Assessment Criteria (Tutors will highlight the appropriate comme.docx

Assessment Criteria (Tutors will highlight the appropriate
comments under each marking criteria)
Weighting
25%
25%
40%
10%
Grade boundaries
DEMONSTRATE RESEARCH INTO AND UNDERSTANDING
OF APPROPRIATE LITERATURE
USE OF EVIDENCE FROM THE CASE TO DEMONSTRATE
UNDERSTANDING OF THE ORGANISATION
INTEGRATION OF UNDERSTANDING OF
ORGANISATION AND APPROPRIATE LITERATURE
PRESENTATION AND WRITING
80%+
Excellent understanding of the relevant theory as well as its
limitations; and contrasting theory.
Excellent use of evidence from the case to demonstrate
understanding of the organisation at a sufficiently deep level to
enable analysis and evaluation. Balances understanding of
organisation at a broad (holistic) level with enough detail to
support points made in discussion.
Excellent integration of appropriate theory, with understanding
of the organisation. Development of a strong coherent argument.
Good use of contrasting theory to provide alternative view of
case study. Different views are then synthesised to provide
strong coherent conclusion.
Excellent narrative. Structure is very well organised with a
clear line of thought that is easy to follow and has an obvious

conclusion. Citations match references and are appropriately
used.
70-79%
Very good understanding of the relevant theory and its
limitations. Introduces contrasting theory.
Very good use of evidence from the case to demonstrate
understanding of the organisation at a sufficiently deep level to
enable analysis and evaluation.
Very good integration of appropriate theory, with understanding
of the organisation. Development of a strong coherent argument.
The insights about the case study firm that result from
application of the theory to the case study are identified,
discussed and conclusions drawn. Use of contrasting theory to
provide alternative view of case study.
Very strong narrative. Structure is well organised with a clear
line of thought that is easy to follow and has an obvious
conclusion. Citations match references and are appropriately
used.
60-69%
Good understanding of the relevant theory. Some recognition of
its limitations.
Good use of evidence from the case to demonstrate
understanding of the organisation at a sufficient level to enable
analysis in depth.
Good integration of appropriate theory with understanding of
the organisation. Development of a coherent argument.
Addresses the purpose of the assignment. Demonstrates good
judgement and support for findings.
Strong narrative. Clear, orthodox structure. References mostly
accurately cited and appropriately recorded.
50-59%
Reasonable understanding of the relevant theory.

Reasonable use of evidence from the case to demonstrate
understanding of the organisation.
Reasonable linkage of appropriate theory with understanding of
the organisation. Partial or incomplete argument. Generally
addresses the purpose of the assignment. Reasonable judgement.
Sometimes lapses into description rather than analysis.
Reasonable narrative. Some structure to the answer, including a
conclusion. References adequately recorded but may contain
occasional minor errors (e.g. no page references for quotes).
40-49%
Basic understanding of the relevant theory; i.e. understanding is
partial or incomplete.
Basic use of evidence from the case to demonstrate
Little linkage between appropriate theory and understanding of
the organisation. Little sense of argument – not developed. Does
address the purpose of the assignment in parts, but often strays
off the point. Poor judgment and some unsupported assertions.
Tends to be descriptive.
Narrative difficult to follow in places. Poor structure and a
weak conclusion. Occasional inappropriate expressions and poor
sentence construction. Narrative difficult to follow. Referencing
may contain errors.
30-39%
While the essay is located in the appropriate area of theory
suggesting some knowledge, it does not demonstrate
understanding.
Demonstrates little use of evidence from the case or little or no

