Samsung has grown from an idea hatched up in a small village in Korea to a tech giant and one of the greatest success stories in the corporate world. Founded in 1938, the proprietor Lee Byung-Chul endeavored to develop it as just a small trading company in Su-dong near Daegu city in South Korea producing and distributing groceries within Daegu city. Created with only about 30, 000 won, Samsung only had forty employees but now has thousands of employees across the globe with a number of subsidiaries and holding companies under the brand name Samsung. Lee Byung-Chul being an enthusiastic industrialist ventured into other business such as sugar refining, retail, insurance, and securities with the goal to make Samsung an industrial leader in several sectors, this thus made it easy for Samsung to enter the electronic industry.
Samsung relied on its huge capital it had from the already developed industries to release a black and white television set which was its first product. Soon, Samsung acquired Hanguk Jeonja Togsin a telecommunications giant in 1980. Under this umbrella, Samsung started producing fax machines, telephones, and switchboards which resulted in the great success of the Samsung brand and in the ‘80s, all the production units merged to become one company under the name Samsung Electronics Co. Ltd. Lee handed the baton to his sons before he died in 1987 but he did not die with his dream and philosophy to make Samsung one of the greatest brands in the world. His son’s invested millions of dollars to the growth of their electronic products and research for advanced technology.
Management and Strategy
Samsung’s success can only be traced back to their management and business planning and strategy; these have further been backed up by collaboration, excellence, and creativity in its leadership. Samsung has among the world’s most praised managers and has a continuously evolving culture to encourage innovative ideas to create new products, advance technology, create new markets and continue improving the daily lives of their loyal customers while at the same time attracting new ones and working to maintain them by endeavoring to satisfy their needs.
Samsung is a global brand and that requires that it has management across the globe, Samsung has its main headquarters in South Korea with other headquarters in North America, Southwest Asia, Europe, Latin America, Middle East, China, Southeast Asia and Africa. This means that most of its managerial roles including decision making are decentralized. Samsung management delegation depends on employee empowerment and employees are awarded more power and authority to make decisions. A decentralized management ensures that they get the most from every region and that way it is easier to determine the unique needs of each region.
The main strategy that has been seen to work for Samsung is their effort to build great relationships with their employees. For any company eyeing prosperity, it is very advisable for the company to ensure that their employees are satisfied on their management and Samsung seems to realize this. Samsung endeavors to develop a subordinate plan that evaluates employees work and rewarding hardworking employees at the same time building a positive environment in the workplace. This ensures that employees are satisfied and are encouraged to come up with innovations.
Advantages of Samsung over Competitors
Samsung has been successful in attracting a large customer base with most of its customers being loyal customers. What gives Samsung the large customer base and the large market it enjoys compared to its competitors? Samsung embraces a culture that acknowledges cultural differences and gives preference to local markets; with headquarters in all continents, and Samsung offering support in community activities, Samsung customers feel that they are valued and thus have trust in the brand. Samsung has also amassed a good reputation over the years and many now see it as a great brand, Samsung the brand is respected all around the globe, mainly because it is an old and verified brand that took billions and many years to build.
Samsung has one of the best supply chains and is very distribution efficient which is ensures that they have a market force in most markets around the world; it also ensures that all its stores are stocked up with their latest products giving their customers a wide variety to choose from. Samsung also enjoys the economies of scale and is thus able to carry out quality production at low cost. Samsung also enjoys a diversified portfolio and has multiple investments and shares in many industries, the failure of one single industry would not affect their profitability greatly.
Samsung BCG matrix
Samsung galaxy note 7 crisis
From stories of mobile phones being produced from cheap child labor to the production of phones which are not environmental friendly Samsung has now entered the abyss of controversy with building controversy over its galaxy note 7 smartphone which is so far its best and latest phone but at the same time the most scandalous. Multiple explosions of the galaxy note 7 have led to growing fears that the phone is a fire hazard. This led to a recall of the smartphone but apparently this was not enough to fix Samsung’s manufacturing issues. A return of the smartphone in the market which was now thought to be safer did not go well as the phone kept blowing up, this led Samsung to recall all sold phones and discontinue the smartphone which was only in the market for two months.
This explosion of the galaxy note 7 has been thought to be caused by the company accidentally squeezing the batteries harder than they should, the manufacturing error placed pressure on the battery plates which brought the negative and positive poles in the phone into contact. According to Korea’s Agency for Technology and Standards from a technology perspective, the defect was caused by several contributing factors mainly caused by deficiencies in assembly, for example, the use of insufficient insulation tape which led to the bursting of the phone in frames during charging.
Samsung recalled all the devices and asked customers to return their smartphones for a replacement did not work quite well as the situation was already uncontainable and airlines worldwide and aviation authorities had already published warnings that the galaxy note 7 is not allowed on board.
How the crisis impacted sales, personnel, and reputation
It has been argued that the Samsung galaxy note 7 crises will not hurt the brand in the long run but we cannot downplay the fact that this crisis affected the brand negatively. Some market commentators have forecasted that competitors will benefit from this crisis by poaching Samsung customers. Actually one of the market analysts projected an increase of Apple customers to over 5 million, which would be a large setback for the brand which is already facing great losses from the recall of the phone. With the exodus of its customers who are very likely to never come back even after they are assured of quality, it is very likely that Samsung sales will drop greatly.
