a more multicore hardware, a larger and more pixel-dense display, and slimmer profiles. The increased processing capacity gives gadgets additional capabilities, but the cells’ breakthrough cannot power these chipsets. Regardless of the smartphone’s cost, most customers are compelled to scrounge for energy at the end of the day.

Enterprise risk management (ERM) is a technique that takes a tactical view of risk assessment from the standpoint of the whole company or corporation. Saeidi et al. (2019) enumerated that ERM is a top-down methodology that tries to detect, appraise, and plan for prospective losses, threats, liabilities, and other prospects for the destruction that may impede an institution’s activities and aspirations and result in losses. Enterprise resilience is the ability to endure systemic disruptions and prepare for new risk situations.

A resilient firm aligns its approach, processes, operational processes, regulatory regime, and decision-support functionality to identify and adapt to ever-changing risks. In addition, it makes a firm withstand interruptions to its foremost profit drivers and gain competitiveness over less adaptable rivals. Such resilient companies promote transparency and implement rules for executives and boards to manage enterprise-wide risks (Bemthuis et al., 2020). It can survive illegal or dishonest staff behavior, IT equipment breakdowns, disturbances in interconnected supply chains or consumer connections, severe market circumstances across geographies, and many other upheavals businesses confront today (Bemthuis et al., 2020). The following recommendations will assist Samsung in strengthening its corporate risk management to establish resilient business capabilities to avoid a similar issue to the Samsung Galaxy Note 7.

First, Samsung Inc. management should thoroughly evaluate the firm’s competitive plans. As previously indicated, Samsung failed to manage competition risk effectively. The leaders’ erroneous decision to shorten the timeline for engineers and part suppliers led to the battery safety catastrophe. Therefore, some enhancements to the risk administration procedure should be made to ensure that the organization is on the correct course relative to its rivals. Samsung requires an internal risk management committee to assist in assessing the hazard exposure of its initiatives and managerial choices. The group will be able to evaluate all alternative outcomes and spot possible dangers. Then, senior management should be provided with a balanced scorecard that details the business goal, research aim, concerns, and company capabilities. The report can assist managers in identifying hazards and balancing profits and risks. In addition, with adequate risk intelligence, directors can devise strategies for adapting to intense rivalry and gaining a competitive edge.

Second, as a company specializing in luxury handheld devices, the quality problem is crucial. Samsung should, therefore, have a rigorous quality assurance procedure. Even while Samsung has made some attempts to upgrade its energy test system, such as its eight-point battery wellness monitoring program, Samsung still has room for improvement regarding quality assurance. On the one hand, Samsung and its battery provider could communicate more. Samsung might obtain further knowledge about its suppliers’ capabilities, choose vendors and make purchases accordingly. Alternatively, Samsung might create a different risk management group to check product quality based on external reports; examples include customer testimonials; therefore, the organization can quickly recognize. By cooperating with the internal risk control department, Samsung could anticipate quickly identifying the source of the issue. Additionally, the risk administration team could prepare preparations for any product-related concerns. As a result, the plan will facilitate the corporation’s problem resolution.

Last, Samsung should enhance its customer interaction to contain and mitigate the crisis’s impact. Utilizing social media effectively and increasing the disclosure of data could lead to the desired outcome. Since more people are utilizing digital platforms and fewer individuals routinely visit the company portal, most individuals acquire information more quickly through media sites. Samsung is encouraged to utilize these platforms to disseminate vital information effectively. In addition, Samsung should boost its crisis-related informational openness. When experiencing a catastrophe, the organization needs to get the comprehension of its customers. As quickly as feasible, Samsung should inform consumers of its inquiry into the situation to preserve customer trust in its merchandise. Moreover, the enhanced transparency of crisis-related material could demonstrate to clients the business’s favorable view and attempts to defend its brand.

