EXPLOSION

Individual Assignment

OF SAMSUNG
 Table of Contents

1 - INTRODUCTION: SamSung

2 - VIEW & CRITICAL ANALYSIS:

2.1 Scandal of SamSung

2.2 Recovery from the scandal

3 - CONCLUSION

4 - REFERENCES
 1. INTRODUCTION:

The Samsung Group is a South Korean multinational conglomerate

headquartered in Samsung Town, Seoul. It comprises numerous affiliated
businesses, most of them united under the Samsung brand. And it also is one of
the world’s largest producers of electronic devices. Samsung  focuses on the
assembly of a good sort of consumer and industry electronics, including
appliances, digital media devices, semiconductors, memory chips, and integrated
systems.
 Samsung was founded by Lee Byung-Chul in 1938 as a trading company.
Over the next three decades, the group diversified into areas including food
processing, textiles, insurance, securities, and retail. Samsung entered the
electronics industry in the late 1960s and since 1990, Samsung has increasingly
globalized its activities and electronics; in particular, its mobile phones and
semiconductors have become its most important source of income. As of 2020,
Samsung has the 8th highest global brand value.
Samsung has a powerful influence on South Korea's economic
development, politics, media, and culture and has been a major driving force
behind the "Miracle on the Han River". Samsung has been the knight in shining
armor, first pulling the country out of post-war devastation, to saving it from the
chaos of the financial crisis 60 years after. Its affiliate companies produce around
a fifth of South Korea's total exports. Samsung's revenue was equal to 17% of
South Korea's $1,082 billion GDP.

2. VIEW & CRITICAL ANALYSIS:

2.1. Scandal of Samsung:

On August 19, 2016, Samsung officially opened the Galaxy Note 7 for sale in
10 countries, including Vietnam. They announced its “best smartphone so far”,
this flagship model occupies a large position in the hearts of consumers but the
rosy start soon turned sour.
On August 24, 2016, the first explosion of Samsung Galaxy Note 7 was
reported in Korea and it simultaneously happened in China due to the battery
issues.
Soon after, on August 31, Samsung delayed adding Note 7 to the Korean market.
One day later, on September 1, Samsung still decided to sell the Note 7 in China.
Surprisingly, Samsung announced an unprecedented decision that they must
recall 2.5 million Note 7 units globally after just 1 day of opening sale in China
Exactly 1 week later, on September 8, the US Federal Aviation Administration
advised passengers not to turn on or charge Note 7 on flights or store it in
checked baggage.
Then, on September 9, the US Consumer Product Safety Commission (CPSC) urged
Galaxy Note 7 users to stop using their phones.
Less than a week ago, CPSC officially announced the recall of about 1 million
Galaxy Note 7 devices on September 15.
Unfortunately, a man in Florida (USA) sued Samsung for being burned from an
explosion caused by Note 7 so that the CPSC decided to recall Note 7 one more
time.
Also in September, Samsung announced it would start selling the new version of
Galaxy Note 7 in Korea and said the Note 7 exploded in China due to a fire
outside. They make a promise that the new version is safe enough to use. At the
same time, they also started a program to exchange Note 7 in their homeland.
And believing that promise, Samsung’s fans put their faith in the Note 7 again,
they started buying a new Note 7. 
It got worse September 23, there was a report of a new Galaxy Note 7 machine
explosion, which was confirmed by Samsung as safe.
Soon after, Samsung delayed the return of the Galaxy Note 7 for 3 days. As of
September 29, they announced that more than 1 million people globally are using
Note 7 with certified batteries. And Samsung continues to sell the new Galaxy
Note 7 in South Korea on October 1.
It seemed that everything was going to be better. But only 4 days later passengers
on flights of Southwest Airlines (USA) were evacuated in an emergency after a
new Note 7 version caught fire on the plane.
Immediately after that incident, on October 9, AT&T and T-Mobile decided to stop
selling the new Galaxy Note 7 version due to safety concerns for users.
And the fateful day of the Note 7 has arrived. On October 11, Samsung asked
customers who are using Galaxy Note 7, whether old or new, to stop using and
shut down the device immediately because of safety issues. This giant also
announced to test Note 7 on the same day, thereby ending the short life cycle of
the aforementioned “superhero”.

Never before has the top smartphone maker in the world suffered such a
horrifying scene. If the first Note 7 failed, we could see it as a mistake, but in the
second round, after switching battery suppliers, everything is still the same, then
it's catastrophic. As of September 9, Samsung has lost $ 22 billion, its share price
has dropped 11%, these figures show the severity of the incident. In the third
quarter of 2016, the sales of Samsung Electronics have decreased by 7.5% along
with the profits dropping by 30%. And Samsung’s sales performance in the
Chinese market was even worse. Due to Samsung’s “unequal treatment” strategy
in the explosion crisis, its market share in the Chinese market has fallen to less
than 10%, far behind Huawei and Apple. Meanwhile, Samsung’s market value
has erased more than 20 billion dollars (Du,2017). Further, in spite of the efforts
Samsung has made in the crisis-rescuing, customers still felt disappointed at
Samsung’s response, generating adverse impacts on the brand image.

