Maggie Chen is a young entrepreneur who had always been interested in fashion. She started her own fashion label after college and worked tirelessly to build it up. Chen's fashion label, named "Chen Couture," quickly gained a following for its unique designs and high-quality materials. However, as Chen gained more experience in the industry, she realized how difficult it was to compete against the big players. The high costs of production, marketing, and distribution made it challenging for small businesses like hers to make a profit. In fact, she often found herself struggling financially at the end of each quarter.

After several years of struggling to make a profit, Chen decided things needed to change, and she proceeded to change her business strategy. She started looking into the possibility of breaking up her fashion label into separate entities that could each be more profitable working individually. When she discovered that her design team was the most profitable part of the business, Chen proposed that the company examine its various functional areas to identify divisions that could be worth more as a stand-alone entity.

However, before she could put her plan into action, a series of events rocked the fashion industry. Just a few months after Chen became CEO, the UK voted to leave the EU, causing uncertainty in the market and challenging how trade may be conducted in that new landscape. This was followed by a global economic slowdown and a dip in consumer spending.

As her business struggled to stay afloat, Chen focused on streamlining operations and began breaking up the organization into separate entities. She made the accessories division and retail stores separate entities as both of which were losing money. 

By 2021, Chen was well into the test of her theory that the individual functional areas (design, retail, and accessories) of the fashion label were worth more than the label itself. The company had created the design team and the online store and had publicly discussed spinning off the manufacturing unit. The one large asset remaining was the fashion label itself.

Chen knew that the fashion label was not performing well financially. She believed that the label itself could be more successful if it was sold.

One of the biggest challenges Chen faced was determining how she could sell of the label, but still maintain other elements that had become successful (mainly the unique design unit).  She had to find the right buyer that would allow her to maintain focus on the design but could help in re-energizing the label to support.

To help her make these difficult decisions, Chen hired your team of analysts and consultants. She is asking you to outline options for selling the fashion label.  Should she sell it outright to the best offer, should she just find a partner to support in re-energizing the fashion label itself, or should she sell to one of the bigger corporate players she was always desperately trying to compete against? In an uncertain industry, she needs guidance.

 

What are the primary problem and secondary problem, explain.