In conclusion, the smartphone market competition has intensified in recent decades. Apple is in rivalry with industry leader Samsung’s Galaxy Note series, and newcomers like Huawei are developing swiftly. Consequently, the competitive pressure may be Samsung’s primary concern. One of the reasons why smartphones became so prominent was their long standby time and small footprint. Therefore, this resulted from densely packed batteries, which represented innovative progress but raised the probability of a short circuit.

Historically, the Samsung Galaxy series has monopolized the premium smartphone industry. In the frame of reference of Note 7, this results in minor safety compromises that could very well result in a disaster. ERM is an approach that adopts a tactical perspective on risk management from the perspective of the entire organization. It is a top-down approach that attempts to detect, evaluate, and strategize for potential losses, dangers, obligations, and other possibilities for a collapse that may inhibit a company’s actions and objectives and generate losses. A resilient strategy will conform Samsung to its methodology, procedures, internal operations, regulatory system, and decision-support capabilities in a manner that enables it to recognize and acclimate to ever-changing risks. In addition, it allows a company to withstand disruptions to its primary profit drivers and gain a competitive advantage over less adaptable competitors.

To solidify its corporate risk management and avoid a circumstance similar to the Samsung Galaxy Note 7, Samsung’s leadership should comprehensively analyze the company’s competitive strategies. As a firm that concentrates on premium portable gadgets, the issue of quality is paramount. Therefore, Samsung should have a stringent quality assurance method. Samsung should improve its user engagement to minimize and reduce the crisis’s effects. Effective use of digital networks and more information transparency could contribute to the intended outcome.

Aykol, M., Herring, P. and Anapolsky, A. (2020) ‘ Machine learning for continuous innovation in battery technologies .’ Nature Reviews Materials , 5 (10), pp.725-727. Web.

Bemthuis, R., Iacob, M.E. and Havinga, P. (2020) ‘ A design of the resilient enterprise: A reference architecture for emergent behaviors control .’ Sensors , 20 (22), p.1-39. Web.

Heathman, A. (2017). Samsung’s Galaxy Note 7 phones: what was wrong with them? Web.

Lopez, M. (2017). Samsung explains Note 7 battery explosions, and turns crisis into opportunity . Forbes . Web.

Saeidi, et al. (2019) ‘ The impact of enterprise risk management on competitive advantage by moderating role of information technology .’ Computer Standards & Interfaces , 63 , pp.67-82. Web.

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Remarkable Recovery: Samsung Crisis Management Case Study

Have you ever wondered how a global tech giant like Samsung managed to navigate a major crisis and bounce back stronger? 

In the world of corporate governance, effective crisis management can be the difference between irreparable damage to a company’s reputation and a successful recovery. 

In this blog post, we delve into a Samsung crisis management case study to learn about exploding batteries to the intricate strategies employed to restore trust.

Samsung’s journey offers valuable insights into the intricacies of crisis management in the digital age. 

Join us as we explore the key lessons learned and best practices from this high-stakes situation, shedding light on the remarkable recovery efforts that propelled Samsung forward.

Let’s learn about sailing through tough times through Samsung crisis management case study

Background of Samsung History and growth of Samsung as a global conglomerate 

Samsung, founded in 1938 by Lee Byung-chul, started as a small trading company in South Korea. Over the years, it steadily expanded into various industries, such as textiles, insurance, and retail.

In the 1960s, Samsung ventured into electronics, marking the beginning of its transformation into a global conglomerate.

With a focus on technological innovation and a commitment to quality, Samsung rapidly gained recognition for its consumer electronics products, including televisions and appliances.

Throughout the 1980s and 1990s, Samsung significantly diversified its business portfolio, entering the semiconductor, telecommunications, and shipbuilding industries.

This diversification strategy helped Samsung become a key player in multiple sectors, solidifying its position as a global leader. Notably, Samsung’s semiconductor division became one of the largest chip manufacturers in the world, supplying components to various electronic devices worldwide.

Samsung’s ascent continued in the 2000s, driven by its successful expansion into the mobile phone market. The introduction of the Galaxy series, powered by the Android operating system, catapulted Samsung to the forefront of the smartphone industry.