No linkage between appropriate theory and understanding of the
organisation. Fails in large part to address the task set.
Unsupported assertions and value judgments. Heavily
descriptive.
Weak narrative; difficult to follow. Too frequently contains
inappropriate expressions and poor sentence construction.
Referencing weak and containing errors.
Below 30%
The essay is not located in the appropriate area of theory.
The essay does not include relevant evidence from the case
study.
Absence of either appropriate theory or evidence from the case
(or both). Fails to address the task set.
Little or no obvious narrative. Minimal structure, unsupported
assertions and value judgements, contains inappropriate
expressions and poor sentence construction, minimal or no
referencing.
What went well in this assignment?
The essay is reasonably well written
What went less well in this assignment?
However, its does not use the theory required for the assignment
and therefore does not demonstrate the required understanding.
In analysis try to start with the theory – in this assignment the
use of Porter’s strategy as choice theory was stated (so value
proposition/value chain/activity system and order of fit – see
study units 1 and 2). Then – as we did in the seminar when you
will have looked at Southwest Airlines - seek to determine how
the case study fits these elements – so what was C-Trips value
proposition (i.e. what choices did they make on which
customers, which needs and what price), map their value chain
and then look at the order of fit. This would allow you to
consider if C-Trip measures up to what Porter suggests gives a
firm sustainable competitive advantage (or not).

9-312-092
R E V : M A R C H 1 2 , 2 0 1 3
_____________________________________________________
_____________________________________________________
______
Professor David A. Garvin and HBS-APRC Senior Researcher
Nancy Hua Dai prepared this case. HBS cases are developed
solely as the basis for
class discussion. Cases are not intended to serve as
endorsements, sources of primary data, or illustrations of
effective or ineffective
management.
Copyright © 2012, 2013 President and Fellows of
HarvardCollege. To order copies or request permission to
reproduce materials, call 1-800-545-
7685, write Harvard Business School Publishing, Boston,
MA02163, or go to www.hbsp.harvard.edu/educators. This
publication may not be
digitized, photocopied, or otherwise reproduced, posted, or
transmitted, without the permission of Harvard Business School.
D A V I D A . G A R V I N

N A N C Y H U A D A I
Ctrip: Scientifically Managing Travel Services
When you are in a safe place, you have to think about what to
do when you are in danger.
—Chinese proverb
On July 28, 2011, Jane Sun, CFO of Ctrip.com International
Ltd. (Ctrip), was preparing to meet
with Min Fan, cofounder and CEO, so that he, together with
other members of the senior executive
team, could decide whether Ctrip should broaden its offerings
and focus more on budget and luxury
travelers. Ctrip was China’s leading travel consolidator, with a
3% market share in the overall travel
market and a 51.6% market share in the online travel agency
(OTA) segment (see Exhibit 1 for market
share data). It provided hotel reservations, air ticketing,
packaged tours, and corporate travel
management, primarily to frequent independent travelers (FITs):
business travelers at the medium-
and high-end of the market (see Exhibit 2 for an organization
chart). Ctrip had 2010 revenues of 2.9
billion renminbi (RMB) (US $437 million) and net income of
RMB 1.1 billion (US $159 million); in 2003,
it was listed on NASDAQ (see Exhibits 3 and 4 for financial
information and a breakdown by
product lines).1 The company conducted 60% of its transactions
through a call center and 40% online;
both were based on a scientific approach to managing service.
The executive team would meet in the
afternoon to discuss several questions: Should Ctrip stick to

FITs or begin to diversify its customer
base? Did online competitors targeting budget travelers pose a
serious threat? And would the
company’s call center model continue to provide competitive
advantage for the foreseeable future, or
was it likely to be displaced by online systems?
Industry Background
When Ctrip was established in Shanghai in 1999, Fan noted,
“Chinese travel agencies were small,
weak, fragmented, and poor at service.” Firms were either state-
owned enterprises (SOEs) with
autonomous, loosely controlled local operations or small,
independent players. Agencies focused on
group tours and attracted customers with low prices. However,
tours often included red-eye flights,
low-quality meals, and mandatory shopping trips so that tour
guides could earn commissions. At the
time, there were no aggregators for either hotels or airlines. Fan
recalled, “Less than 5% of the hotels
belonged to hotel groups. Even when there were groups, they
operated independently. And before
the Internet boom, the only way for hotels to promote
themselves nationally was to advertise in
newspapers, but that was costly.” Most travelers therefore did
not know which hotels were available
in which cities. Airlines were all state-owned, and e-tickets did
not yet exist. Moreover, travelers
Distributed by The Case Centre North America Rest of the
world
www.thecasecentre.org t +1 781 239 5884 t +44 (0)1234 750903
All rights reserved e [email protected] e [email protected]
centre

