Current Event Crisis Analysis: Samsung

free essayEvery organization is at risk of a crisis, but the level of damage resulting from that crisis is dependent on the preparations and the mitigation measures the company has implemented. It is evident that the business environment is full of competition, and the rivals anticipate that  the other organization receives a problem so that they can have an advantage in the market. Samsung has been one of the companies that have recently had a crisis, which has been as a result of its failure to utilize mitigation measures to one of its product.

Underlying Causation

Samsung is an electronic company that has won the affection of many in the past due to its quality products that have worked towards satisfying the needs of the market. However, the company has been hit with a serious crisis where one of its smartphone products Galaxy 7 Note has shown some fatal defects after being introduced in the market. There have been incidents when the smartphone’s battery exploded, causing damage. Over a total of 92 explosion cases have been reported with 26 resulting in burns while 55 cases involving property damage (Johnson, 2016). The crisis began with the few cases in the United States, and since the company did not have mitigation measures, it remained silent and caused the issue to escalate. It is after the numerous complaints from the customers that the company sought to contain the situation by allowing all Galaxy 7 Note consumers to be compensated with other Samsung products or get refunded. The company seeks its recovery by ensuring it disposes of more of the other products in exchange for the mentioned exploding product. The company has returned to the basics and now tries to identify the cause of the problem and how to avoid a similar scenario with the rest of its future products. In this case, the person in charge of managing this crisis is the chief executive officer whose priority is to safeguard the company’s marketplace. The motive behind the decision made by the management is to ensure that the consumers remain loyal to Samsung products as the company makes an effort to rectify the problem with the defective gadget.

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Stakeholder Analysis

Stakeholders are the pillar of any company since they have the huge role in providing the necessary capital. In this case, therefore, the introduction of the defective product into the market by Samsung is a worry to the investors (Johnson, 2016). The investors have been concerned over the possibility of a decline in the market share, which means that their profits will reduce drastically. The communication strategy with the investors was written, and its message was the reassurance for the investors that the company is still viable and they should not be worried about its decline (zkjadoon, 2015). The information provided for the investors has been consistent, and there are no intermediaries used to help in building the relation between the company and investors during this period of crisis.

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Review of the Organization Response

The action taken by the organization demonstrated the attempt to restore the trust of the consumers, and this involved the compensation for the damaged product. The company acknowledged the blame and emphasized the need for the consumers to return all the accessories affiliated with the Galaxy 7 Note and get a refund. The company never issued an official apology, which resulted in the consumers demanding an excuse. Furthermore, the customers presented their dissatisfaction with the $25 bill credit, which is considered too little given the magnitude of the problem caused (Johnson, 2016). Thus, a bill credit of at least $100 has been proposed (Johnson, 2016).

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Evaluation of Effectiveness of Response Recommendation

The organization was caught unaware and did not have a proper preparation for such a crisis. Such assessment is based on the substantial delay in response to the problem. The company remained silent despite the escalation of the issue in the destruction of the property. If the situation results in the damage of the company reputation, the management would be required to lower the prices of its other products so that the consumers can see the reason to buy the company’s goods. The enterprise would also be required to rectify the issue with Galaxy 7 Note and explain to the public the cause of the problem and how it has been solved (Johnson, 2016). The main benefit that the company can gain from this crisis is the need to devise a proper crisis management in anticipation of a similar issue in the development of future products. It is recommended that the organization develop a platform where the customers are involved in the process of correcting the issue and also in the designing of a new product so that the company will be aware of the needs of the consumers.

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Conclusion

No organization is immune to the crisis, but the best way to safeguard an enterprise from such eventualities lies in the creation of a mitigation plan. The crisis in the Samsung company was as a result of the defect in one of its products whose battery exploded, leading to the destruction of property. The stakeholders were worried as they foresaw a decline in the market shares, but the management reassured that the company was working to rectify the situation and restore customer trust. The response of the company about the compensation was temporary, and thus a rectification of the issue is required. It is, therefore, critical for the company to ensure that the rectification process is communicated to the consumer and guarantee that the development of the future brands are free from defects.