Samsung Galaxy 7, Utilitarianism Ethics and Illegal Labor Practices
Samsung Galaxy 7 , Utilitarianism Ethics
and Illegal Labor Practices
Jorge Yeshayahu Gonzales -Lara, Pedro Ochoa,
Ana Parada, Angela Fernández
Abstract
This paper will talk
about Samsung Galaxy 7 debacle as well as
which Utilitarianism Ethics, The Law
involved with the Exploding Samsung Galaxy 7. It will also
address the social responsibilities. This paper will also talk about Samsung
Illegal Labor Practices
Despite
the Samsung Galaxy 7 debacle, the
company ended the fiscal year in the black. The company did a voluntary recall
and gave incentives for people that returned the recalled devices. Because of
the company brand and reputation, consumers did not lose faith in the brand., South
Korea’s largest business, is family owned Samsung, is a global electronics
manufacturer operating in 61 countries, with more than 150,000 employees. The
newest Samsung Galaxy 7 forced the company to recall 2.5 million devices
shortly after they went on sale. (Samsung, 2012).
Because
of the negligence of Samsung's rush to produce and release the Samsung Galaxy 7
proved to be negligent. As a result, several
people suffered injuries, and the company had to endure a costly recall. Due to
the number of products manufactured around the world yearly that cause harm or
worse, death to individuals, the government created the Consumer Product Safety
Commission as an administrative agency to protect consumers from the irrational
danger of injury or death., and Making ethical decisions has an enormous impact
on businesses. Firms that do the
right thing, regardless of the cost to the company, as in the case of Samsung
with the Galaxy 7, can maintain brand
power and customer loyalty.
First, South Korea’s
largest business, is family owned Samsung, a global electronics manufacturer
operating in 61 countries, with more than 150,000 employees.
The
newest Samsung Galaxy 7 forced the company to recall 2.5 million devices
shortly after they went on sale last August. Because of
Samsung's rush to produce and release the Samsung
Galaxy 7 ahead of Apple’s iPhone 7 anticipate release, there were proven to be
negligent.
1. The devices injured several people,
and as a result, the company had to endure a costly recall.
2. Shortly
after the August 2016 release, reports of exploding phone incidents began.
3. The
reported incidents prompted Samsung to initiate a refund and exchange program.
4. The
program worked with Samsung and the mobile
carriers.
5. Verizon
Wireless gave customers the option to trade the device for a new device of
their choice with the possibility to get
the Galaxy 7 again once they were deemed safe without any additional out of
pocket cost or penalties to the customer.
After
a month, Samsung thought the problem was identified with the software and
released the devices; to determine if the instrument
has the new software the color of the battery icon in the upper right-hand corner of the device is the identifier.
·
Customers were ecstatic at the
release and began swapping the temporary devices for the much-expected Samsung
7, only to be disappointed quickly.
·
Reports began coming in regarding
devices with the new software, identified by the battery color were having problems
exploding.
·
This led to the government is becoming involved, and the Federal Aviation Administration (FAA), and the Pipeline and Hazardous Materials Safety
Administration and the U.S. Department of Transportation (DOT), issuing
a prohibition of the Samsung Galaxy 7 flights in
the United States.
·
Involving the governmental agency to
regulate and ensure the devices were banned from airlines was a step to avoid a
potential in-flight disaster.
·
Once in place, people could not transport the phones in their carry-on
luggage or checked luggage, nor could it be shipped as air cargo.
·
This prohibition posed a huge inconvenience for people who were away
from home or were already traveling with the device could no longer travel with
the device on an airplane.
·
Once the in place, anyone failing
to follow the emergency order could be charged for violation of the Hazardous
Materials Regulations, pay a hefty fine of almost $180,000 and possible
criminal prosecution with up to ten years in prison under Title 18. (DOT,
2016).
Ethics, Law and deontology
considering the rights of persons
Ethics
and the law go hand and hand in business situations. Using ethics as a
reference aids in assuring the common good for all involved. There are a
variety of ethical theories that a company can face when in the situation of a
product recall.
1. Samsung
could have followed the ethical absolutism theory, where a situation is either
right or wrong, and regardless of the
situation or circumstance, the thought will always be the same.
