PFMP · Question #673
With the introduction of new legislation in your company, anyone now is entitled to medical services regardless of whether or not they are employed or have any pre-existing health conditions. Your…
The correct answer is B. Portfolio rebalancing. When a major strategic event such as a merger significantly alters the business environment, the portfolio must be rebalanced to realign its components with the revised organizational strategy.
Question
With the introduction of new legislation in your company, anyone now is entitled to medical services regardless of whether or not they are employed or have any pre-existing health conditions. Your insurance company's executives have been tracking this legislation as it means significant changes for your company; many employers who obtained insurance through your company may go elsewhere for lower costs. Recognizing this legislation may lead to a loss of revenue, your company decided to merge with another insurance firm to obtain greater market share. This merger, though, means some existing projects may not be needed, and the workforce will be reduced by 20 percent, Such a significant change will impact how components are categorized in your portfolio leading to:
Options
- AThe need for a re-constituted oversight group
- BPortfolio rebalancing
- CA requirement to update the portfolio management plan
- DA new portfolio prioritization model
How the community answered
(35 responses)- A11% (4)
- B77% (27)
- C6% (2)
- D6% (2)
Why each option
When a major strategic event such as a merger significantly alters the business environment, the portfolio must be rebalanced to realign its components with the revised organizational strategy.
Reconstituting the oversight group is not necessarily triggered by a merger; the existing governance structure can typically manage the portfolio adjustments that follow.
Portfolio rebalancing is the process of adjusting the mix, categorization, and prioritization of portfolio components in response to significant strategic or environmental shifts - in this case, the merger renders some projects redundant, reduces the workforce by 20 percent, and requires a new alignment of components to revised strategic objectives.
While the portfolio management plan may require updates as a downstream activity, the immediate primary response to a strategic shift of this magnitude is rebalancing the portfolio itself.
Developing a new prioritization model is a more significant structural overhaul and is not automatically warranted by a merger-driven rebalancing.
Concept tested: Portfolio rebalancing in response to strategic change
Source: https://www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management
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