Case study: Samsung

III. Learning from failure: gathering recommendation

Background information:

About the market:

Smartphones, mobile phones with more advanced computing capabilities and connectivity than
regular mobile phones, came onto the consumer market in the late 90s, but only gained mainstream
popularity with the introduction of Apple’s iPhone in 2007. The iPhone revolutionized the industry
by offering customer friendly features such as a touch screen interface and a virtual keyboard. The
first smartphone running on Android was introduced to the consumer market in late 2008.

The smartphone industry has been steadily developing and growing since then, both in market size,
as well as in models and suppliers. Smartphone shipments worldwide are projected to add up to
around 1.48 billion units in 2023.

By the end of 2020, 46.45 percent of the world’s population owned a smartphone. With many
people using more than one smartphone, the actual number of smartphone subscriptions is much
higher. As of 2021, smartphone users are using an estimated 6.4 billion smartphone subscriptions, a
figure that is expected to climb to 7.5 billion by 2026.

In the fourth quarter of 2020, Apple regained the crown of leading smartphone vendor based on
shipments, with 23.8 percent share of the market. Samsung held a 19.1 percent share of the
smartphone market in the fourth quarter of 2020 but were able to reclaim the top spot from Apple
in the opening quarter of 2021, after the effects of Apple’s iPhone 12 launch wore off.

The back and forth between Apple and Samsung is typical at the top end of the market, but the fight
for the remaining places among the top five vendors is hotly contested. Huawei once had a solid
hold on this position, even leading the market for a time, but trade restrictions have taken a heavy
toll on the Chinese smartphone manufacturer. The gap left by Huawei’s decline has largely been
filled by other Chinese manufacturers. Xiaomi’s smartphone market share has increased from 10
percent in the first quarter of 2020, to 18 percent in the first quarter of 2021.

While the market has two fairly consistent leaders, Until the first quarter of 2011, Nokia was the
leading smartphone vendor worldwide with a 24 percent market share.

Nokia’s decline serves as a reminder that in an industry at the forefront of tech innovation, keeping
ahead of the development curve is crucial. A diminished Nokia was once hard to imagine, but a
failure to keep ahead of those that were innovating and changing the face of the smartphone market
saw the company left behind.

About the Customer:

Company presentation
Samsung Electronics Co. is a South Korean multinational electronics corporation headquartered in
the Yeongtong District of Suwon. It is the pinnacle of the Samsung chaebol, accounting for 70% of
the group's revenue in 2012. Samsung Electronics has played a key role in the group's corporate
governance due to circular ownership. Samsung Electronics has assembly plants and sales networks
in 74 countries and employs around 290,000 people. It is majority-owned by foreign investors. As of
2019, Samsung Electronics is the world's second largest technology company by revenue, and its
market capitalization stood at US$520.65 billion, the 12th largest in the world.

Samsung is a major manufacturer of electronic components such as lithium-ion batteries,

semiconductors, image sensors, camera modules and displays for clients such as Apple, Sony, HTC
and Nokia. It is the world's largest manufacturer of mobile phones and smartphones, started with
the original Samsung Solstice and later, the popularity of its Samsung Galaxy line of devices. The
company is also a major vendor of tablet computers, particularly its Android-powered Samsung
Galaxy Tab collection, and regarded for developing the phablet market with the Samsung Galaxy
Note family of devices. It has also developed 5G capable smartphones including the Galaxy S21 and
foldable phones including the Galaxy Z Fold 3. Samsung has been the world's largest television
manufacturer since 2006 and the world's largest manufacturer of mobile phones since 2011 when it
surpassed Apple up until 2021. It is also the world's largest memory chip manufacturer and, from
2017 to 2018, had been the largest semiconductor company in the world, briefly dethroning Intel,
the decades-long champion.

In 2012, Kwon Oh-hyun was appointed the company's CEO. He announced in October 2017 that he
would resign in March 2018, citing an "unprecedented crisis". The company had three CEOs (Ki Nam
Kim, Hyun Suk Kim, and Dong Jin Koh) from March 2018 until December 2021, when the business
units were reorganized and they were replaced by Kyung Kye-hyun and Han Jong-hee. It has also had
a separate regional CEO, HC Hong, who led the business in Southwest Asia from 2015 and then
moved to Latin America in 2020.

Company’s objectives and means:

As people spent more time at home last year, the tech they wanted became the tech they needed.
In relying on that tech, people came to understand many ways connected solutions could make life
easier. TVs were vital for entertainment—and sometimes, fitness. Chromebooks became crucial
home learning tools. Smart fridges helped with remote shopping and meal prep. Smartphones were
indispensable.