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312-092 Ctrip: Scientifically Managing Travel Services
2
could only book flights departing from their city with a local
travel agent. Maria Sun, vice president
of service, explained:
Travel agencies received information on government policy,
price, and commission by fax.
Then an agent searched the TravelSky terminal [TravelSky was
the online platform for air
ticket distribution and transaction processing in China,
developed and operated by an SOE] for
ticket availability and calculated the price for the customer.
Travel agencies only had access to
local flight information because they could not keep large
volumes of information about other
cities on hand. Airlines also had different policies for different
cities, so the same ticket from
Shanghai to Shenyang might cost RMB 500 [US $60] if it was
issued in Shanghai but RMB 1,000
[US $121] if it was issued in Beijing.

Demand for travel service, however, was rising due to the rapid
growth of Chinese private
enterprises. Employees at these companies had to make travel
arrangements for themselves.
Government policy was also loosening. For these reasons, Fan
observed, Ctrip’s success as a travel
aggregator and consolidator was partly a matter of luck: “It was
the right time for Ctrip. In 1995,
government policy was very rigid, the need was not so strong,
and few people cared about service
quality. If we had started five years earlier, we probably would
have died.”
Developing the Business
Inception of Ctrip
Ctrip’s founding team consisted of four individuals with
complementary talents.2 Qi Ji was an
experienced entrepreneur, familiar with start-ups. Neil Shen had
over eight years of experience in
investment banking. Min Fan had worked as a senior executive
in the travel industry for over a
decade. And James Liang, at the time the head of Oracle
China’s ERP division, knew how to develop
systems and scale up businesses. Liang came up with the idea of
launching an Internet travel
business in 1999, and Ji became the company’s first full-time
CEO. Liang became co-CEO in early
2000 and CEO in mid-2000. Min Fan became CEO in 2006.
They named the firm Ctrip (“China trip”);
the Chinese name 携程 (pronounced xie cheng) meant “going
together to share the journey.” Following
U.S. companies like Travelocity, Ctrip first developed a travel
website, Ctrip.com, which provided
information but did not allow for any transactions. Due to its

superior content, extensive online
community, and user-friendly design, Ctrip.com soon was
ranked among the most popular of over
300 Chinese travel websites. At that time, page views were the
only focus for investors. Ji recalled,
“The first question investors asked me was how many visits we
had. No one asked how much
revenues and profits we made.” In October 1999, Ctrip received
RMB 4.1 million (US $500,000) in the
first round of financing.
Hotel Reservations
That same month, Ctrip entered the hotel reservations business.
Ji explained, “No license was
needed. The Chinese government regulated air ticketing and
packaged tours because it worried
about fraud, but it didn’t regulate hotel reservations.” Existing
players negotiated a price with hotels,
solicited customers over the telephone, and received their
commissions after customers stayed at the
hotel. Ctrip used the Internet to overcome the constraints of
these small, off-line competitors. It was
able to provide more comprehensive, transparent, and up-to-date
information about a much broader
base of hotel suppliers, and also build a database with
customers’ historical orders and consumption
habits for targeted promotions. Liang noted, “We realized that if
we could use technology, there was
not much competition. Besides, the margin for hotel
reservations was much higher than for air
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Ctrip: Scientifically Managing Travel Services 312-092
3
ticketing. All we needed to do was develop a hotel inventory
nationally.”Ctrip decided to target FITs
and provide them with “convenience at a reasonable price.”
Ctrip launched an online platform and an 800-number, creating
a 24-hour hotline to take orders
and maintain relationships with hotel suppliers. It set up the
first call center system in 2000. To
accelerate growth, Ctrip acquired a hotel reservation company,
largely for the know-how of its
management team. Because credit cards were not popular in
China before 2000, a prepaid model was
dominant, with hotel reservation companies paying deposits to
hotels beforehand.3 Fan, who was
then leading Ctrip’s hotel reservations business, crafted a new
model and began to enter into
allotment agreements with hotels in 2000.
Fan’s team began by convincing hotels to accept the payment-
upon-check-in model, and then
worked to convince more and more hotels with whom the firm
had good relations to put aside an
allotment of rooms especially for Ctrip. This would ensure
immediate confirmation for customers

