It has universally been a regular practice by both major companies as well as smaller corporations to either outsource a part of their work or enter into a contract with other smaller companies to provide them accessories and parts for their final product.
This not only saves time but also expenses especially if the parts are small. Of course, the maker of the accessory parts has to ensure quality and durability of what they are making for the parent company.
These days the major trend of enterprises, to save costs or undertake cost cutting measures, has been to outsource the complete production to other countries where labor is cheap, land for factories can be bought at reasonable rates, power at subsidized rates and lucrative tax benefits.
A case in point is Apple, the largest, richest, most famous computer company in the world which has set up factories in China, Being the biggest market in the world Apple not only profits from making but also selling in China.
However, Apple has been pulled up by Chinese authorities for labor violations and adverse working conditions. Foxconn, the Chinese company that operates on behalf of Apple, was investigated by the Chinese government after riots broke out over working conditions and case of suicides were reported. Apple promised to improve conditions, but problems persist.
Outsourcing does have its setbacks, and though a company like Apple which is a world reputed company would never compromise on quality, certain things happen at times resulting in a production fault for which of which sets have to be recalled.
The most recent incident of recalling sets has been by Samsung Electronics, Apple’s biggest rival and a major player in the global telecom market.
Samsung has had to recall its latest Galaxy Note 7 which has a problem with its batteries and have known to explode. A minor glitch in the battery has caused phones to explode and has brought the battery maker into focus. Samsung SDI supplies 65% of the batteries to Samsung Electronics and is now in the limelight.
This is indeed a major setback to Samsung which has declined to comment on the matter and a miraculous boost for Apple’s iPhone 7 launched on the market.
Samsung SDI refused to comment on its role or the impact of the recall on its business. Samsung, has another major supplier, a unit of the Japanese electronics parts maker TDK Corp, Amperex Technology Ltd.
Based in Hong Kong which also supplied batteries to the giant telecom company. However, Amperex only provided 35% of its cells.
China as mentioned being the biggest market in the world saw the launch of the Samsung Smartphones on Sept 1 even though additional tests were being carried out by Samsung in Seoul in view of reports that the batteries were catching fire.
Shares of the affiliate company. Samsung SDI has drastically plummeted causing massive financial losses to the enterprise.
An estimated 2.5 million Galaxy Note 7 devices are being recalled which according to market experts and analysts will result in losses of 904 million dollars.
Samsung Electronics has not given numbers, but the impact will be felt far and wide, and sooner it rectifies the problem, the better for them as Apple their rivals are about to launch their iPhone Seven which is equally in demand. And the competition is cut throat and fierce.
It may be surprising to know that the same company Samsung SDI supplies Apple Inc its batteries also. Is there more to it than meets the eye? Apple has clarified that they do not use the same type of cells, and all its products are of exceptional quality.
Meanwhile, Samsung Electronics said aid it may seek a third supplier beyond the two companies it relies on for lithium-ion battery supply.
As stated earlier, outsourcing can have multiple problems and creates complications as in the case of Samsung, The company makes Smartphone battery cells in Cheonan, South Korea and Tianjin, China, but packages them in the company’s Vietnam factory and through a Chinese branch of South Korea-based ITM Semiconductor Co. Ltd.
Samsung SDI began manufacturing lithium-ion rechargeable batteries in 2000 and is currently one of the world’s biggest manufacturers by market share.
The flaw is with the battery and not the handset according to a spokesman of Samsung Electronics. The problem in its Galaxy Note 7 devices was caused by a defect in the battery cell and had nothing to do with the phone itself.
Samsung, like many other handset makers, uses lithium-ion batteries in its Smartphones as they are quite light in weight and extremely durable. Lithium-ion batteries are also commonly employed in laptops and even airplanes.
The need to surge ahead and provide better quality services is what is driving these companies to such a hectic trend. Quality control people overlooked the minor flaw in the battery.
According to an expert problems in compatibility of the phone’s battery and chip could have also played a role when charging the battery quickly.
Smartphones, with a long battery life, are very appealing to customers for no one wants to keep on charging their sets repeatedly.
The fact of the matter is that the competition in the telecom industry has become so fast and fierce that at times it ‘s hard to keep up with the market.
It goes without saying that Samsung and Apple are the leading players in the market, and their sets have no parallel in quality and design. It is chic, elegant, sleek and has immense prestigious value. The prices are quite steep for the average person, but nevertheless, sales are skyrocketing.
Oppo, a Chinese Smartphone company, has outclassed Samsung by its great Ad slogan, “Charge your phone for five minutes, talk for two hours.”
The fierce competitive market may well have contributed to Samsung’s sets burnout, so to speak.
It is indeed Samsung’s misfortune that the mishap has occurred at the time of year which is the back to school season and the Christmas season. The world over and mobile phones are best things to gift these days.
Analysts believe the financial hit to Samsung could hit the KRW 1 Trillion mark almost 904 million dollars.
Perhaps the Korean Government may help bail the company out as Samsung is the flagship of the South Korean Commercial industry.
The most ironic part is that Samsung suffered this misfortune when its rival Apple has launched I phone7 in the global market.
Many believe that Samsung has hit a new low and will take the time to recover, but they are two things that one should tend not to forget, The South Koreans are the most resilient, courageous and determined people in the world and face adversity bravely. The very fact that North Korea looms over it as a daily threat does not deter them in achieving their goals.
As for Samsung, well like Apple the very name itself has immense prestige value and will certainly bounce back within the shortest possible time.
What is commendable of this company that it will incur all losses but not compromise on quality nor disappoint their customers.
As for Samsung SDI, they have a lot to answer for as to what caused the battery to fail. Being such a major supplier to the entire the world will want to know what went wrong, and they will have a lot to answer for.
A machine is a machine and can develop a fault at any time, but the with the advanced technology available companies are trying to leave no stone unturned to ensure that the final product is foolproof, hassle-free and a joy to use.
There was a time that Sony was the leading maker of electronic products, but now it seems that Samsung has become a household name and has come to stay for a long time.
The company makes almost every product one can think ranging from of mobiles such as Galaxy Note7, S7, Smartphones, Tablets, Samsung Televisions , adorn the wall of every living room and are well known for its clarity and resolution.
Other products include camcorders, cameras, IT monitors, printers not to forget Refrigerators, microwave ovens, stoves, washing machines and Air conditioners and vacuum cleaners.
Samsung may have taken a fall for the time being, but it will get back and once gain give their competitors a run for their money.
This probably will be a wake-up call for the company and Samsung will respond positively and learn from it and further improve their products.
Apple, being the biggest company in the world will also be ethical and will not do anything to take undue advantage of the situation and will not smear Samsung. Both societies are so far reaching and expansive that playing by the rules is the norm for both of them.
Unlike competition in the underdeveloped countries where its dog eats dog. These behemoths have a code of ethics. Let the game continue and the people benefit.