The company’s innovative designs, cutting-edge features, and aggressive marketing campaigns contributed to its rise as a major competitor to Apple’s iPhone.

With its global reach, Samsung has consistently ranked among the world’s largest technology companies, epitomizing South Korea’s economic prowess and technological advancements.

Samsung has also been considered one the best companies that successfully managed and implemented change initiatives.

Overview of Samsung’s position in the technology industry

In the consumer electronics segment, Samsung has established itself as a dominant force. Its diverse product lineup encompasses televisions, smartphones, tablets, wearables, home appliances, and audio devices.

The Galaxy series of smartphones, in particular, has enjoyed immense popularity and has emerged as a fierce competitor to other industry giants. Samsung’s televisions are also highly regarded for their cutting-edge display technologies, such as QLED and MicroLED.

The company’s advancements in semiconductor technology have contributed to faster computing speeds, increased storage capacities, and improved energy efficiency.

Samsung’s influence extends beyond consumer electronics and semiconductors. The company is actively involved in telecommunications infrastructure, including the development of 5G networks and the production of network equipment.

Samsung has also made notable strides in the realm of software solutions, including its own mobile operating system, Tizen, and various software platforms for smart devices.

Samsung Galaxy Note 7 Crisis

The Note 7 battery issue marked a significant crisis for Samsung, leading to a widespread recall of the flagship smartphone and causing considerable damage to the company’s reputation.

The crisis began in September 2016 when reports emerged of Note 7 devices catching fire or exploding due to faulty batteries. These incidents raised concerns about consumer safety and triggered a wave of negative publicity for Samsung.

Upon receiving initial reports of battery-related incidents, Samsung initially responded by issuing a voluntary recall of the Note 7 in September 2016. The company acknowledged the problem and expressed its commitment to addressing the issue promptly and effectively.

Samsung attributed the battery malfunctions to a manufacturing defect, specifically a flaw in the design that caused a short circuit.

To ensure customer safety, Samsung advised Note 7 owners to power down their devices and refrain from using them. The company swiftly implemented measures to exchange the affected devices, offering customers the option to either replace their Note 7 with a new unit or receive a refund.

Samsung also collaborated with mobile network operators and retail partners to facilitate the recall process.

In its initial response, Samsung took steps to communicate with customers and the public about the issue. The company published official statements expressing regret for the inconvenience caused and assuring customers of its commitment to resolving the problem. Samsung emphasized its dedication to quality and safety, promising to conduct thorough investigations and implement necessary improvements to prevent similar incidents in the future.

Media coverage and public perception during the crisis

During the Note 7 crisis, media coverage played a significant role in shaping public perception and amplifying the negative impact on Samsung’s brand.

The crisis received extensive coverage from both traditional media outlets and online platforms, leading to widespread awareness and public scrutiny. Here’s an overview of media coverage and its influence on public perception:

  • News Outlets: Major news organizations across the globe reported on the Note 7 battery issue, highlighting incidents, the recall, and subsequent developments. Television news segments, newspapers, and online news articles extensively covered the crisis , emphasizing the potential safety risks and consumer concerns. The constant media attention contributed to the widespread dissemination of information and increased public awareness of the issue.
  • Online Platforms and Social Media: Social media platforms played a pivotal role in the crisis, enabling the rapid spread of information and user-generated content. Users took to platforms such as Twitter, Facebook, and YouTube to share their experiences, express concerns, and criticize Samsung’s handling of the situation. Viral videos, photos, and personal accounts of Note 7 incidents gained traction, further fueling negative sentiment and influencing public perception.
  • Expert Analysis and Opinions: Alongside news coverage, experts and industry analysts provided their insights and opinions on the crisis. Their assessments of Samsung’s response, the potential causes of the battery issue, and the implications for the company’s brand reputation contributed to the overall narrative. Expert opinions had the power to sway public perception and shape the understanding of the crisis.
  • Consumer Forums and Discussion Platforms: Online forums and discussion boards dedicated to technology and consumer experiences became hubs for discussions surrounding the Note 7 crisis. Consumers shared their frustrations, exchanged information, and warned others about potential risks. These platforms served as gathering places for individuals affected by the crisis and amplified the negative sentiment surrounding Samsung’s brand.