while booking on- and off-line. To facilitate the hotel booking
process, Fan and his team developed
the EBooking network, which electronically connected bookable
hotels to Ctrip via the Internet and
enabled them to exchange booking information. This EBooking
system now acts as the company’s
hotel global distribution system (GDS) in China. Within three
months, the team had convinced 800
hotels to cooperate with Ctrip. At these hotels, Ctrip’s
customers could reserve and confirm rooms
but would only pay upon check-in, without any advance deposit.
Ctrip also avoided advance
payments. Moreover, it set the commission rate at 15% so that
hotels would not be motivated to set
up their own online channels.
In March 2000, Ctrip received RMB 37 million (US $4.5
million) in its second round of financing.
In November 2000, after acquiring another hotel reservation
company, Ctrip secured an additional
RMB 99 million (US $12 million) in its third round of
financing, which was critical to the company’s
survival during the Internet downturn. By the end of 2010, Ctrip
had about 17,000 hotel suppliers in
China, including 12,500 hotels with allotment agreements, and
had stakes in two of China’s leading
budget hotel chains, Home Inns and Hanting. It also had about
20,000 hotel suppliers abroad.
In the first 10 years, Ctrip relied on two primary channels for
acquiring customers: distributing
free membership cards and brochures at airports, railway
stations, and office buildings; and building
alliances with all major airlines and banks so that their
customers could become Ctrip members and
enjoy discounts and bonus points. Because it was relatively easy

for competitors to imitate the first
approach, Ctrip made several changes. In 2006, the company
equipped sales staff with handheld
personal digital assistants (PDAs) and developed an IT system
to help them work more effectively.
Sales staff could register members directly by their mobile
phone numbers on their PDAs. After
getting the mobile phone number, the system would access the
customer’s record, identify the
customer segments to which he or she belonged, and provide
tips on how the sales staff should focus
the conversation. By tracking the number of customers that
sales staff talked with every day as well
as the length of the conversations, this system also helped Ctrip
manage over 1,000 sales staff
dispersed in over 50 cities more effectively. In 2011, Ctrip
upgraded the PDAs to tablet PCs so that
sales staff could show photos and videos of their products to
customers, further improving the
quality of their interaction with customers. Many competitors
were unable to keep pace with Ctrip’s
technology upgrades and shifted to online channels for customer
acquisition.
Air Ticketing
In 2000, Ctrip first experimented with air ticketing, but because
it was difficult to work with
diverse travel agencies in different cities, the effort remained
small. In 2002, Ctrip officially launched
the air ticketing business, acquiring Beijing Coast Air Service
Company to add scale and coverage as
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4
well as management know-how. It created a nationwide platform
and developed relationships with
travel agencies in over 60 cities. Fan noted,
It was a very important turning point. If you book flights from
Ctrip and you are in
Shanghai, you are not only able to book return tickets from
Shanghai to another city, say,
Beijing, but also book a flight that departs from a third city, for
example, from Hangzhou to
Guangzhou. Before Ctrip partnered with air ticketing companies
in different cities and
developed the online platform for air ticketing, no one had the
technology to issue a ticket for a
flight that departed from a third city. Now, this practice has
been widely adopted.
Jane Sun added, “We can utilize different policies on our
platform to offer the best price.”
Moreover, while it took considerable training and skills for staff
at traditional travel agencies to
interpret the complex codes on the TravelSky terminal, translate
them into language customers could

