LEADERSHIP & ORGANIZATIONAL BEHAVIOR

(MGMT8042)

CASE ANALYSIS:
(“DISASTER AVERTED: SAMSUNG CRISIS MANAGEMENT
STRATEGY FOR GALAXY NOTE 7”)

GROUP:
1. ANDIKE AYU ARIMBI 1700001666
2. ANDINA PERMATA SARI 1700001880
3. RAYHAN ABDUR RASYID 1700001924

BINUS BUSINESS SCHOOL

MM YOUNG PROFESSIONAL
(JWC)
 “DISASTER AVERTED: SAMSUNG CRISIS MANAGEMENT
STRATEGY FOR GALAXY NOTE 7”

INTRODUCTION
Samsung is a the largest South Korean Business conglomerate and focused on electronic
devices, company based in the capital of South Korean, Seoul. On August, 2016 Samsung
introduces their newest product, the Samsung Galaxy Note 7. But after that, Samsung faced a
significant threat to its corporate image after global reports emerged revealing complications
with its latest smartphones product. Just two week following the release of the flagship device,
Samsung newest product, Galaxy Note 7 created a PR disaster for the company, they were
reported of malfunctions within the Galaxy Note 7’s lithium battery, causing the devices to
explode unexpectedly and endanger the safety customers
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. Recalling a product is never easy, and a yielding
return more than 30 percent is extremely challenging.

DISCUSSION
1.​ R
​ elate, discuss, and analyze between case study and concepts

For corporations, maintaining a favourable public image is vital to their survival, and a crisis
threatens one’s image and places it under scrutiny. To understand the function of image repair
strategies, it is essential to consider the nature of attacks that prompt such responses in
corporate crisis.
A core principle of effective crisis communication is quickness, accuracy, and consistency.
During a crisis, an early response from the implicated organization is imperative because while
they may not be able to communicate “new” information, an active response allows the affected
organization to stay in control of the crisis. Five months after issued, Samsung came out of the
shadows on November and took full responsibility for the product recall through the publication
of print apology ads in three major U.S newspapers.
Samsung had another challenge because the new Note 7 replacement also reported to had
the same issue due to battery problem and Samsung had to do another recall for the product.
Samsung finally stop the production of Note 7 on 11th on 11th October 2016. Those problem
occurred due to Samsung did not apply concept testing to its best and too hasty to determine
the root cause of the problem.
By contextualizing which theories of crisis communication can be seen across these texts,
one is able to evaluate whether Samsung’s response to the Note 7 crisis adhered to the
appropriate crisis strategies recommended by academic literature for its crisis type.

2.​ E
​ valuate management plans

Samsung management promised customers immediate action to understand and investigate

the issue. Samsung‘s risk and crisis management were first in customer response. The risk
management plan was also well communicated and customer centric. As explained in study
case Crisis management is a professional approach of handling crises that come up with
organizations and people who are often in the public eye.
There are different forms of crisis management models. However, all the models have three
basic steps:
1. Identifying not only the nature but also scope of the problem.
2. Involves fixing the problems and making things right with the affected stakeholders.
3. Entails taking actions aimed at ensuring that the problem will not happen again.
In crisis matters, the primary concern of affected stakeholders is with discerning the what,
when, where, and how information about the crisis because they feel reassured when they are
aware of what happened. When implementing image repair strategies, an important things for
organizations in crisis is to minimize the psychological stress facing stakeholders by
communicating to the public that their safety is the most important, and this is done through
corrective action. Upon analyzing the sample texts, corrective action was a strategy used by
Samsung to combat allegations of the Note 7 crisis, within both its apology advertisement and
web press statements. Corrective action was exhibited in the institution’s November 7th apology
ad when CEO Gregory Lee notes, “we have stopped production and recalled our popular
Galaxy Note 7” and “we are taking proactive steps to do better. An update of our actions
follows” (Prigg, 2016). These response efforts showcase Samsung’s attempts to move towards
a resolution for the crisis, the first and most important being the discontinuation of the product
line to limit further harm to consumers. In its first two press statements, the company displayed
its attempts to resolve the crisis through the removal of the defective product, which is a theme
further exemplified in Samsung’s final press statement on Oct 11th statement, where the
company outlined definitive plans to discontinue the device and offer consumers active steps to
take to temporarily resolve the issue.

CLOSING
In conclusion, the technical team should change their testing techniques of all products
before the sales launch. This is because future malfunctions will be viewed as incompetence
pattern. The quality assurance remains a critical component that the company should deal with
to ensure effective crisis and risk management.

The management could have used effective techniques to solve the problem. Replacement
of the batteries did not solve the problem. The entire management could have found the cause
of the problem instead of dealing with the symptoms only. When an organization accused of a
specific offensive act offers consumers compensation, and this is openly accepted, this can
enhance an organization’s brand image. However, while seeking forgiveness for one crisis
through a personalized apology, it does not behoove an organization to address a secondary
crisis and offer compensation.

Samsung should also participate in gap analysis, risk management evaluation, and reform.
The mentioned should be coordinated with the executive team, crisis management team, and
the board in an actionable manner. The Samsung Company will perform well if it has a
reputation risk and crisis management plan for all the crisis, stakeholder evaluation, reputation
including its safety, health, and quality management programs with the objective of establishing
or re-establishing sustainable organizational trust and resilience.
 DAFTAR PUSTAKA
Jansen, B. (2016, October 16). Samsung Galaxy Note7 banned on all U.S. flights due to
fire hazard. USA Today. Retrieved from
https://www.usatoday.com/story/news/2016/10/14/dot-bans-samsung-galaxy-note-7-
flights/92066322/
Lopez, M. (2017, January 22). Samsung explains Note7 battery explosions, and turns
crisis into opportunity. Forbes Magazine. Retrieved from
https://www.forbes.com/sites/maribellopez/2017/01/22/samsung-reveals-cause-of-note-
7-issue-turns-crisis-into-opportunity/#18aee23d24f1
Mullen, J. & K.J. Kwon. (2016, September 2). Samsung is recalling the Galaxy Note7
worldwide over battery problem. CNNMoney. Retrieved from
http://money.cnn.com/2016/09/02/technology/samsung-galaxy-note-7-recall/