1) Strategic drift is the gradual deterioration of competitive action that results when an organization fails to acknowledge and respond to changes in the business environment. 2) There are four phases of strategic drift: incremental change, strategic drift, flux, and transformational change or death. Strategic drift occurs in phase 2 when small incremental changes fail to keep up with rapid environmental changes. 3) Phase 3, flux, occurs when there is a huge gap between strategy and environmental requirements. Management tries to minimize this gap but efforts are indecisive, leading to declining performance, internal conflicts, and customer alienation.