First of all it is necessary to find a definition of diversification in order to analyse the business strategies of Nokia. There are different grwoth strategies outlined in table 1, the Ansoff Matrix. Diversification is a growth strategy of entering product markets different from those in which the firm is currently engaged. A diversification strategy can be implemented by either acquisition, merger or a new business venture. This strategy can be categorized as a related or an unrelated diversification. A related diversification characterizes that the new business areas do have meaningful commonalities with the core business of the company. Thus, it could provide the potential to generate economies of scale or synergies based on an exchange of assets or competencies, such as exploiting brand name, Marketing Skills or Research and Develop- ment (R&D) capabilities. 2 On the other hand unrelated diversification takes place when the commonality in markets, distribution channels, production technology or R&D areas differ. 3 Companies pursuing a strategy of unrelated diversification have no intention of leveraging or transferring competencies between business sources. It should decrease the risk by operating in multiple product markets, for obtaining a high Return On Investment (ROI) or for allocat- ing Cash Flow.
4 The reasons for implementing a diversification strategy can be the direct response to market decline of a company, the spreading of risks, because of an increased competitive environ- 1 Cf.Merriden (2001), p.viiii; Hage (2011)