Team Case Analysis - Ctrip

Team Case Analysis:

Ctrip

Group 8

Kaitlin Samman, Eric Saliba, Erika Savitt, Joshua Pearsaul, Sebastian Silva

I. Background 

History:

Ctrip was founded in Shanghai in 1999. At the time Chinese travel agencies were fragmented and subpar, with the majority of them being state-owned enterprises. The market had no aggregators for either hotels or airlines, no significant online presence, all airlines were state-owned and the concept of a e-ticket had yet to be introduced. It was during this time that the Chinese market began to experience rapid growth of private enterprises which increased the demand for travel service at a time when Chinese travelers were only able to book flights departing from their city with a local travel agent in an inefficient manner. Ctrip’s founding team, consisting of Qi Ji, Neil Shen, Min Fan, and James Liang recognized the opportunity in China to become early market leaders in the online travel agency business, which resulted in Ctrip becoming the largest online travel agency in China.

Mission/Vision:

The company’s business philosophy focuses on five core values: C - Customer: Customer needs guide Ctrip, T - Teamwork: Ctrip creates a seamless collaborative system between customers and partners, R - Respect: Ctrip treats customers with the utmost respect, I - Integrity: Ctrip puts integrity first in its cooperation with its partners, and P - Partner: Ctrip pursues win-win cooperation with all its partners.

Goals & Objectives:

Ctrip’s goal is to create long-term shareholder value by enhancing its position as a leading comprehensive travel service provider in China.

Strategies:

Ctrip intends to leverage the Ctrip brand to attract new travel suppliers, negotiate more favorable contractual terms with its existing suppliers, expand its hotel supplier network and room inventory, and expand air-ticketing and other travel product offerings. The company also intends to pursue selective strategic investments and expand further into the global market, including Hong Kong, Macau and Taiwan. Their strategy involves a scientific approach to managing service, with a large emphasis on data analytics and six sigma methodology, meant to improve efficiency and customer satisfaction.

II. Situation Analysis

Internal Environment

Strengths

CTrip has successfully acquired many complementary businesses to expand its portfolio and reach within the travel industry, making it the largest competitor in China, as seen in figure 1. The company is led by a diverse group of individuals who combine their expertise to successfully lead the company. The four individuals consist of Gi Ji who is an entrepreneur, Min Fan: a senior executive in the travel industry ,James Liang: the head of Oracle China, and Neil Shen: an investment banker (Dai, 2013).  Fin and Liang instituted a culture highly “customer-centric, nonhierarchical and scientifically managed (Dai, 2013).”

The leaders encourage open discussion and equality between employees. Debates are encouraged which is  unlike any traditional Chinese company and allows for the generation of new ideas from all levels of employees at the company. They also started a corporate university and MBA program for promising employees. New call center employees receive a full month of training and a mentor to guide them through their new job. CTrips focus on its employees led to a highly motivated and passionate team which differentiates them from typical Chinese non service oriented companies. (Dai, 2013)

Another strength of CTrip is their focus on scientific management to create better customer service and save money. CTrip has been able to create metrics such as lifetime value of a customer, Quality Assurance with Grade A, B, C and D defects which have boosted the effectiveness of their call center, a huge focus of their business. Experiments were also used for finding ways to train new staff more efficiently and finding the perfect script for incoming phone calls. They utilized Six Sigma which according to their website is a “methodology used to improve business processes by utilizing statistical analysis rather than guesswork… to achieve hard and soft money savings, while increasing customer satisfaction (6Sigma, 2018).” The use of Six Sigma reduced call times from 210 seconds to an average of 180. Scientific management is also used to analyze each task within a process and break them down into steps, control points and chances for defects which allowed them to find the most efficient and money saving ways to do tasks, while providing the top possible customer service creating a competitive advantage over other firms in the Chinese market. (Dai, 2013)

The adoption of technology has been a major strength for making CTrip a leader in its industry. They were the first to adopt PDA’s and later Tablet PCs so sales staff at airports could easily register new members and allowed staff to get tips on the spot in regards to what to say to the customer. It was also one of the first in China to launch the air ticketing business and hotel reservations over the internet, where-as competitors would need to solicit customers over the phone. These innovations created large name recognition for CTrip.  Lastly, even though volume increased by 45% year over year, automation of systems has allowed CTrip to cut costs and avoid mass hiring (Flannery, 2017).

Weaknesses

        Because CTrip is solely focused in the travel industry they rely solely on discretionary spending. Their reliance on consumer spending leaves the company very vulnerable to any drop in the growth of Chinese consumer spending (Maltbie, 2016). Also, CTrip has taken on a lot of debt to cover acquisitions. Liabilities rose from CNY 12714.7 million at the end of FY2014 to FY2015 at CNY 33,666 million (Sharma, 2017). This means they have a much lower debt ratio compared to other Chinese competitors.

                The other weakness of CTrip is they have very low name recognition outside of China. TripAdvisor has successfully found a way to go global and become a widely used brand in over 60 countries while CTrip still mostly caters to only Chinese citizens because it is not known widely outside of China even though efforts such as creating an English website have been made. This means their marketing needs to improve if they want to become more widely recognized.

External Environment

Threats