Galaxy Note 7 Crisis: Analysis of Compensation Strategy, Knowledge Management, and Innovation Transformation of Samsung

Abstract

This research aims to analyze the compensation and knowledge management strategies implemented by Samsung in dealing with the Galaxy Note 7 product crisis in 2016, as well as its impact on the transformation of the company's innovation strategy. Using a descriptive qualitative approach with a case study, this research explores how high-tech product failure incidents affect consumer perceptions, brand loyalty, and the direction of the company's internal policies. Information was gathered from literature review and secondary documentation, highlighting compensation management and benefits offered to the affected consumers, the influence of organizational culture on internal communication failure, and the post-crisis shift from closed to open innovation. The research results revealed that Samsung's compensation strategy at the beginning was seen as inadequate by the public, which caused a decline in customer trust and company market value. Crisis management was exacerbated by internal knowledge management breakdowns and the centralization of decisions. But the accident was a wake-up call for Samsung to switch to an open and collaborative knowledge management system, and further improve its sustainable innovation practices through the recycling of products and the diversification of suppliers. This research provides useful insights for global technology companies in planning reputation recovery, management, and mitigation.