Abstract
A firm's success depends on its social legitimacy. Usually, in the consumer's mind, the importance of a firm relies on what it can bring to the society. Therefore, for Nike, relocations basically mean that the company takes away jobs from US citizens. Moreover, Nike's labor scandals have highlighted some ethical issues: low wages, child labor, dangerous working conditions, environmental awareness and so on. At first, Nike didn't pay attention to the criticism as the charges were leveled upon them by a little group of activists, but later on the societal pressure became so high that Nike was compelled to take some measures to calm down public opinion; hence the significance of keeping an eye on the societal reaction to the brand management.
In this type of industry, brand image is essential. Nike has been associated with "coolness", with "success" and "fashion". However, labor scandals have sullied Nike's reputation. Even though currently Nike's revenues have been little affected by the bad image, the firm needs to improve its reputation quickly: step by step, Nike has lost numerous partnerships (especially with US college campuses) and its labor practices have become the center of attention of the average consumer. Although Nike was not the only one with bad labor practices, the firm ended up being the scapegoat, and therefore the target of media criticism.