Samsung’s continued investments in innovations that adapt to evolving lifestyles enable the
company to keep pace with rapid changes. Key innovations unveiled include:

 Samsung Bespoke 4-Door Flex: The latest version of the Bespoke refrigerator features
changeable panels that come with a choice of colors and materials that made the original a
success, allowing consumers to adjust their fridge for form and function. The new 4-Door
model, available in North America this spring, also includes a brand-new Beverage Center™,
which gives quick access to a water dispenser and an automatically-filled water pitcher.
Samsung Bespoke 4-Door Flex also comes equipped with a Dual Auto Ice Maker which
 makes not only regular cubed ice but also smaller ‘ice bites’ to suit different preferences for
cold beverages.
 110-inch MICRO LED: This new screen features self-lit inorganic LED with a slim and nearly
bezel-less Infinity Screen design that seamlessly blends into the living space. The result is a
spectacularly immersive viewing experience with astounding picture quality. The 110-inch
MICRO LED also adds “4Vue” (Quad View), a four-way viewing option—so you can keep up
with multiple sports at once, or stream a tutorial while playing a video game. Also, for US
consumers, more than 160 free channels1 are available through Samsung TV Plus. MICRO
LED will be rolled out globally beginning this spring.2
 Lifestyle TV: Samsung’s cutting-edge lifestyle TV lineup includes The Serif, The Frame, The
Sero and The Terrace—a recently launched 4K QLED outdoor TV—as well as Samsung The
Premiere, a cinema-like quality 4K laser projector.
 SmartThings Cooking: A new service from Samsung SmartThings is designed to make your
culinary journey seamless. An automatic Meal Planner powered by Whisk’s Food AI
recommends meals for the whole week, makes shopping lists with the ingredients you need,
and connects to grocery retailers for one-stop shopping straight from the Family Hub™
refrigerator or your mobile screen. Recipe instructions can be sent directly to synced
Samsung cooking devices to minimize hassles and mistakes.3
 Samsung Health Smart Trainer on Samsung 2021 TVs: Samsung Health seamlessly transforms
the home into a personal gym, and the new Smart Trainer4 feature tracks and analyzes
posture in real time, just like a personal trainer. During and post-workout, Smart Trainer
provides feedback on form, helps you count your reps, and estimates calories burned. With
video and interactive training via Bixby-enabled voice control, Samsung Health Smart Trainer
elevates and personalizes the home workout experience.

Samsung has long been at the forefront of AI and robotics innovation, leveraging its seven
global AI research centers to advance technology. By bringing AI to its products, Samsung is
creating new home experiences—from washing machines that optimize water usage,
detergents, and wash cycles, to TVs with a Quantum AI Processor that can upscale HD
content into pristine 8K resolution.

 JetBot 90 AI+: Coming to the US 1H 2021, this new vacuum cleaner uses object recognition
technology to identify and classify objects to decide the best cleaning path. LiDAR and 3D
sensors allow JetBot 90 AI+ to avoid cables and small objects, while still cleaning hard-to-
reach corners in your home. Also outfitted with a camera, JetBot 90 AI+ is integrated with
the SmartThings app to assist you with home monitoring.

 Samsung Bot™ Care5: The latest development in Samsung’s growing robotics lineup,
Samsung Bot™ Care is designed use AI to recognize and respond to your behavior. It will be
able to act as both a robotic assistant and companion, helping to take care of the details in
your life. It will also learn your schedule and habits and send you reminders to help guide
you throughout your busy day.
 Samsung Bot™ Handy6: Also in development, Samsung Bot™ Handy will rely on advanced AI
to recognize and pick up objects of varying sizes, shapes and weights, becoming an extension
of you and helping you with work around the house. Samsung Bot™ Handy will be able to
tell the difference between the material composition of various objects, utilizing the
 appropriate amount of force to grab and move around household items and objects,
working as your trusted partner to help with house chores like cleaning up messy rooms or
sorting out the dishes after a meal.

Looking to the future, Samsung is also developing other tangible applications of AI

technologies for daily life. Samsung is continuing to build on its Samsung Bot™ Retail, which
would guide users outside the home in retail environments, and GEMS, Samsung’s health-
focused exoskeleton as mobility aide. These innovations allow robots and robotic devices to
co-exist with humans, enhancing their lives and catering to a variety of lifestyles and
different environments.

