Executive Summary
This is a report based on the case study of Samsung mobile and the product name is Galaxy note 7. The product faced several issues regarding the faulty battery. This report will critically evaluate the risk management procedure in various aspects. Firstly, the risk management will occur on the basis of strategic decision making. After that the risk management procedure has analysed the internal and external risk management procedure. After that, quantitative and qualitative risk management procedures will be analysed in this report. Lastly, the conclusion will discuss the evaluative description of this report.
Introduction
Every business authority has to evaluate the risk management plan for every single step. The company Samsung launched their new model Galaxy Note 7 in the market in the year of 2016 (BBC News, 2017). The model creates a lot of problems for the users and the company has to be bound to draw back the models from the market. The report will show the critical evaluation of the holistic nature of risk management, quantitative and qualitative techniques to manage risk, and the internal-external influences on approaches to risk management and disaster planning.
Critically evaluate and analyse the holistic nature of risk management within strategic decision making
The ‘holistic nature’ indicates the role of risk management to highlight the importance of understanding the interrelationship among each risk (Arrfou et al., 2021). On the other hand, strategic decision-making is the process by which the company can set a strategic plan to fulfil goal. When a company can evaluate a risk management plan in a holistic way with a strategic decision-making plan it will be successful for the company. As per the case study, Samsung faced a large problem with their Galaxy Note 7 model after launching in the market in the year 2016. This phone model has faulty batteries which overheated and exploded. Yet, they have to recall all the models from the market and also from the consumers (Amelia Heathman, 2017). The company did not evaluate and analyse risk management in a holistic way. Even they did not make a strategic decision to manage the risks which may come in the future. The process of risk management has not been done properly by the officials of the company. However, the situation might be avoided by following Herbert Simon’s decision-making theory. The theory will show how logical individuals should work under the risks of a company (CRMS, 2022). Herbert Simon’s theory has three steps,
Intelligence
In this stage, the company has to know and identify the challenges which they are now facing. The higher officials have to know about the operational issues and challenges which are leading to the operational risks (Roberts and Wernstedt, 2019). As per the case study, the challenges of the company are the faulty batteries which are getting overheated and exploded. Because of this problem the company has to recall over 2 million products from the market. The cost of the recall Samsung may pay about $ 5.3 billion which is a large amount for the company.
Design
This stage will give the possible solution of the problem as per the risk category. In this stage there are some sub-stages like risk analysis, figuring out the risk impact, and others. Although, the company has to discuss and take the concern from the stakeholders, also has to monitor the whole process properly before applying the process (Baskerville, 2018). As per the case study, Samsung has identified the two faults of their battery. That was the manufacturing fault of the battery, one is the battery was too short which caused the short-circuiting. The second issue is the battery has been provided by a third-party provider, Amperex Technology Ltd., which has been incorrectly welded the batteries (Amelia Heathman, 2017). However, the company has set an alternative way to handle the risks and solve the problems.
Choice
After sorting their alternatives, the company has to examine critically and evaluate various consequences for the most suitable alternative. After selecting and properly examining the alternative the risk assessment has to be done (Mytypings, 2022). The higher officials have to decide whether the risk mitigation has to be taken or not. The higher officials of Samsung have decided to remodel the battery of the Galaxy Note 7. They made the battery thinner, removing the thickness margins. The case study of Amelia Heathman, 2017 shows that when the phone is charging the battery needs 10% extra space, but the battery of the model Note 7 has filled all the space which is the reason for which the explosion happened. As per the case study, the company officials forced the customers to surrender their handset to the store from where they bought it. Many of the customers were unwilling to do so but they forced them to surrender by telling them to cut off their connection. Although, the customers had given some other handset as an alternative. Then they remodel the whole process of the installation of the battery.
Figure 1: Herbert Simon’s decision-making theory
(Source: Mytypings, 2022)
By applying this theory, the higher officials will find a smoother way to get a solution to their problems. However, the higher officials did not evaluate the historic nature of the risk management and faced the loss of $ 5.3 billion (BBC News, 2017).
Critically evaluate the use of quantitative and qualitative techniques to manage risk
Quantitative techniques
Quantitative techniques in risk management are approximate numeric which affects the overall risk management of a project. There are some techniques that are used as quantitative techniques in risk management. They are,
- System analysis
The main objective of this technique is to evaluate alternative ways with proper manners.
- Marketing research
This technique helps to know about the market demand of the product. The objective of the technique is to evaluate and analyse the opportunities and study the recent market trends which will help the company to take the right decision in the implementation (Dobaj et al., 2019).
- Operating research
Operating research helps in making decisions to choose the proper alternative process. Linear programming, game theory, and others are some well-known operating researches.
- Network analysis
Network analysis is useful in project development, implementation of project cost, and determining the gestation period.
- Cost volume profit analysis
This technique helps to identify the product terms change in the cost of raw materials and other project inputs (He et al., 2018).
- Ratio analysis
Ratio analysis can be used to better, easy and useful comparison among the alternatives.
