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Samsung Galaxy Note 7 Product Recall and Influence Case Study

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Updated: Aug 2nd, 2021

Abstract

This paper discusses security risks and their influence on both the company that manufactures a potentially dangerous product and its clients. The recent issue with Samsung Galaxy Note 7 will be described. Some background information on the topic will be provided and followed by the damage caused by the recall. The way the company responds to the public and will be mentioned as well as its outcomes. Finally, possible alternative strategies will be considered.

Product and Security Risk

Samsung Galaxy Note 7 was released in September of the previous year and attracted the attention of numerous customers immediately. Among the main shortcomings of the product, professionals identified its high price (alternative devices could be more advantageous unless the S Pen is used), iris scanner (the users need to hold the phone close to their faces), and the hybrid slot (limited opportunity to exchange the storage). However, these limitations had never been considered critical. As it turned out, the main problem of this phone was its battery. It seemed to be an advantage of this product initially because it could be charged fast using a wired or wireless way (CSMArena team, 2016).

The security of the clients was affected as the phones spontaneously burst into flames. As soon as the first 35 cases of this accident were reported, the company decided to recall the product, including all those that had already been sold. As the professionals found out, the problem was in the lithium-ion battery. The liquid that surrounded it was flammable, which was normal. However, Samsung Galaxy Note 7 was rather thin so that the element that separated different sides of the battery was not enough to resist heat. When the liquid turned hot, it made the phone explode (Hollister, 2016).

Damage Caused by the Recall

When Samsung decided to recall its product, about 1 million phones were already sold. In addition to that, 1.5 million more items were manufactured (Hollister, 2016). All of them were considered to be dangerous to human health and were no longer allowed to be sold, which affected the company’s revenue significantly. It should also be mentioned that Samsung planned to manufacture about 19 million phones so that the total recall of Samsung Galaxy Note 7 could have reached more than $16 billion in lost revenue. Still, the missed sales led only to the $5 billion initially. Trying to save the situation, Samsung thought of an idea to resume global sales, but the production was completely ended eventually. Still, regardless of that situation, Lee (2016) stated that “for Samsung, with a market value of $235 billion and $69 billion in cash and equivalents at the end of June, the loss of sales of one model could be absorbed” (para. 13).

The issue with Samsung Galaxy Note 7 became critical because it caused damage to people’s health and property. All in all, professionals indicated “92 incidents in the US, plus at least 17 in Korea, 1 in Taiwan and 2 in Australia” (Hollister, 2016, para. 17). Even though these numbers do not seem to be statistically significant, they were indicated only during the first month on sale and prove that more people could have been at risk if there was no recall. Fortunately, the explosion of the battery did not lead to human deaths. However, some individuals got burns as they were holding the phone when it inflamed. For example, a man from the USA got a second-degree burn. His leg and thumb suffered, as he carried the phone in his pants pocket and then had to take it away (Kastrenakes, 2016). Similarly, the property of the owners was affected.

Even though Samsung Galaxy Note 7 explosions mainly had limited effects that affected its owners and their goods, this problem was claimed to cause environmental damage as well. Pham (2016) underlined that if Samsung decided to save money and dump its phones, it would harm nature. Inappropriate utilization of these devices would be as harmful as toxic waste because they are full of cobalt, tungsten, etc.

It cannot be denied that this issue led to the embarrassment of the company. Being known for high-quality products and having a lot of loyal clients, Samsung suddenly faced critics. Still, it admitted its responsibility and tried to respond to the problem so that people’s dissatisfaction can be overcome.

Company’s Response

To improve the situation, Samsung promised its clients to:

  • The USA: offer a refund or another phone, give a gift card or credit, and obtain $100.
  • The UK: change this phone for Samsung Galaxy S7 or S7 Edge. A refund can be obtained totally or just for the difference in price between the models.
  • Australia: the same as in the UK.
  • Singapore: provide a refund or any other phone (Dolcourt, 2016).

Trying to protect its customers, the company encouraged them to bring their phones back to the places where they bought them, but some devices were not returned so that it is not clear whether they were thrown away or continue working properly.

Outcomes of the Recall

As the phones started inflaming, the clients addressed Samsung and even referred to the court (Kastrenakes, 2016). The US Consumer Product Safety Commission supported them. Still, the company realized its responsibility and accepted it without any resistance.

The recall of Samsung Galaxy Note 7 reduced the company’s income and increased expenditures due to the necessity to get the product back, recycle it, and provide the customers with a refund. Billions of dollars were spent by the company to restore clients’ loyalty, but some of them decided to take a break with the brand.

Depending on the location, Samsung replaced Galaxy Note 7 with any other phone produced by the company or with particular items. The company was ready to offer an exchange or refund as long as it would take customers to bring them back (Dolcourt, 2016).

Personal Considerations

I would respond to this issue in the same way as the CEO of the company. I would emphasize that the lives of the clients are critical to me that is why I would encourage them to give the phones back. I would also offer a refund to satisfy those who are willing to take a break or another product for those who remain loyal. However, I would also try to maintain the same response strategy in different locations for the customers not to feel somehow discriminated or deprived. In addition to that, I would gather customers’ feedback regarding this situation so that they can see that I am highly interested in their considerations and want to use some of their ideas when developing the next product. Finally, I would emphasize what would be done to ensure future security (Griffor, 2016).

Conclusion

Thus, focusing on the case study of Samsung Galaxy Note 7, it can be seen that any product can have security and system risks that have an adverse influence on both customers and the organization. It is critical to respond to the problem efficiently so that the damages of the incident can be minimalized and the client’s loyalty promoted. Utilization of an appropriate approach in this situation can save the company from losing its competitiveness completely.

References

Dolcourt, J. (2016). Web.

CSMArena team. (2016). Web.

Griffor, E. (2016). Handbook of system safety and security. Amsterdam, Netherlands: Elsevier.

Hollister, S. (2016). Web.

Kastrenakes, J. (2016). Web.

Lee, S. (2016). Web.

Pham, S. (2016). Web.

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IvyPanda. "Samsung Galaxy Note 7 Product Recall and Influence." August 2, 2021. https://ivypanda.com/essays/samsung-galaxy-note-7-product-recall-and-influence/.

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IvyPanda. 2021. "Samsung Galaxy Note 7 Product Recall and Influence." August 2, 2021. https://ivypanda.com/essays/samsung-galaxy-note-7-product-recall-and-influence/.

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IvyPanda. (2021) 'Samsung Galaxy Note 7 Product Recall and Influence'. 2 August.

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