The Entire History Of Nike - Part 3

over 2 years ago

Before Nike became a thing, there was a partnership between two companies, Onitsuka Tiger and Blue Ribbons. The partnership between the two companies led to a business growing at a high rate. However, soo the partnership started having a downfall. This part will cover that.

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As I mentioned in the previous part, the bank giving Buck loans to buy the Onitsuka Tiger shoes had concerns that there will become a point where Buck wouldn't be able to pay the loans as the company didn't have any cash flow. That was only one of Buck and Blue Ribbons' problems, although the biggest.

Different Resorts

Buck didn't want to depend fully on the bank when it comes to having money to buy Onitsuka Tiger shoes to resell in the United States. The bank's concern was made worst as Onitsuka Tiger was always delivering their shoes late to Buck, giving him a smaller window of time to sell and pay back the bank.

Buck's biggest problem was the cash flow. That's what pushed him to get a backup as his partnership with Onitsuka Tiger was growing more uncertain by the moment. Especially when you realize that he was newlywed at the time.

PricewaterhouseCoopers (PwC)

Buck found a job as a legal accountant in a big company at the time called PricewaterhouseCoopers (PwC). PwC, by the way, is still one of the biggest companies in the world. Buck invested most of his salary into Blue Ribbons and would spend the rest on groceries.

Buck's time there as a legal accountant gave him great insight into how companies run their business. That's when he fully realized that his biggest problem was in fact the lack of cash flow.

Back To Blue Ribbons

Buck's time at PwC helped him navigate through the tough financial period as he finally started getting paid through his company, Blue Ribbons, as well as hiring more people, prompting him to finally leave PwC and focus solely on Blue Ribbons and his partnership with Onitsuka Tiger.

Problems In The Horizon

When Buck traveled to Japan to renew his contract with Onitsuka Tiger for three years, he didn't like that period as he wanted more, however, that didn't stop him from signing it as he wanted his company to grow further.

On the other side, Onitsuka Tiger's board wasn't that impressed with Blue Ribbons either and they had even started searching for other representatives in the United States, something Buck learned all about.

Upon confrontation, Buck learned that Onitsuka Tiger's board wasn't impressed with him.

The meeting was intense as at some point it was suggested that Buck gives up selling in New York and California to other representatives to which Buck said no for two reasons

The two regions made a fifth of his total sales
He saw it as Onitsuka Tiger slowly trying to phase him out.

A Not So Perfect Solution

Onitsuka Tiger finally suggested a new partnership structure where Onitsuka Tiger would hold 51% of control with Blue Ribbons having 49% and Buck keeping his role as the owner and CEO of Blue Ribbons.

That action, by the way, is a term known as the "Power of Supply". Since Buck had only one supply source, he had no choice other than to take that deal. However, Buck didn't submit it for long.

A Change Of Direction

Upon returning to the United States, Buck met up with his previous coach and a current business affiliate, Bill Bowerman. The pair decided that since Bowerman designed shoes that were successful in the United States, they could have those designs manufactured elsewhere this time with their own brand.

The idea made sense to Buck as it also would alleviate him from falling under the mercy of suppliers.

While Buck was assuring Onitsuka Tiger that he would be conducting business with them as usual, he was searching for different places to manufacture Bowerman's designs. Eventually, he found a place in Mexico that previously worked with Adidas.

The deal was that the factory would manufacture 3,000 pairs of football (soccer) shoes. The reason it matters to be specific about the kind of shoes is that Blue Ribbons' partnership with Onitsuka Tiger was made for running and tennis shoes.

Everything seemed for Blue Ribbons, all that is left is branding their shoes, as well as the conclusion of their partnership with Onitsuka Tiger. Two things I will cover in the next part.