It’s important to avoid the cost of being uncompetitive.
A firm will fail to create a sustained competitive advantage when the following are true:
It cannot differentiate its products from those of competitors. There is no variation in customers’ needs or wants that it can satisfy better than competitors. The firm lacks sufficient resources, such as capital and trained personnel, to be a low cost producer. Don’t let that happen to you!
When the above conditions are present, it’s time for a change. It should stop doing what doesn’t seem different enough from others in its industry to start innovating again and focusing on customers’ needs or wants.
The firm either has resources already, such as capital or trained personnel, and can use them to be more competitive by lowering production costs; or there is an opportunity available (e.g., through mergers) to acquire new resources that would make it low cost producer of quality goods/services. If not then maybe it just needs to find ways to lower its own operational costs instead.