Business’s ethics, normally argued around whether a firm ought to make as much profit as possible for its shareholders that only allows it to follow the basic laws and regulations, or take a step back to participate its social responsibility with certain amount of sacrificed profit. (1) Taking the incidence happened 2016 as an example, when the Note 7 from Samsung, was recalled twice after encountering flaming due to battery’s malfunction. The complete recall was announced in October 2016, and the investigation result was announced in January 2017, clarified reasons for the incidences.
As the first incident was caused by deflection of negative electrode and the replacement battery, after first recall, had high welding burrs affecting negative electrode, there were even missing insolation layers from the replacing battery. (2) Although Samsung stepped into its responsibility quickly and regained trust from the market in 2017 with a 2% increase in market share in handheld phone division (6), it raises the question mentioned in the beginning of this post: should a firm make as much profit as possible by merely following basic laws and regulations, or participate more in its role of social responsibility with certain amount of sacrificed profit?
It is clear, after the intensive laboratory investigations, that Samsung is fully capable to establish the “8-Point Battery Safety Check”(3) before the incidences occur. If the business is fully capable and ethically obligated to ensure public wellness related to its consumers, why weren’t these safety inspections applied in the first place? Since these safety checks are required for each individual phone manufactured, the cost will rise, and the profit will drop, which is unlikely to be agreed by the board of directors if incidences had not happened. Thus, obviously, although Samsung’s CEO, Oh-Hyun Kwon claims to “endorse the UN Sustainable Development Goals (UN SDGs)”(5), profit might still be overweighed before the Note 7 recalls.
However, as a contract to the prediction profit decline through increasing cost with the safety concern, in first quarterly report, Samsung’s profit inclined (6). The Samsung’s reaction, from recalls to sharing testing results to “global standardization bodies”(2), shows how a firm step into its social responsibility and starts to create social value rather than simply maximizing profit. By taking the perspective to see solutions for social challenges as opportunities for profits, Samsung has achieved the 2% increase of market share in its cellphone division as well as the increase in revenue within an annual quarter (6), demonstrating a positive response to the social responsibility it took with the incident.
Work Cited
- http://www.investopedia.com/terms/b/business-ethics.asp
- https://www.forbes.com/sites/maribellopez/2017/01/22/samsung-reveals-cause-of-note-7-issue-turns-crisis-into-opportunity/#9ccf9c24f12d
- http://www.samsung.com/us/explore/committed-to-quality/
- https://www.nytimes.com/2016/12/14/technology/personaltech/biggest-tech-failures-and-successes-of-2016.html
- Samsung. Samsung Electronics Sustainability Report 2017. 2017. Web. 12 September 2017
- Samsung. 1Q Interim Business Report. 31 March 2017. Web. 12 September 2017