understand, and then calculate the ticket price based on discount
policies that were listed on faxes,
Ctrip’s IT system modularized all information so that even
young, inexperienced call center staff
could immediately quote an accurate price.
The growing use of credit cards and the introduction of e-tickets
in 2006 accelerated Ctrip’s
growth while also reducing fraud and errors. To improve quality
and gain competitive advantage,
Ctrip established its own ticket delivery teams in major cities.
These teams, equipped with motor
scooters, ensured two-hour delivery and payment collection
anywhere in the city: at home, in the
office, even while visiting a park. Direct delivery soon
accounted for over 50% of air ticket volume.
Customers who purchased e-tickets using credit cards accounted
for another 30%–40% of the
business, requiring Ctrip to rely on partners for delivery and
payment collection for only 10%–20% of
its business. In 2004, Ctrip launched an online platform for
international flight reservations, the first
in China. In recent years, airlines reduced their commission
rates to agents; some also built their own
direct sales channels online.4
Packaged Tours
Ctrip entered the vacation business in 2004 with the acquisition
of Shanghai Cui Ming
International Travel Agency. Fan explained, “More than 70% of
our customers are business travelers.
They have leisure travel needs as well. When we gained over
50% share of the online business travel
market, it was the right time to enter leisure travel.” Ctrip
offered do-it-yourself (DIY) tours, semi-

DIY tours, and group tours, with a focus on the former.
Compared with traditional travel agencies, Ctrip emphasized
service and transparency, disclosing
full information about each itinerary on its website. It was also
more efficient. Dongjie Guo, vice
president of the vacation business, explained, “Traditional
travel agencies only developed e-
commerce for use as a marketing tool or distribution channel.
But Ctrip leveraged advanced IT right
from the beginning. Our internal operations and management
are based on processes, so we enjoy
higher productivity, lower marketing costs, and growing scale
advantages.” Guo also highlighted
Ctrip’s service orientation, as well as its rigorous vendor-
selection process. He noted, “When it comes
to choosing third-party vendors for ground tours, we don’t
necessarily pick the largest vendor,
because scale is not the only criterion we use for choosing
vendors. We pick firms that share our
service mentality. Then we protect their interests. For example,
we expect their prices to be at the
market average and won’t push them to compromise service
quality in order to give us the lowest
rate.” Ctrip provided vendors with training, developed the V-
booking system5 to help them manage
resources more efficiently, and provided financial support when
they needed to invest in order to
improve customers’ experiences.
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5
Corporate Travel Management
In China, travel expenses were the second-largest controllable
corporate expense after wages.
Yuxiang Zhuang, vice president of the corporate travel
business, estimated that travel agencies and
ticketing agencies processed 90% of the RMB 100 billion (US
$15 billion) in current corporate travel
transactions, while travel management companies (TMCs)
handled 10%. Ctrip first entered this
market in 2001, but exited shortly thereafter. Sales grew slowly
because companies perceived Ctrip to
be serving primarily individual customers. Also, Ctrip had to
pay customers’ travel expenses up front,
but found collecting payments to be difficult, resulting in
financial losses.
Immediately after Fan became CEO in early 2006, Ctrip decided
to re-launch the corporate travel
business. The company’s scale advantages in hotel reservations
and air ticketing and its local market
insight and focus allowed it to quickly catch up to the market
leaders: the joint ventures of
multinationals such as American Express and Carlson Wagonlit
Travel, which leveraged their global
service capability. Ctrip’s cost control capability also gave it an