Branding management

Branding worldwide vision

Samsung’s corporate vision is to “Inspire the world with our innovative technologies, products and
design that enrich people’s lives and contribute to social prosperity by creating a new future.” The
company follows this vision statement to maintain profitable technology business operations that
contribute to the improvement of people’s lives. Samsung frequently refers to a shortened version
of this corporate vision: “Vision 2020: Inspire the World, Create the Future.” The company
extensively implements this statement throughout its subsidiaries’ operations in the consumer
electronics, computing technology, and semiconductors industries. The following components are
contained in Samsung’s vision statement:

1.Global inspiration

2.Innovation

3.Improvement of lives and future social prosperity

Based on its vision statement, Samsung’s strategic objectives include the development of products
that inspire. This inspirational aspect requires the company to consider local and regional market
conditions to ensure that its technological products actually inspire people despite differences in
their societal situations. Samsung’s corporate vision also pushes for a high degree of innovation.
Technological innovation is especially notable in the company’s products, such as smartphones and
laptops. Moreover, the vision statement indicates strategic efforts that include Samsung’s corporate
social responsibility strategy for improving people’s lives and contributing to social prosperity. This
corporate vision means that the company sees itself as a mover and major contributor to the world’s
improvement through consumer electronics, semiconductors, and other products that add value to
people’s lives and society. In a way related to the mission statement, Samsung’s corporate vision
includes a global scope of application and the aim of contributing to societal improvement

Brand identity

‘’Our story begins in 1969, when Samsung was born with the ambition to help people achieve the
impossible. After over 50 years, we're still innovating, creating technology that breaks down old and
new barriers, and helping people to do what they can't. We continue to be driven by our purpose, so
we put people and what they care about at the center of everything we create.’’
‘’Our values are at the heart of everything we do. We follow five key principles that embody our
commitment to people, excellence, change, integrity, and co-prosperity. We focus on these
principles to continue growing, innovating, and challenging the status quo to turn our values into
action every day.’’

1.Human experiences

We put people first, at the center of everything we do.

2.Progressive innovation

We continually find new ways to improve the way people live by creating inventive products and
services.

3. Defiant optimism

We challenge ourselves and the status quo to change the world.

4.Integrity & transparency

We always aim to do the right thing by being open and honest with our customers and ecosystem of
partners.

5. Social betterment

We believe that everyone should benefit from technology. It should be accessible, sustainable and
used for good.

Corporate responsibility

The Device Solutions Division of Samsung Electronics is engaging in a variety of social contribution
activities across 260 locations in around 70 countries, in order to contribute to the common interest
of humanity, and fulfill the mission entrusted to us as members of the human race.

The Device Solutions Division of Samsung Electronics gives hope to socially disadvantaged
individuals, working with others to improve lives globally and in local communities, and experiencing
the joy of sharing through employees’ voluntary donations of their money and time and their
participation in activities such as educating children and adolescents, creating jobs for the less
fortunate, providing living support for low-income groups, granting wishes to children with hard-to-
treat diseases, and providing health and medical services and cultural events in underdeveloped
regions

Learning from failure: How Samsung overcame its Galaxy Note 7 fiasco

The story: On August 19th, 2016, Samsung Galaxy Note 7 was released as a successor to Galaxy Note
5. With its IP68 water resistance, dual-sided curved display, iris recognition system, HDR color, and
many other impressive features, the Note 7 broke pre-order records in South Korea, causing
international releases to be delayed due to supply deficiencies. Critics gave fairly positive reviews,
praising for its HDR support and its streamlined user interface, while they criticized it for its very high
price. Dealing with these happy problems was short-lived, however, as Note 7s were recalled
informally just two weeks after its release.

On September 2nd, 2016, Samsung suspended sales of the Note 7 and recalled some devices as
manufacturing defect in the batteries caused excessive heating and caused fires. Then, in just two
weeks, Samsung issued a formal US recall and exchanged the phones with those with batteries
sourced from different suppliers. However, when these replacement phones caused issues as well,
Note 7s were recalled worldwide and their productions were permanently stopped. The Note 7s life
had only spanned just less than two months before the permanent shutdown on October 11th,
2016.

When disaster struck, Samsung knew that it had to be proactive and take responsibility, according to
Schunker.

"We knew we couldn’t afford the luxury of a fetal position and just lie there, so the first thing that
we did to make things right was to take accountability," he said. "For Samsung, it wasn’t just the
right thing to do, it was the only thing to do."

The company promptly held a press conference, in which it took full responsibility for the crisis. It
was also forthcoming in its admission that while it didn’t know what was causing the battery
malfunction, it would not rest until the actual cause was discovered.

The company then moved into decisive and meaningful action, getting 700 researchers and
engineers, 200,000 phones and over 30,000 batteries tested in every extreme condition possible. In
a company first, Samsung also opened up to third party auditors.

When Samsung eventually figured out what exactly had gone wrong, it communicated that out to
the public. In January, it announced a quality assurance program and other safety features, including
an 8-point battery safety check, rolling them out the very next day.

Once the issue at hand was addressed, Samsung turned its attention towards recovering people's
love and trust. It focused on finding a bigger purpose that both its employees and consumers could
rally around, made its brand more inclusive globally and tried to create an internal culture of change.

"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," he said. "We needed to reclaim our leadership."