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SAMSUNG NOTE 7 (QUALITY ISSUE)
Samsung is one of the leading technology giants around the globe encompassing numerous business sectors like electronics, construction, life insurance, etc. in its portfolio. With its headquarters in Seoul, Samsung Electronics, one the various affiliates of Samsung group has been able to retain highest market share (21% – 23%) in smartphone business in the past couple years, beating its major competitor Apple by a huge margin of around 9% (International Data Corporation, 2016). On 19th August, 2016, Samsung released its latest smartphone model named Samsung Galaxy Note 7. Considering the success of its previous versions, Note 7 was supposed to be a major competition for its rival iPhone. Unfortunately, within 2 months of its release, Samsung had to discontinue its manufacturing in October 2016 due to some quality issues with its battery, as there were many cases reported where the battery suddenly caught fire.
It was a huge blow on Samsung’s brand image as its latest smartphone release was facing major quality issues. This not only affected the company’s reputation but also raised the fingers on its research and development department, which is known for its innovative designs. Moreover, this issue was putting the safety of the Note 7 customers at a huge risk. According to the United States Consumer Product Safety Commission, around 90 incidents of battery overheating were reported along with 55 incidents of property damage and 26 incidents of burns in the US, all due to Samsung Note 7 (Chen & Sang-Hun, 2016).
Samsung’s next step
For damage control, Samsung had to recall its 2.5 million released Note 7 handsets (Mozur & Lee, 2016). In its official statement, Samsung requested the customers to get their devices replaced at nearest Samsung store for a safer Note 7 device. As it was the worst quarter of a year for Samsung in past few years, the replacement sets also started facing the same issues and the company had no other choice but to order for the second recall for all the available Note7 devices in the market, including the so called “safer” replacement devices. The company assigned two separate teams for investigating the root cause of the problem. Ultimately in October, 2016, Samsung officially discontinued producing Note 7 handsets, incurring a loss of around $17 billion in lost sales from its expected sales of around 19 million units (Carlon, 2016).
After this tremendous mishap, Samsung sent a report to KATS (Korean Agency for Technology and Standards) explaining the reasons for this quality control issue which was originally due to a defect in their Note 7 design (Hollister, 2016). In Lithium ion batteries used in smartphones, there is a thin plastic layer that separates the positive and negative poles which need to be insulated from each other in order to avoid short circuit causing overheating of the battery and eventually fire. The design of the phone was such that it was putting a lot of pressure on the battery which led the plastic layer to get punctured and hence the short circuit. This defect was revealed while revising the assembly process of the phone (Hollister, 2016), which had to be done for Quality Management purpose. This was the reason which didn’t allow the company’s corrective action of changing the Note 7’s batteries and sending them as safer replacements, to succeed.
Samsung refunded the customers and learned some lessons from this mistake and also made critical improvements in its quality control process. This had to be done to maintain customer relationship. One of the contributing factors for this quality failure was the time factor from triple constraints, as Samsung was in a rush to beat iPhone 7, which hampered the quality considerations in Note 7’s design. This also forced the company to re-evaluate every process in its product development cycle (Kovach, 2016).Also, due to the time constraint only Samsung had to stop Note 7’s production and concentrate on it next model, otherwise they could have found out the problem and correct it.
Carlon, K. (2016, October 11). Samsung permanently discontinues the Galaxy Note 7, $17 billion in sales lost. Retrieved February 19, 2017, from www.androidauthority.com: http://www.androidauthority.com/samsung-galaxy-note-7-permanently-discontinued-721283/
Chen, B. X., & Sang-Hun, C. (2016, October 11). Why Samsung Abandoned Its Galaxy Note 7 Flagship Phone. Retrieved February 19, 2017, from New York Times: https://www.nytimes.com/2016/10/12/business/international/samsung-galaxy-note7-terminated.html?_r=0
Hollister, S. (2016, October 10). Here’s why Samsung Note 7 phones are catching fire. Retrieved February 19, 2017, from CNET: https://www.cnet.com/news/why-is-samsung-galaxy-note-7-exploding-overheating/
International Data Corporation. (2016, November 26). Smartphone Vendor Market Share, 2016 Q3. Retrieved February 19, 2017, from IDC: http://www.idc.com/promo/smartphone-market-share/vendor
Kovach, S. (2016, November 5). Samsung’s culture needs to change if it wants to survive. Retrieved February 19, 2017, from BusinessInsider: http://www.businessinsider.com/samsung-reaction-to-note-7-recall-2016-11
Mozur, P., & Lee, S.-H. (2016, September 2). Samsung to Recall 2.5 Million Galaxy Note 7s Over Battery Fires. Retrieved February 19, 2017, from The New York Times: https://www.nytimes.com/2016/09/03/business/samsung-galaxy-note-battery.html
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