2. Samsung
could have said, the Samsung Galaxy phones have always worked just fine, there has never been any problem with devices
catching fire in the past, so there is no way they are catching fire now.
3. The
utilitarianism ethical theory could have been the viewpoint of Samsung, in
which the result would have been on the
good for the greatest number of people.
4. More people
were wanting to continue to use their phones that had not problems than
devices with overheating batteries.
5. Samsung
could have done a case by case analysis.
6. Deontology
ethical theory focuses on the individual and what is right; even if an act
would benefit a group of people, it must also consider an individual’s rights
as well.
7. Justice
ethics are about being fair, like
deontology considering the rights of persons
and adheres to the U.S. justice system. Under justice ethics, constitutional
rights are protected and ensure everyone
is treated equally in court. (Seaquist,
2012).
Utilitarianism Ethics
Had
Samsung chose utilitarianism ethics, the exploding battery situation could have
been a disaster. If the utilitarianism ethics approach would have taken place,
then only devices that were displaying issues would have been addressed.
Meaning, there would never have been any recalls,
and people would still be free to use the device everywhere jeopardizing the
lives of not just the phone user, but anyone near them.
1.
The phones would also be free to continue
to fly on U.S. airlines, which could have resulted in planes explodes in the
air killing countless people and costing countless amounts of money.
2.
Just as there was a fire at one of the
manufacturing plants that provided the batteries for the Samsung Galaxy 7
caught fire because of a pile of the discarded batteries, which could have been an American business or
home. (Yahoo, 2017).
3.
Samsung displayed the ethics theory of
justice when they company conducted a voluntary recall of the Samsung Galaxy 7,
giving focus to doing the right thing for the consumer
and showing good intentions and complying with the United States government.
4.
Though there were only 30 cases of known
exploding Samsung Galaxy 7 devices, out of fairness, Samsung used justice
ethics and recalled over one million of the devices sold around the world.
5. The primary reason global electronics manufacturer Samsun
maintained customer loyalty is the ethical decisions made by the company.
(Samsung, 2017).
6. The
newest Samsung Galaxy 7 forced the company to recall 2.5 million devices
shortly after they went on sale. Making
ethical decisions has an enormous impact on
businesses.
7. Enterprises that do the right thing,
regardless of the cost to the company, as in the case of Samsung with the
Galaxy 7, can maintain brand power and customer loyalty.
ü When
faced with a product recall, the severity of the harm motivates the remedy the
company offers.
ü When
there is a greater chance of consumer injuries, the company provides a better
long-term solution to ensure customer satisfaction and loyalty and brand trust.
ü The
solution may cause major revenue losses initially, but trust will remain, and the Brand name can bounce back
successfully.
ü Ethics
within leadership throughout the business is a
critical component of all involved in management positions, with front line managers to CEOs.
ü Product
recalls testing the strength and the
ethical values of a business and the person with the most influence, the
CEO. (Xia Liu, Liu, and Lou, 2016).
Products
recall costly and if poorly implemented
can be the end of a company’s brand. When there is a recall, it is important to
have the capability to trace back the steps to
get to the cause of the problem to ensure a solution in as quickly as
possible. Having a system in place with identifying product codes can eliminate
having to recall all the goods, instead,
a batch within a group. (Dai, Tseng and
Zipkin, 2014). The Consumer Product Safety issued a recall of the device on
September 15th and again October 13th, after the second
recall, Samsung stopped all sales of the product and issued a voluntary recall.
(CPSC, 2016). In December, Samsung pushed a software update to the devices that
would not allow them to charge past 60% due to safety concerns. At the end of
December, the big four U.S. mobile carriers, Verizon, AT&T, Sprint and
T-Mobile began the process of shutting the devices off and refusing to activate
on the networks out of safety concerns. Due
to the number of products manufactured around the world yearly that cause harm
or worse, death to individuals, the government created the Consumer Product
Safety Commission as an administrative agency to
protect consumers from the irrational danger of injury or death. (Seaquist,
2012). Studies found that brand equality has an effect of product recall
outcome. Brands that were stronger, established and popular has a less adverse
effect by recalls as opposed to smaller lesser known business.
