Imagine browsing the internet or taking a call on your smartphone and all of a sudden — the device catches on fire! It might sound far-fetched, but it has actually happened to some owners of the Samsung Galaxy Note 7.
Samsung issued a recall of about a million of the devices earlier this month after receiving nearly 100 reports of the phone’s batteries overheating. And surprisingly, it’s been the recall effort, potentially even more than the actual fires, that has hurt Samsung throughout this process.
It took nearly two weeks for Samsung to coordinate the recall with the U.S. government. And all the while, consumers who weren’t aware of the recall continued experiencing overheating batteries. The delay and mishandling of the recall caused Samsung’s market value to plummet by billions of dollars.
The Takeaway From This Crisis Management Example
This situation demonstrates the importance of crisis management for businesses of all sizes. When dealing with recalls or other serious issues, you need to act quickly and deliberately. No one wants their business to go through something like this. On the other hand, a smooth and decisive response by your business can actually win back some of the good will you lost in the first place. So it pays to be able to handle a crisis well.
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