Financial implications and losses incurred by Samsung

The Note 7 crisis had significant financial implications for Samsung, resulting in substantial losses for the company. Here are some of the key financial impacts experienced by Samsung as a result of the crisis:

  • Recall and Replacement Costs: The recall and replacement process incurred significant costs for Samsung. The expenses involved in collecting and replacing over 2 million of Note 7 devices, including logistics, shipping, and refurbishment, were substantial. The costs also encompassed the testing and certification of replacement devices to ensure their safety. The total recall cost was estimated at $5.3 billion.
  • Decline in Sales and Market Share: The crisis had a detrimental impact on Samsung’s sales and market share in the smartphone industry. As consumer confidence in the Note 7 and Samsung’s brand reputation declined, potential buyers shifted their preferences to alternative smartphone options. The decline in sales of the Note 7, coupled with the negative impact on the perception of other Samsung products, led to a loss of market share for the company.
  • Stock Price Decline: The Note 7 crisis had an immediate impact on Samsung’s stock price. News of the battery issue, recalls, and subsequent negative media coverage led to a decline in Samsung’s stock value. Samsung shares fell approximately to 7 percent right after 2 months of the crisis.

Crisis Management Strategy Employed by Samsung

Following are the key aspects of Samsung Galaxy Note 7 crisis management strategy:

Immediate actions taken by Samsung to address the crisis

In the face of the Note 7 crisis, Samsung swiftly implemented a range of immediate actions to address the situation and mitigate the impact on consumers and the company’s brand reputation. Here are some of the key actions taken by Samsung:

  • Voluntary Recall: As soon as reports of battery issues emerged, Samsung initiated a voluntary recall of the Note 7. This proactive step demonstrated the company’s commitment to consumer safety and willingness to take responsibility for the problem.
  • Temporary Production Halt: To address the root cause of the battery issue, Samsung temporarily halted production of the Note 7. This decision aimed to prevent further distribution of potentially defective devices and allow for thorough investigations and corrective measures.
  • Transparent Communication: Samsung made efforts to communicate openly and transparently about the crisis. The company issued official statements and press releases acknowledging the problem, expressing regret for the inconvenience caused, and reassuring customers of its commitment to resolving the issue. Transparent communication was crucial in maintaining trust and providing timely updates to affected consumers.
  • Collaboration with Authorities: Samsung collaborated closely with regulatory authorities and industry experts to investigate the battery issue comprehensively. By engaging external expertise, the company aimed to identify the root cause and develop effective solutions. This collaboration demonstrated Samsung’s commitment to finding the best possible resolution.
  • Customer Support and Safety Guidelines: Samsung provided clear instructions to consumers regarding the use of Note 7 devices, emphasizing the importance of safety. The company advised customers to power down their devices, participate in the recall, and utilize alternative devices in the interim. This approach prioritized customer safety and aimed to prevent further incidents.
  • Increased Battery Testing and Safety Measures: Samsung implemented enhanced battery testing procedures and stringent safety measures to prevent similar incidents in the future. The company adopted more rigorous quality control processes, including additional safety certifications and testing standards, to ensure the highest levels of product safety.

