--- title: "Strategic information system and benefits" subject: "Information System" chapter: 1 key: "semester_8/information_system:strategic-is-benefits" source: https://www.bctengineer.com/q/semester_8/information_system/strategic-is-benefits site: BCT Engineering --- # Strategic information system and benefits Information System · Chapter 1: Information Systems - Asked in: 2072 Magh, 6 marks; 2071 Bhadra, 5 marks (asked 2 times) - Video: [STRATEGIC INFORMATION SYSTEMS](https://www.youtube.com/watch?v=yDUvX36B2z8) — MANIFESTED PUBLISHERS - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_8/information_system/strategic-is-benefits - Whole chapter: https://www.bctengineer.com/md/semester_8/information_system/chapter-1 ## Question What do you mean by a strategic information system? What are different benefits of using strategic information systems? ## Short answer A strategic information system helps an organization achieve competitive advantage through strategies like cost leadership or differentiation. Benefits include lower operating costs, product differentiation, customer lock-in, higher switching costs, barriers to entry, better decisions, new business opportunities, and faster response. ## Answer A **Strategic Information System (SIS)** is an information system that helps an organization gain or sustain a competitive advantage, reduce a competitive weakness, or change its goals, products, services or business processes. It is not defined by technology but by its impact on business strategy. Examples: airline reservation systems, Amazon's recommendation and one-click ordering, FedEx package tracking, ATM networks of banks. #### Strategies an SIS supports (based on Porter's competitive forces model) - Low-cost leadership - Product differentiation - Focus on a niche market - Strengthening customer and supplier relationships (lock-in, switching cost) #### Benefits of strategic information systems 1. **Competitive advantage** - unique services or lower costs that rivals cannot copy quickly. 2. **Lower operating cost** - automation of processes and efficient supply chains. 3. **Product and service differentiation** - customization, personalization, value-added services. 4. **Customer lock-in** - high switching costs bind customers (e.g. online banking, loyalty data). 5. **Better supplier relations** - integrated ordering and inventory (JIT) with partners. 6. **Barriers to entry** - heavy technology investment makes it hard for new rivals to enter. 7. **Better decisions** - accurate, timely information for top management planning. 8. **New business opportunities** - new products, new markets and new business models (e-commerce). 9. **Improved quality and speed** - faster response to market change. A strategic advantage may be temporary because competitors imitate it, so the SIS must be continuously improved. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. What makes an information system 'strategic'? A. The use of the newest technology B. Its impact on business strategy, such as gaining competitive advantage C. Its size and cost D. That it is used only by top management Answer: B. An SIS is defined by its effect on strategy, not by the technology used. (Key point: Defining SIS) 2. How does an SIS create customer lock-in? A. By lowering prices to zero B. By hiding information from customers C. High switching costs bind customers, for example through online banking D. By removing the need for suppliers Answer: C. Customers who depend on a system face costs to switch to a competitor. (Key point: Lock-in) 3. Why does an SIS act as a barrier to entry? A. Heavy technology investment makes it hard for new rivals to enter B. Laws forbid new rivals C. It lets the firm ignore customers D. It makes products identical to rivals Answer: A. The investment and capability needed discourage new competitors. (Key point: Barriers to entry) 4. Why must an SIS be continuously improved? A. The hardware wears out each year B. Customers dislike stable systems C. Porter's forces change by law D. Competitors imitate it, so the advantage may be temporary Answer: D. Strategic advantage fades when rivals copy it. (Key point: Temporary advantage) ## Related in Information System - [Information audit and its benefits](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Ainformation-audit-benefits) — Information System, chapter 2 - [IS planning need; strategic IS](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Ais-planning-strategic-is) — Information System, chapter 5 - [Enterprise management system and benefits](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Aems-with-example-benefits) — Information System, chapter 3 - [Geographic Information System](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Agis-characteristics-uses) — Information System, chapter 1 - [Short note: HR information system](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Ashort-note-hris) — Information System, chapter 6 - [ERP value, benefits and failures](https://www.bctengineer.com/question.md?key=semester_8%2Finformation_system%3Aerp-business-value-failures) — Information System, chapter 3 ## Related in other subjects - [Types of information systems; decision support](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Amis-types-decision-making) — Organization and Management, chapter 9 - [Short note: Organizing information systems](https://www.bctengineer.com/question.md?key=semester_7%2Forganization_and_management%3Anote-organizing-information-systems) — Organization and Management, chapter 9 - [Project management information system](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Apmis) — ICT Project Management, chapter 7 - [Restaurant information system requirements](https://www.bctengineer.com/question.md?key=semester_5%2Fsoftware_engineering%3Arestaurant-requirements) — Software Engineering, chapter 1