Word bank: competitors · intangibles · long · products

1. Moat = what stops from taking your profits.
2. Brand, network effects, switching costs, cost, .
3. Better can lose to stronger moats.
4. Ask how the moat will last.

1. A video game becomes more fun as more of your friends play it, because there are more people to play with.

   1. Which advantage is this?

   • A. Cost advantage
   • B. Network effects
   • C. Patent
   • D. Low prices

2. A school uses one company's grading software. Switching would mean retraining every teacher and moving years of records.

   2. What protects the software company?

   • A. Switching costs
   • B. A cheaper product
   • C. Advertising
   • D. Nothing

3. 3. Once a company has a competitive advantage, it keeps it forever.

   True/False

1. 1. Match each moat to an example: network effects, switching costs, brand, cost advantage, intangibles. Examples: a patented medicine; a messaging app all your friends use; a store that buys in bulk and charges less; your school's grading software with years of records; a famous logo people pay extra for.

2. 2. Explain how a better product can still lose to an existing one.

1. 1. What's the strongest moat of a company you use every day?

2. 2. Can you think of a company whose moat disappeared? What happened?