Communication strategies employed by Samsung

Samsung employed various communication strategies to address the Note 7 crisis and manage the impact on its brand reputation. Effective communication was crucial in maintaining transparency, addressing consumer concerns, and rebuilding trust. Here are some of the communication strategies employed by Samsung:

  • Official Statements and Press Releases: Samsung issued official statements and press releases to provide updates on the progress of the recall, investigations, and corrective actions. These statements expressed remorse for the inconvenience caused and reiterated the company’s commitment to customer safety. Clear and concise communication helped keep customers informed and reassured them that Samsung was actively working to resolve the issue.
  • Direct Customer Communication: Samsung directly communicated with customers to provide instructions and updates on the recall process. The company utilized various channels such as email, SMS messages, and notifications through its official website and smartphone apps. This direct communication ensured that customers received important information and guidance regarding the recall and replacement program.
  • Social Media Engagement: Samsung actively engaged with customers and the public on social media platforms, including Twitter, Facebook, and YouTube. The company responded to customer queries, addressed concerns, and provided updates on the progress of the recall. By engaging in two-way communication, Samsung demonstrated its willingness to listen, respond, and provide assistance to affected customers.
  • Collaboration with Industry Experts: Samsung collaborated with industry experts, battery manufacturers, and regulatory authorities to investigate the root cause of the battery issue. This collaboration was communicated to the public, showcasing Samsung’s commitment to finding solutions and ensuring that the necessary expertise was involved in resolving the crisis.
  • Advertisements and Marketing Campaigns: Samsung launched advertising and marketing campaigns focused on rebuilding trust and emphasizing its commitment to quality and safety. These campaigns highlighted Samsung’s dedication to addressing the issue and regaining consumer confidence. Advertisements often emphasized the company’s rigorous testing procedures and quality control measures to assure customers of the safety of its products.
  • CEO Apology: Samsung’s CEO issued a public apology, taking personal responsibility for the crisis and expressing regret for the inconvenience and concern caused to customers. The CEO’s apology aimed to convey sincerity, empathy, and a commitment to rectifying the situation, while also reinforcing the company’s accountability and determination to regain trust. The apology was published on a full page in 03 major US newspapers – the Wall Street Journal, The Washington Post and The New York Times.

Collaborations with regulatory authorities and industry experts

Samsung worked closely with government agencies and regulatory bodies in various countries where incidents related to the Note 7 were reported. The company shared information, conducted investigations, and cooperated with authorities to ensure compliance with safety regulations and guidelines. Collaboration with government agencies helped align efforts to address the crisis and establish industry-wide safety standards.

In the United States, Samsung collaborated with the CPSC, an independent federal agency responsible for ensuring the safety of consumer products. Samsung worked together with the CPSC to investigate the battery issue and coordinate the recall process. This collaboration ensured that the recall efforts followed established safety protocols and provided consumers with accurate information.

Samsung collaborated with battery manufacturers to investigate the specific manufacturing defects that caused the battery issue. The company worked closely with these partners to analyze the battery designs, manufacturing processes, and quality control measures. By involving battery manufacturers in the investigation, Samsung aimed to identify the root cause and implement corrective actions to prevent similar issues in the future.

Samsung engaged independent testing labs to conduct thorough assessments of the Note 7 batteries and verify the effectiveness of corrective measures. These labs specialized in battery testing and certification, providing expertise and unbiased evaluation of the battery performance and safety. Collaboration with independent testing labs helped validate Samsung’s efforts to address the battery issue and instill confidence in the effectiveness of the solutions.

Post-Crisis Recovery and Rebuilding 

Samsung implemented more stringent quality control measures across its product development and manufacturing processes. This included enhanced battery testing protocols, increased inspections, and stricter quality assurance standards. By demonstrating a commitment to producing reliable and safe products, Samsung aimed to rebuild customer trust.

Extended Warranty and Customer Support: Samsung extended warranty periods for existing and new devices, including the Note 7, to provide customers with added assurance. The company also enhanced its customer support services, ensuring that customers could easily access assistance, product information, and technical support. These initiatives aimed to demonstrate Samsung’s commitment to customer satisfaction and support.