Samsung can evaluate its risk management using quantitative techniques, but these techniques do not properly eliminate the risk factors. As per the case study, Samsung has battery issues, for which they are forced to recall all the models from the market as well as from the customers (Amelia Heathman, 2017). They have to focus mainly on system analysis, marketing research, and cost volume profit analysis. If they do their research and analysis properly then they will use the operating system techniques also. Then the problems will show before market launching and will be solved then. But the problem has not been identified properly or the process and theory have not been properly implemented (Amelia Heathman, 2017). That is why they failed to identify the weak points of their newly launched Galaxy 7 and faced a large amount of loss.
Qualitative Technique of Risk Management
Samsung mobile can use the qualitative risk management system to remove the obstacles of previous incidents regarding the battery issues. This will help the company to identify the main risk factors which can affect profitability and hamper the customers’ loyalty. The qualitative technique is quite different from quantitative technique (Shi et al. 2021). Researchers found several management procedures of the risk factors for reducing the risks in the companies. Samsung can analyse the weaknesses of the products that affected the customers as well as organisational profitability. Moreover, some factors will help to make a successful management procedure.
Assessment and Meetings
Samsung can organize several meetings to assess the risk factors and they are required to identify the management of the concern. The CEO of this company in America organized meetings with the employees and also discussed the R & D team. After that, the company also hired the eternal stakeholders and implement several strategies for risk management (Zhang, W., 2021)
Risk Audit
The research and development team organized several research projects by taking several pieces of information from the international market and documenting that report to assess the risk which is called risk audit. However, this will take much time to gather several pieces of information (Spears, 2021).
Trend Analysis
Collection of information for the concern and listing of this data will be helpful for Samsung to understand the trend.
Critically evaluate internal and external influences on approaches to risk management and disaster planning
According to the case study, of Samsung Galaxy note 7 suffered from some issues and the company recalled the product. Information says that the recall cost was 5.3 billion throughout the world. Due to battery issues the company was forced to recall the products. After that Samsung launched the products implementing the risk management strategies, which will help the company both internally and externally. These are as follows:
Internal Risk Management Factors
Employees
The company has a huge number of employees throughout the world and they are doing their duties regarding their skills at various departments. If the company invests more in the research and development team for technological innovations, this will be helpful to reduce the risk factors. Hence, the company built a battery advisory board to fight the situation regarding the battery issues (Naim et al., 2021). This team includes specialized consultants such as professors of various elite universities. They enhanced the research and development team of the company to make a quality assurance regarding the battery issues of the product. Here, the stakeholder’s theory of risk management is applicable because the company hired an expert team with the R&D which can provide a concrete solution to the concern (Wysokińśka-Senkus et al., 2021). However, this may increase the price level of the products because Samsung spends money to implement proper strategies of risk management with the help of internal and external stakeholders (Lopez, 2022).
As per the stakeholder theory of risk management, stakeholders are responsible to find and identify the risk factors of the organization. Yet, the stakeholders are external in this case because the company hired researcher team from various sources (Lopez, 2022). Persons attached with research work regarding technology and related factors help the company to reduce the risk factors as well as internal risk factors related to stakeholders.
Technological Risk
The organization needs to reduce the technological risk factors because the issues arise regarding the faulty battery. Samsung mobile hired a team by collecting some external stakeholders for better productions (Fiandrino et al., 2021). External stakeholders implement several strategies which help to implement several verifications regarding the products. The protocols prescribed by the expert team will help the company to launch the product with several verifications. A durability test will help to identify the temperature of the batteries after overcharging (Diao et al., 2021). On the other hand, a visual inspection will help to assess by the standardized criteria and an X-ray test will help to find out the electrode (Lopez, 2022). On the contrary, charge-discharge test, accelerated usage test and many other tests will occur to judge the issues as well as risks from the products.
Here, the agency theory will be the appropriate theory of risk management because Samsung mobile hired several ex-pats to identify the risk factors. Here, the external stakeholders are the agents of risk management which will decrease the provision of vulnerable products.
External Risk Management Factors
The external factors are as follows:
Economical Risk
Samsung suffered from the risk situation for battery issues and the company recalled the product. The company invested 5.3 billion to recall the product from the world market so the company succeeded in removing all products that are vulnerable throughout the world. After correction of this product relaunching is another risk factor from the economic aspects (Lopez, 2022). Financial risk management theoryapplicable in this case because this will protect as well as effects of financial loss regarding the faulty product…
Managing Risk
Managing risk factor for this company can affect the company to maintain the business with the capital. Samsung spent a huge amount of money to control the crisis regarding the product named Galaxy Note 7 (Lopez, 2022). Nevertheless, the company will be successful in implementing the changes in the product which help the company to increase its competitive advantage (Hidiroglu, 2021). This is why, Samsung will evaluate the risk factors of the company and then analyse the vulnerability of the risk factors. After analysing the risk factors the research and development will implement several strategies to prevent the risk.
Conclusion
This report is emphasizing the risk management of the company named Samsung mobile regarding poor battery performance. For this reason, the company was forced to recall the product within a few months and faced a huge loss situation throughout the world. On the other hand, the company hired some external stakeholders to identify the risks and this also helped to remove as well as reduce the effects of risk factors throughout the world. The qualitative and quantitative approaches of risk management discussed in this report help to remove the risk factors after that the internal and external risk factors are also analysed in this report.
Reference list
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