2.2. Samsung’s recovery from the scandal:

After this serious scandal, Samsung suffered serious economic losses, and in
addition, they completely lost the trust of customers - which they have built up
over the years. But after all, they are more pitiable than to blame because
everyone will make mistakes and fail through our life. Oprah Winfrey said:
“Failure is another stepping stone to greatness”.
First, Samsung needs to regain faith from their customers. For example, in
the Samsung advertisement at the Oscars event on March 26, 2017, the company
implied the message: “Creativity is our legacy. Innovation is our legacy. Quality is
our Priority ”. According to experts, the literal meaning of this message is simply
the promise that the next phone won't explode. Another commitment that
Samsung can make is that it will immediately solve the problem that customers
are facing with current smartphones, and at the same time point out the
technological advantages in its products compared to competitors, which include
Apple.
Their first solution is calming customers by compensation. The Competition
Administration Department of the Ministry of Industry and Trade of Vietnam said
that just in our country, Samsung has spent about VND 240 billion to refund more
than 12 thousand people owning genuine Galaxy Note 7. Besides, they also
support each person with a voucher worth 1.5 million VND to buy other Samsung
products. In parallel with the compensation, Samsung also deployed the program
to exchange the old products to the new ones on many major phone retail
systems. Those who own old Samsung or iPhone lines on the list bought by
Samsung can sell them to this manufacturer and compensate for the S7 or S7
Edge.
 After that, leaders of Samsung Electronics took effective actions to
apologize to the consumers, and guaranteed to do everything to solve this
problem.

Not just that, they have become honest and do not hide the company's
mistakes. Samsung did a thorough research on the explosion crisis, found the
reason and published the conclusion. Although it was late, it was a signal that
Samsung cares about the consumers’ safety. 700 researchers tested over 200,000
devices and more than 30,000 batteries and they have compiled it into an easy-
to-understand video and uploaded it on their official page. At the same time, they
gave their apologies and commitments for the quality of their upcoming products.
After trying to compensate for the damage they have caused, they continue
to move to rebrand, restoring trust from customers. "This time the stakes were
much higher, because we not only had to recover from all the damage that had
been done, but do it during one of the most competitive smartphone launch
seasons we’d ever seen in advance of the S8 launch," Pio Schunker, svp of
integrated marketing communications at Samsung Mobile Communication said.
"We needed to reclaim our leadership." The brand decided to build “brand love”
by seeking to break away from its "immensely fragmented brand identity which
lacked warmth and humanity". It exploits itself in relentless innovation,
crystallizing it into a larger branding purpose encapsulated in the slogan "Do What
You Can't". They focused on their service by running #SamsungService campaign,
the four-minute long film was launched on December 30, 2016 and quickly went
on to cross 100 million views on YouTube in just seven weeks of its launch. This
video became the Most-Watched Video Globally on YouTube in 2017. With the
slogan “We’ll Take Care of You, Wherever You Are”, the video showcases the
journey of a young Samsung engineer on his way to provide services in a remote
village in India, highlighting Samsung’s vision of creating long-lasting relationships
with its consumers through timely service. Besides, the slogan sounds like an
apology for their scandal in the past and a promise of the brand to take care of
their customer.

3 - CONCLUSION:
In 2016, Samsung was blowing up — quite literally by their biggest scandal
ever. Their mistakes have seriously affected the safety, health, and property of
customers and worst of all, they have lost customers' confidence in their
products. In addition, they experienced big losses when they had to recall huge
quantities of devices and compensate customers for damages. At the same time,
they also lost market share in important markets. But they finally recover from
this scandal and come back to their position in the market. It also used the
opportunity to find a bigger brand purpose for itself and create an internal culture
of change that encourages and prides itself on taking risks.

4 - REFERENCES:
https://www.businessinsider.com/how-samsung-overcame-its-galaxy-
note-7-fiasco-2017-10

https://www.thegioididong.com/tin-tuc/video-samsung-giai-thich-
nguyen-nhan-note-7-phat-no-940920

https://news.samsung.com/in/samsung-customer-service-campaign-is-
the-most-watched-video-globally-on-youtube-in-2017
https://www.thegioididong.com/tin-tuc/toan-canh-scandal-samsung-
galaxy-note-7-no-tam-biet-2016-940995

https://www.washingtonpost.com/business/how-samsung-moved-
beyond-its-exploding-phones/2018/02/23/5675632c-182f-11e8-b681-
2d4d462a1921_story.html