  Launch of subsequent product lines and their impact on brand perception

Following the Note 7 crisis, Samsung launched subsequent product lines, including flagship smartphones like the Galaxy S8 and subsequent iterations. These launches played a crucial role in shaping brand perception and rebuilding trust. Key factors that influenced brand perception and the recovery process include:

  • Emphasis on Safety and Quality: Samsung placed a strong emphasis on safety and quality in its subsequent product launches. The company implemented rigorous testing procedures and introduced new safety features to ensure the reliability and safety of its devices. By highlighting these improvements, Samsung aimed to regain customer trust and reassure them of its commitment to producing high-quality products.
  • Positive User Experience: Samsung focused on delivering positive user experiences with its new product lines. This included improvements in design, performance, and functionality to enhance customer satisfaction. By providing users with exceptional products, Samsung aimed to rebuild its reputation and generate positive word-of-mouth, contributing to brand recovery.
  • Brand Messaging and Marketing: Samsung’s marketing efforts during subsequent product launches were carefully crafted to reinforce positive brand associations and regain customer trust. The company emphasized innovation, customer-centricity, and the commitment to quality and safety. Marketing campaigns highlighted features, benefits, and technological advancements to create a positive brand image and overcome the negative perceptions associated with the Note 7 crisis.

Final Words 

Samsung’s handling of the Note 7 crisis serves as a case study in crisis management. Despite the significant financial and reputational setbacks, the company took proactive steps to address the crisis, regain customer trust, and prevent similar incidents in the future.

The Samsung crisis management case study highlights the importance of swift and transparent communication, customer-centric actions, and continuous improvement in product safety and quality. By effectively addressing the crisis, Samsung was able to navigate the challenging situation and rebuild its brand, reaffirming its position as a leading global technology company.

Overall, the Samsung crisis management case study provides valuable insights into how a company can recover from a major setback, restore customer trust, and strengthen its position in the market through strategic actions and a relentless commitment to customer satisfaction and product excellence.

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Frontiers in Art Research , 2023, 5(11); doi: 10.25236/FAR.2023.051101 .

A Critical Case Report of Samsung Note 7 Recall

Tianlan Lan

Winchester School of Art, University of Southampton, Winchester, United Kingdom

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This article is a report of Samsung Note 7 recall in 2016. Relevant literature, annual and news reports are summarized to analyze and assess. Samsung launched the smartphone Galaxy Note 7 on 19th August 2016. However, this product suffered multiple incidents of overheating or explosions around the world due to quality problems. Before the product was removed from the market completely, it had experienced two recalls. This incident caused Samsung significant financial losses and a crisis of consumer trust. While Samsung was quickly forgiven by consumers globally, the corporation has been accused of differential treatment in China, and the resulting impact has been far-reaching. For all the smartphone industry, it is recommended that: 1. there should be a gradual shift towards an open model of innovation; 2. suppliers should be scrutinized and enhanced in design awareness; 3. a well-designed crisis management plan should be recommended; 4. should pay more attention to the Chinese market.

Samsung, Design Management, Business Strategy, Crisis Management

Cite This Paper

Tianlan Lan. A Critical Case Report of Samsung Note 7 Recall. Frontiers in Art Research (2023) Vol. 5, Issue 11: 1-8. https://doi.org/10.25236/FAR.2023.051101.

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First page of “THE GALAXY NOTE 7 LAUNCH: A PROMISING START TURNED DISASTER: RISK MANAGEMENT ANALYSIS (CASE-STUDY”

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THE GALAXY NOTE 7 LAUNCH: A PROMISING START TURNED DISASTER: RISK MANAGEMENT ANALYSIS (CASE-STUDY