advantage with corporate clients. Jane
Sun noted, “If a customer needs to fly from Beijing to Shanghai,
we give him three choices. If he does
not select the lowest-priced flight, our system will
automatically send an e-mail to his supervisor,
who needs to specially approve the itinerary. This enables a
company to cut its travel cost from 10%–
30%, depending on its level of discipline.”
The call center faced challenges in learning how best to serve
corporate customers. Maria Sun
explained, “For other products, customers adapt to our
processes. Each corporate customer, however,
has different travel policies, and a number of them demand
customization. But if we customize for
everyone, we will lose efficiency.” Ctrip therefore decided,
after two years of experiments, to segment
corporate customers into three broad groups based on their
transaction value, each with a different
service model. Serving top executives and purchasing managers
was also challenging because they
might cease doing business with Ctrip if they were not
personally satisfied with one travel experience.
Sun noted, “This is related to our service positioning. We serve
medium- to high-end customers, but
the bosses of large companies are super high-end customers.
This is not an issue that can be solved by
processes, and we need to rely more on our staff’s creativity
and efforts.”
Ctrip targeted leading multinational companies (MNCs) and
Chinese companies. Zhuang
observed:
Seventy percent of our customers are MNCs, and 30% are large
Chinese companies. MNCs

have been using travel management companies, so we don’t
need to educate them. They
reevaluate vendors every two to three years. If our products are
competitive, we have the
chance to win new customers. Most domestic companies have
long used travel agencies or
ticketing offices. My job is to persuade them to use a travel
management company. Once I
persuade them, Ctrip is the preferred vendor because our major
competitors don’t usually
have Chinese companies as their customers. Their role in China
is primarily as a service center
for global contracts.
From 2005 to 2010, Ctrip grew its corporate customer base
thirtyfold to 600 clients and its
corporate travel transaction value one hundredfold to RMB 3
billion (US $455 million). It was ranked
as the best TMC in China from 2009 to 2011 by Travel Weekly
China. With a 30% market share in the
business, Ctrip expected to overtake American Express as
number one in China in 2011. That same
year, Ctrip launched a product for small and medium-sized
enterprises (SMEs). Zhuang noted, “If
you are capable of serving 10,000 SMEs, their combined sales
volume is similar to that of about 50 big
companies. But no one will be able to seize the business from us
because they will not be able to serve
such a large customer base.” He was not worried about
competition, noting that “we are our own
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competitor. To qualify for this business, the market must first
recognize you as a good TMC. Second,
you must be able to invest huge resources.”
Growth in 2011
In 2011, Ctrip extended its offerings into several new areas. It
launched restaurant booking
through investment in Dining Secretary China Ltd. and the high-
speed-train-ticketing business
through investment in 99pto.com. It also launched Lvping.com,
a website that consolidated leisure
travel information. Ctrip was also considering geographical
expansion in second- and third-tier cities
in China and in the Greater China region.
Creating the Company Culture
Positioned as a high-tech travel service company, Ctrip adopted
a “55443” strategy that put
service at the core. Jane Sun explained:
Five means you are so far ahead of the market that the second
player can’t catch up with
you for at least 5 or 10 years. Four means that you are ahead of

the market, but the advantage
is relatively easy to replicate in the short term. Three means
that you are at the market level.
We assign five to service and branding, four to product and IT,
and three to price. The reason
why people use Ctrip is because of our high level of service and
branding. And we build our
brand through service because it is difficult to copy and makes
Ctrip a unique company in a
non-service-oriented country.
To be successful in mass-producing service and achieving
customer satisfaction, Ctrip had created
a culture that was extremely customer-centric, nonhierarchical,
and scientifically managed. Liang laid
the foundation for the culture, while Fan moved to
institutionalize it, drafting the company’s culture
framework and principles in 2006 (see Exhibit 5 for the
framework). According to Ctrip managers,
these cultural elements were distinctive among Chinese
companies, which were frequently managed
intuitively and hierarchically.6 They believed that Ctrip was
neither a typical Chinese nor a typical
American company, but a hybrid of the two. Jade Yu Wei,
director of new business development for
the vacation business, observed, “Ctrip has a U.S. company’s
management thinking and model, with
heavy reliance on processes, data, and other formal management
tools. But it also has a Chinese
company’s sharp market insights and the local characteristic of
understanding, seizing, and
responding rapidly to market opportunities.” At Ctrip, customer
needs took priority, and each
department set a standard for customer service. For example,
the call center had two slogans: “Let
customers hear our smile” and “100 – 1 = 0,”meaning that one