The employees and personnel at Samsung are not left out too, the backlog on the quality question and the production of a phone that explodes due to manufacturing errors drops on their court. The company can only blame their employees on the issue but among the personnel there are those who are not directly or never involved in production at the company but their reputation has been destroyed together with the brand name but they have the task of protecting Samsung’s reputation because they are the same people who bask in the company’s glory when it prospers.
Samsung still remains a major player in the smartphone market and this is not likely to end anytime soon. In the second quarter of 2016, Samsung sold over 70 million phones globally and it is very likely that they will not fall anytime soon. From the above statistic, it is observed that Samsung still remains a preferred brand and they are set for a major comeback soon.
How has the crisis affected Samsung’s relationship with major carriers such as AT&T, what will it take to convince buyers again?
One of the major impacts of this crisis is that it has greatly affected Samsung’s relationship with AT&T which is by far the second largest mobile service provider in the world. AT&T has discontinued all its exchanges of sales and exchanges of the galaxy note 7 smartphones, this has mostly been aggravated by the fact that even after a recall and the second release of what was thought to be a safer galaxy note 7 still exploded. AT&T released a statement that they are currently not exchanging the new note 7 until further investigations are conducted over the incidents reported.
Most of the major carriers have agreed to accept the return of the note 7 but AT&T which is a major market force has stopped the sale of the phone entirely. This shows that AT&T lacks confidence and trust in Samsung which could be a major blow for the giant brand. It is very likely that other carriers may follow suit which will hurt Samsung even more mostly impacting on their sales and their customer base.
For Samsung to convince buyers again, it is very likely that they will focus on their pricing strategies which would mean that they would have to forego profits to maintain their customers. It has been rumored that the next new phone (galaxy note 8) will cost less in an effort to attract customers again. Samsung could also forego profits and invest heavily in redeeming its public relations by offering a public apology, telling the public what they have done about the crisis and the measures they are taking to avoid similar cases in future.
Samsung communication strategies
After the crisis, Samsung responded to the situation on their website by telling customers to return the device to the outlet store where they purchased it for an exchange or a refund but unfortunately, they never posted this on their twitter account nor on their facebook page until it was too late. Crisis management experts view this as a very imprudent gesture that is passive and overly baffling considering the seriousness of the situation and what it would cost the smartphone giant. Their response only on their homepage was not enough for a company that values its customers, Samsung ought to post their response and apology on their facebook, twitter and all social media platforms out there.
Samsung’s image continues to be tainted by the allegation that after recalling the galaxy note 7 devices, they worked without direction from the United States commission on product safety. All this information is out there in the public domain and is becoming a nightmare for Samsung as they not only enjoy customer loyalty from smartphones but are also in other products. For a company undergoing such public scrutiny, it would be very wise that they embark on a communication strategy that works to restore customer confidence.
Before Samsung chooses the best communication strategy to use, it is very important that they focus on the mission to be addressed by the strategy, embrace the crisis and avoid any blame game, embark on transparency and speed in addressing the crisis, staying calm is also very critical in the event of a crisis as panic would cost you public confidence.
Samsung can either decide on a defensive strategy or an accommodative strategy as a communication strategy. The former would prove useless and imprudent because they have already acknowledged that the devices had a problem, recalled them but the problem persisted, there are thus left with the accommodative strategy where they acknowledge their role in the crisis and accept the flaws. This entails coming up with a plan to manage the crisis which could be done by hiring crisis management experts or establishing a committee from within the organization. The plan is updated quarterly or annually depending on the progress, this is done to assess the viability of the plan and the success or failure of the committee.
The crisis management committee is composed of members from all segments of the organization; finance, operations, human resource, public relations and personnel in the legal docket. The team makes decisions on the moves the corporation should make to regain public confidence, the management is thus expected to trust the team as its ticket back to a good reputation and accord them all the support.
Social media has made it so easy for corporations to improve their public relations. Samsung should invest heavily on notifying the public about the crisis on social media, this way it is easier to reach customers, address all their queries and assure them of the correction of the current situation and promise them a better future. Through social media, it is also very likely that Samsung will not only reach its loyal customers but also potential customers. Maintaining constant communication with concerned customers will not only regain customer trust but also attract new customers as it will portray the image of a brand that values its customers.
What mix of communication that best help Samsung turn things around after this public relations ruin
Being accommodative; establishing a plan on how to go about managing the crisis, hiring crisis management experts or establishing a committee within the corporation, and the management in the corporation trusting the crisis management committee while at the same time incorporating social media will see that Samsung gets back to its feet PR wise. It is inevitable for Samsung to forego profits by spending more on PR and lowering their smartphone prices in the future to settle the crisis both in the short term and the long term and the short term but this will prove worth it when it retains a large market.
Samsung is a great brand and it is very likely that the brand will not fall anytime soon, this was just a manufacturing flaw which was not intended and the company stands corrected. Loyal customers may have felt a prick in their loyalty but a great number still trusts the brand not only in smartphone products but also on other products such as televisions, refrigerators, laptops, microwaves and other products. The management wishes to continue the dream, values and philosophy of the company’s founder Lee Byung-Chul to advance the world in technology and diverse businesses. Samsung is still expanding its recall of the galaxy note 7 device and is committed to its customers and public safety. They have since accepted the problem and are asking customers to return the phone to retailers and carriers.