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In the fast-paced world of technology, even industry giants like Samsung are susceptible to setbacks. Based in South Korea, Samsung has gained recognition for its diverse product lineup, particularly in consumer electronics like smartphones. Holding a significant 20% market share in 2023, Samsung stands tall among the world's leading smartphone manufacturers, largely due to the success of its Galaxy series, introduced in 2009. The Galaxy series owes its allure and dominance to Samsung's relentless pursuit of technological excellence. Offering larger screens and a wide range of features has enabled the company to maintain a leading position in the fiercely competitive smartphone market. However, in an industry marked by relentless demands for innovation and rapid responses to rival advances, Samsung faces increasing pressure to adapt and innovate quickly. This case study focuses on a crucial moment in Samsung's history, revolving around the 2016 launch of the Galaxy Note 7. Although initially praised by critics and consumers, the model quickly encountered a series of alarming incidents, including overheating and spontaneous combustion, tarnishing Samsung's reputation and posing safety risks. In response, Samsung recalled all Galaxy Note 7 devices and temporarily halted sales. Despite efforts to resolve the issues, a subsequent re-release was plagued by recurring problems, leading to another widespread recall and government-imposed bans on the device's use aboard airplanes. This dual crisis, involving product malfunctions and reputation damage, presented unprecedented challenges for Samsung. The case study examines the critical missteps that led to the Galaxy Note 7's failure, highlighting associated risks. Furthermore, it explores how effective risk management practices could have mitigated these challenges, potentially resulting in the successful development of the Samsung Galaxy Note 7. In an environment where rapid adaptation and innovation are crucial, understanding the lessons from this incident is essential for Samsung's future endeavors.

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  1. Samsung Note 7 Failure Case Study - IvyPanda

    Nov 5, 2024 · The failure of Samsung’s Galaxy Note 7 has had enormous financial implications. It is estimated that it may lead to a revenue loss of over $ 5 billion. Even though the company could easily deal with the loss of income, the failure has great social and legal ramifications.

  2. A Critical Case Report of Samsung Note 7 Recall

    This article is a report of Samsung Note 7 recall in 2016. Relevant literature, annual and news reports are summarized to analyze and assess. Samsung launched the smartphone Galaxy Note 7 on 19th August 2016. However, this product suffered multiple incidents of overheating or explosions around the world due to quality problems.

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    Jan 23, 2017 · Samsung builds a test lab to find the root cause of the Note 7's issues. In the last 120 days, Samsung built a new test lab. It staffed it with 700 researchers, 200,000 devices and 30,000 ...

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    paper is the first of its kind case study on a first of its kind incident that hap-pened with Note 7 – one of the most talked about cases of 2016 and can be used as stepping stone for further analysis into this or similar cases. Keywords: Buyer Preferences, Consumer Behaviour, Mobile Phone Industry, Note 7 Explosion, Samsung Case INTRODUCTION

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    Jun 6, 2023 · Samsung Galaxy Note 7 Crisis . The Note 7 battery issue marked a significant crisis for Samsung, leading to a widespread recall of the flagship smartphone and causing considerable damage to the company’s reputation. The crisis began in September 2016 when reports emerged of Note 7 devices catching fire or exploding due to faulty batteries.

  7. (DOC) Samsung Galaxy Note 7: A Case Study in Risk Management ...

    This case study has been conducted for learning purposes in terms of the possible issues in risk management related to Samsung Galaxy Note 7 fiasco. Samsung’s leaderships in particular are being scrutinized for their mishandling throughout the process.

  8. A Critical Case Report of Samsung Note 7 Recall | Francis ...

    This article is a report of Samsung Note 7 recall in 2016. Relevant literature, annual and news reports are summarized to analyze and assess. Samsung launched the smartphone Galaxy Note 7 on 19th August 2016. However, this product suffered multiple incidents of overheating or explosions around the world due to quality problems.

  9. (PDF) THE GALAXY NOTE 7 LAUNCH: A PROMISING START TURNED ...

    5 This case study will analyze the critical mistakes that led to the Galaxy Note 7's failure, shedding light on the types of risks associated with the project. Moreover, it will explore how effective risk management practices could have mitigated these challenges and contributed to the successful development of the Samsung Galaxy Note 7.

  10. CASE STUDY- PRODUCT FAILURE OF SAMSUNG GALAXY NOTE 7.docx

    Jun 18, 2022 · EXECUTIVE SUMMARY The purpose of this case study was to examine the issue of the explosion of Samsung Galaxy Note 7. Research for this case study included a review of the introduction, identification, the main issues, analysis and recommendations.