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Lesson plan · Understanding Businesses · Lesson 8

Competitive Advantages

Brand, scale, switching costs, and network effects.

  • 45 minutes
  • Grades 9–12
  • Intermediate
  • Activity: small groups
Present slidesWorksheet + keyStudent lesson

Objectives

Students will be able to:

  • Define a competitive advantage (moat)
  • Identify five common moats
  • Evaluate how long a moat is likely to last

Materials

  • Slide deck and a projector
  • Worksheet (one per student)
  • Exit ticket slips (bottom of the worksheet)

45-minute agenda

  1. 0–5 min

    Warm-up

    Post: “Why don't people switch to a new social media app, even if it's slightly better?”

    Teacher note: Their friends aren't there — a network effect. Switching also means rebuilding followers and photos (switching costs).

  2. 5–17 min

    Direct instruction

    Present the lesson slides. Make sure students leave with these points:

    • Moat = what stops competitors from taking your profits.
    • Brand, network effects, switching costs, cost, intangibles.
    • Better products can lose to stronger moats.
    • Ask how long the moat will last.

    Use the “See it” slide (Five common moats) to make the idea visual.

  3. 17–22 min

    Worked example

    Walk through “Why a better app can still lose” on the slides. Pause before the result and ask students to predict it.

  4. 22–32 min

    Build a Moat

    Format: small groups · 10 minutes

    1. Each group gets a business: a neighborhood pizza shop, a phone maker, a video platform, a bank, or a sneaker brand.
    2. Groups name the business's strongest moat: brand, network effects, switching costs, cost advantage, or intangibles (like patents or licenses).
    3. Groups plan how a new competitor could attack it and how the business could defend.
    4. Groups rate how long the moat will last: 1 year, 5 years, or 20+ years.

    What to look for: Answers vary. Look for specific reasoning: the video platform's network effects, the bank's switching costs, the sneaker brand's brand power, and so on.

  5. 32–37 min

    Check for understanding

    Use the question slides — or run them as a Four Corners game. Answers:

    1. Which advantage is this? — B. Network effects
    2. What protects the software company? — A. Switching costs
    3. Once a company has a competitive advantage, it keeps it forever. — False
  6. 37–42 min

    Discussion

    • What's the strongest moat of a company you use every day?
    • Can you think of a company whose moat disappeared? What happened?
  7. 42–45 min

    Exit ticket

    Prompt: What is a moat, in business?

    Answer: Something that protects a company's profits from competitors.

Differentiation

Common misconception

“The best product always wins.” Moats often matter more than small quality differences.

Support

Give each group a moat card deck with a definition and an example on each card.

Extension

Pick a company whose moat weakened. What happened, and how could it have been predicted?

Homework or make-up work

Students can complete the full interactive lesson — including its knowledge check — at learnwithflc.org/courses/understanding-businesses/competitive-advantages. No account needed; progress saves on their device.