Two organizations merge and consolidate all key portfolios. As a result, a new strategic direction is communicated. What should the portfolio manager do next?

Question

Options

• AEliminate the components in each portfolio that generate the least revenue.
• BContinue to independently manage the portfolios.
• CTerminate the existing portfolios and develop new ones.
• DReevaluate and prioritize the portfolios'components.

• A
  5% (3)
• B
  9% (5)
• C
  68% (38)
• D
  18% (10)

Explanation

A merger combined with a new strategic direction represents a fundamental organizational realignment. The existing portfolios were designed to support the prior strategies of each separate organization, making them structurally misaligned with the new direction. The correct response is to terminate the existing portfolios and build new ones from scratch that reflect the merged organization's unified strategy. Simply reevaluating components (D) assumes the existing portfolio structure is still valid, which it is not. Eliminating low-revenue components (A) or managing portfolios independently (B) both ignore the strategic reset triggered by the merger.

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