This research considers how a firm’s competitive advantages deteriorate and core reversed, not at the level of elemental technology and product architecture, but at the level of business system. The different level of analysis could lead to different solutions. A firm’s challenges in adapting to changes in external environments are considered at two levels; “perception” and “action”. This research presents hypotheses of factors for deterioration/reversal of a firm’s competitive advantages, and examines the hypotheses by conducting a case study.