Managers and CEOs from larger companies have more to lose
from recalls because the consumer expectation is greater than that of a manager
at a smaller less known brand. (Korkofingas, Ang, 2011).
Successful companies have proactive strategies ready to deploy in the event
product-harm arrives. Having proactive
strategies in place and willing to
implement at a moment’s notice can reduce the financial ramifications and allow
the company to maintain long-term viability. Recalls are never good, however,
at least having a plan will limit the time it takes to initiate a solution if a
crisis arises. (Chen, Ganesan & Liu, 2009).
The Law involved
with the Exploding Samsung Galaxy 7
There are several areas law involved with the
exploding Samsung Galaxy 7; the company was
neglectful in the engineering of the devices by the four elements that
define negligence. First, the duty of
care, persons injured by their phone's battery
overheating and in some cases exploding, merely
using the device for the intended purpose. Samsung breached the duty of attention with the faulty manufactured devices.
The breach directly caused injuries to some users of the devices. (Seaquist,
2012).
·
Due to some devices exploding and causing
damages to personal property, there are also 92 incidents in the U.S. and based
on state statutes. Several people cite
damages to their vehicle or their home, in such cases, there will be civil lawsuits for people seeking monetary damages.
(CPSC, 2016).
·
It is imperative to
differentiate between criminal and civil lawsuits resulting
from the negligent lawsuits.
·
The incidents where the consumers injured from the use of the Samsung Galaxy 7 will file civil lawsuits which are the
lawsuits where plaintiffs seek money for damages, in civil court; Samsung will
receive a summons,
and the plaintiffs will be responsible for proving the defendant is liable.
·
Samsung also face some criminal suits if
the United States government imposes any fines because of the recall. The
negligence of Samsung is a Strict Liability in Tort because it comes under the
theory of law developed to hold manufacturers, retailers,
and wholesalers liable for defects making a product unusable for its intended
purpose.
·
The three criteria for product liability are, the phones are just as they are when received no alterations, and used as intended,
and the batteries are getting hot and
exploding due to manufacturing defects. (Seaquist, 2012).
·
Product recalls explain reasonable conduct
and defines the manufacturer reasonably in not recalling precludes tort
liability. (Lens, 2016).
·
Because the batteries are harmful to the
environment, the Environmental Protection Agency must become involved to make
sure Samsung handled the disposal of the batteries safely and appropriately.
·
Due to security
concerns, there were special return bio-hazard, fire proof boxing for device
returns.
The Constitutional Law
Constitutional law is a state’s main source of law, comprised
of 51 constitutions; Each state has a constitution plus one federal
constitution. Under the constitution, states are free to adopt and regulate any
laws they wish within their borders.
The case of the Samsung exploding phones come under federal statutes because there were domestic transactions because the phones were mass-produced outside of the United States,
then transported into each state and the reason for the government agencies
involvement with the ban and recall. Legislatures have to address ethical concerns regarding companies in the United
States that conduct business with international companies regarding
regulations.
The Foreign Corrupt Practices Act by Congress in 1977 came
due to bribing between U.S. corporations
and international businesses; the act was
passed making it unlawful for American companies or foreign governments to
commit bribery, making it a criminally liable act. (Seaquist, 2012).
The
exploding caused Samsung to end production of Galaxy 7
The exploding devices fiasco caused Samsung to end production
of the Samsung Galaxy 7 devices and recall the 3 million devices sold globally.
·
As of January 23rd,
96% of the devices are back to Samsung. Samsung now has a team of 700 engineers
working to investigate the cause of the
device failure. Samsung has also engaged third party experts to provide
objective analysis.
·
The company is reviewing
every aspect of their manufacturing process. After a lot of independent
analysis and consultations with third
parties, experts determined the batteries cause
the issues. To avoid this type of occurrence in
the future, they have improved the entire process putting quality first.
Because the battery was the cause of the
disaster, a new 8-point battery safety check protocol with multi-layer security measures including a battery advisory
group. (Samsung, 2017).
·
Despite the Samsung Galaxy 7
debacle, the company ended the fiscal year in the black. The company did a
voluntary recall and gave incentives for people that returned the recalled
devices.
