Strategic drift, the case of Nokia Corporation

Abstract

Organizations that do not align with the external environment and not respond rapidly to changes face the risk to undergo strategic drift. Strategic drift can be described as the phenomenon where the strategy of an organization gradually fails to keep in line with the environment in which the organization operates. As a result of the above, the organization fails to keep its strategic position, which leads to an organization crisis and frequently is followed by a transformation or a bankruptcy. The aim of this dissertation is to study the case of Nokia Corporation and support the hypothesis that Nokia had undergone a strategic drift. Nokia, after a successful course in the mobile phone market from the late 90’s to late 00’s, ended to the sale of its mobile phone division to Microsoft in 2014. To examine whether the hypothesis is true or not, financial data and market share figures were collected and analysed from various sources. Additionally, SWOT and Porter’s five forces analysis were conducted. As per the results of the study, Nokia Corporation, from 2009 onwards had indeed passed through all the 4 stages of strategic drift, as a consequence of wrong strategic decisions and internal weaknesses. Inability to detect the changes that occurred in the external environment and adapt accordingly was the main reason, where factors such as the inability to foresee the future of the market, the bad management, lack of expertise and underestimation of the competition gave the final hit.