Ctrip: Scientifically Managing Travel Services

Abstract

Ctrip is a $437 million Chinese on-line travel services company with a scientific, data driven approach to management. The case explores Ctrip's founding and early growth, its expansion into multiple market segments including hotel reservations, air ticketing, leisure travel, and corporate travel, and the sources of its competitive advantage. The firm's culture, organization and call center operations are described in detail, as are its decision-making and business processes. At the end of the case, executives are considering whether Ctrip should actively pursue either the budget or luxury travel segments, which would mean shifting attention from the company's core customer base of Frequent Independent Travelers.

Learning Objective: The case has three main purposes. First, it helps students understand some of the distinctive challenges of the Chinese marketplace and how those challenges can be overcome. Ctrip was founded in 1999 at a time when the Chinese travel industry was fragmented; the key players were either state-owned enterprises or small, local travel agencies. Ctrip grew quickly by consolidating the business, broadening geographical coverage, and offering superior service. Second, the case includes a detailed description of the company's scientific approach to management, which help students better understand its elements and key components: data-driven decision making, experimentation, process analysis, and a non-hierarchical, learning oriented culture. Third, the case presents students with a dilemma faced by many growing companies - deciding if and when to expand into new market segments that are likely to require different capabilities because they appeal to a different customer base (in this case, either budget or luxury travelers rather than Ctrip's traditional Frequent Independent Travelers).