·
Because of the company brand and
reputation, consumers did not lose faith in the brand. Samsung’s success can
contribute to various ethical reason. First,
they have an excellent reputation and
have built trust and brand respect. The company’s employees are committed to
satisfaction for productivity. Samsung made a good decision to completely pull
the Samsung Galaxy Note 7, a move that cost the company billions of dollars.
·
Samsung states on their website,
they re-assessed every step of their manufacturing and redesigned the quality
assurance program, making sure to place customer safety ahead of beating the
competition with the latest device release.
Ethics, Social
Responsibility, and Environmental Sustainability
Samsung
has devoted themselves in practicing the code of conduct, and they are making
sure that “their employees share the company’s values and practice integrity.”
(Samsung Code of Ethics)
1. As
a company with “308,745 employees in 79 countries” (Fast-Facts) they must make
sure that they are following all the rule.
2. The
company is “fully committed to complying with local laws and regulations as
well as applying a strict global code of conduct to all employees.
3. It
believes that ethical management is not only a tool for responding to the rapid
changes in the global business environment, but also a vehicle for building
trust with its various stakeholders including customers, shareholders,
employees, business partners, and local communities.
4. With
an aim to become one of the most ethical companies in the world that is
respected by its stakeholders, Samsung Electronics continues to train its
employees and operate monitoring systems, while practicing fair and transparent
corporate management.” (Corporate Ethics)
5. “Samsung
Electronics endeavors to become a world leading company by following its
management philosophy of “Devoting its talent and technology to creating
superior products and services that contribute to a better global society.”
6. Samsung
Electronics’ value chain of “Management Philosophy, Core Values and Management
Principles” is rooted in this management philosophy and constitutes the
spiritual guidelines for all its employees in their effort to realize the
corporate vision of being a world leader.” (Corporate Ethics)
Samsung
really doesn’t have a proactive social responsibility statement more so a
policy that they aim to enforce by “creating integrated values.
ü Not
only Samsung create economic value by maximizing profits and shareholder value,
but also, we take on a broader responsibility as a global corporate citizen to
create societal values.
ü These
societal values are the total accumulation of all the impact generated by
direct/indirect causes and serve as resources to usher in a better future.”
(Samsung Electronics Sustainability Report)
Samsung
Illegal Labor Practices
Ethics broadly refers to
the values of the right manner, obtained from the society, often referred as
“the right thing to do”. Ethics are a necessity for individuals as the
appropriate course of action in any content or condition is reliant on ethics.
· In
August 2012, according to the China Labor Watch, a self-governing labor rights
group based in New York, Samsung was investigated for illegal hiring procedures
including inhumane working conditions of their manufactures based in China
(Arthur 2012).
· Samsung
is a well-known, South Korean based multinational company a series of
subsidiaries and associated businesses.
· The
Samsung Group consists of approximately 80 companies with a prime emphasis on
electronics, heavy industry, construction, and defense industries.
· In early 2012, Samsung became the world’s
leading mobile phone maker overtaking Nokia and is currently the world’s prime
TV and flat screen maker.
Samsung suppliers have violated labor
rights in a few areas including underprivileged working conditions, this
includes:
1. The
failure to provide basic safety equipment for the employees. The report by the
China Labor Watch also revels the use of illegal hiring practices embracing the
employment of children under the age of 16 years.
2. At
HEG Electronics (Huizhou), a Samsung
Supplier,
child labor consisted of approximately 80% of the factory’s workforce and only
received 70% of the adult wages, the children also faced pay deductions for absenteeism due to
illness (Alan 2012).
3. The actions by the manufactures were
highly unethical and illegal. Excessive working hours is very common in
factories in China. “Chinese employees working overtime beyond legal hours and
being fined for absence and tardiness” (CBS News 2012).
4. Employees were expected to work 16
hours a day with only one day off at some of the Samsung’s manufactures.
·
A range of stakeholders were impacted by
the unethical behavior of the Chinese suppliers.
·
The employees that work at the factories
or the manufactures were employed on illegal terms not binding the Chinese labor
laws as well as unsuitable working conditions, including the under aged
employees.
·
Due to the report by the China Labor
Watch, many of these illegally recruited employees lost their jobs at the
factories. During their employment period, the health and safety of the
employees was compromised, “…didn't
provide sufficient protective goggles, masks and other safety equipment to
workers” (Arthur 2014).
·
Samsung
itself was impacted by the unethical actions of its supplies in China.
·
The
reputation of the company has been damaged as Samsung claimed to be unaware of
the activities carried out by the suppliers. Although Samsung denies the
existence of any form of illegal activity at their own factories but admits the
excessive working hours at their suppliers’ factories (Mundy 2013).
·
Samsung
also had to pay compensation which was delayed but refused of any “link”
(Arthur 2014).
·
Intertek
is a global auditing firm, claiming to be reliable and independent, however the
firm has been exposed for accepting bribery from a toy company in China from
the past (Mucaster 2012).
·
Coincidently,
Samsung also utilizes Intertek’s services, this represents Samsung’s lack of
interest towards their sources of products and encouraging the suppliers to
behave unethically towards the employees and the community.
The decision made by the
suppliers of Samsung was not ethical in any case.
1. To
maximize their profit, unethical and illegal hiring policies were practiced.
2. The
over worked employees were forced to work in unsafe and inhumane working
conditions, by putting the employees in danger the manufacturers compromise the
safety of the workers which is highly unethical and illegal.
3. The
employing children to preform adult procedures the suppliers are behaving
unethically towards the children’s’ responsibility and the society.
4. Samsung
on the other hand, claiming to be unaware of the procedures and treatment of
their suppliers’ employees, it is Samsung’s responsibility to know the
conditions in which their products are manufactured in as well as the induvial
that produces the products.
5. Samsung
has only warned the suppliers that were involved in the illegal procedures but
has not terminated and contracts of the suppliers involved, this has indirectly
encouraged the suppliers to continue them activates but on a low scale.
6. Samsung
is held responsible for continuing the contract with the suppliers and
therefore also plays an equal role as the suppliers in behaving unethically for
their own financial benefits.
Business ethics
previously was considered as a focus on the rights of the employees and their
treatment. To behave ethically within a business, the employees must be
receiving the correct wages and entitlements. The business also has the meet
the legal workplace safety regulations to insure the well-being of the workers.
As well as the legal requirements, the business must behave in an ethical
manner with the employees, socially and professionally, by respecting their choices
and opinions in the workplace. However, after the additional provided on the
business ethics, business ethics are significantly boarder in terms of the
employer’s duty towards the employees and the wider society. Business ethics
also considers the effect of the business activities in the larger society,
socially and environmentally, as the business activities are evaluated by the
potential impact it can have on the environment. The further learning and
research have only added additional knowledge about business ethics to the
prior understanding, by providing a detailed explanation of the
responsibilities of the business towards the environment, society and the
employees.
Conclusion
There are
several areas law involved with the exploding Samsung Galaxy 7; the
company was neglectful in the engineering of the
devices by the four elements that define negligence. First, the duty of care, persons injured by their phone's battery overheating and in some
cases exploding, merely using the device
for the intended purpose. Samsung breached the duty of attention with the faulty manufactured devices. Due
to some devices exploding and causing damages to personal property, there are
also 92 incidents in the U.S. and based on state statutes. Several people cite damages to their vehicle or their
home, in such cases, there will be civil lawsuits
for people seeking monetary damages.
Samsung’s supplies in
China have acted unethically by illegally employing employees as they are under
paid and over worked, including child labor, investigated by the China Labor
Watch. The manufactures have breached many laws relating to wages and safety
standards of the factories. As a result, Samsung is also behaving unethically
by continuing the contracts with the suppliers. Samsung’s actions indirectly
encourage the illegal and unethical activities of the suppliers on a low scale.
Samsung shows a lack of interest in the welfare of the employees involved in
the Samsung’s production, as they utilize the services of an unreliable
auditing firm to record perform the auditing of their suppliers. Samsung’s
actions in the consumer world are misleading however the production procedures
are highly unethical and illegal.
Miami,
October 29, 2019
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