mistake could wipe out all Ctrip had
done to build a long-standing customer relationship. Quality
assurance (QA) measured customer
satisfaction rates and provided data for each department to
improve customer service. Moreover, at
Ctrip, data spoke louder than titles. Jane Sun observed,
“Seniority is not important, but numbers,
facts, and objectivity are. We take pride in winning a debate
with James or Min Fan by using numbers,
facts, and logical analysis. They like it too.”
Scientific Management
Rooted in its DNA, Ctrip’s scientific approach featured a
systematic, data-driven, decision-making
process that included hypothesis formulation; extensive data
collection, experimentation, and
rigorous analysis; and the adoption of standardized tools of
total quality management, work
measurement, division of labor, and process analysis. Liang
explained his rationale for adopting this
approach at Ctrip:
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Every business needs a scientific, rigorous approach, but in our
business the need is even
more compelling. We are mass-producing service using high
technology. That has two
important implications. First, there are lots of transactions
generating lots of data. You can rely
on data to analyze Internet purchases and call center operations.
Second, our customer
requirements don’t change very much. You can take your time
analyzing the details and
introducing improvements. The stability of customer
requirement makes it easy to adopt this
long-term, analytical approach.
There were several requirements for putting this approach into
practice. Liang elaborated:
First, you need a culture of quantitative focus. You want
everything to be measurable, and
you want to quantify as much as possible. Second, you need a
good IT team that can generate
and gather data and provide the analytical tools. Third, you
need to set up an incentive system
that ensures people not only preach the culture, but also are
motivated to do what you
promote. And lastly, very importantly, you have to have a
culture of open discussion. You
need not just one analytical mind, but many, many people trying
to think and work this way.
In the company’s early years, Liang had identified the “lifetime
value of a customer” as the single
metric for evaluating new opportunities and reducing defects

and had assigned it an initial value of
several thousand RMB. Ctrip would adjust the lifetime value
based on a customer’s consumption
level and also as business grew. Based on these measures, Ctrip
established its QA system. Maria Sun
and Xiuzhen Zhang, director of QA, set up four grades of
defects (A, B, C, and D) to measure and
evaluate the entire service process and customer satisfaction.
Zhang explained:
Grade A problems are fatal defects. For example, on the flight
ticket you get the customer’s
name wrong and he can’t board the plane. Grade B problems are
serious defects. For example,
the customer wants a queen-sized bed, but the staff forgets to
write it down and the hotel
provides two twin-sized beds. Grade C problems are general
defects. For example, a staff
member tells the customer that she will respond in 15 minutes,
but she actually responds in 20
minutes. Grade D problems are hidden troubles, not visible to
the customer, rather than
outright failures.
Ctrip quantified these defects by the degree to which they might
cause the company to lose a
customer, and then assigned monetary values based on the
lifetime value of the customer.
Decision making and experiments When department heads
applied for budgets, they had
to demonstrate the returns they could achieve with the
investment, based on the same metric of
lifetime customer value. At management meetings, the
executive team would challenge the analysis.
Jane Sun explained, “When we see a number, we will question

it. Is the source biased? Was your
sample large enough? The executive team needs to question and
be very critical before we allocate
resources.” Lower-level employees also used data to support
their decisions. For example, employees
were taught that if they had one last air ticket to offer and had
to choose among a new, a one-time, a
two-time, a three-time, or a diamond (i.e., intensive, dedicated)
customer, they should offer it to the
two-time user because Ctrip data showed that if it satisfied
someone three times in a row, he or she
would become a lifetime customer.
Departments frequently used experiments to support their
decision making. For example,
experiments helped the sales team train new members more
effectively. Jane Sun explained, “Every
word the sales staff says to the customer is scripted very
carefully. What to say first, and what to say
next is very carefully studied. During the experiment,
employees wear a recording pen. At the end of
day, their supervisor will listen to the recording and see what
words need to be eliminated, what
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words should stay, and what kind of pitch is most effective.”
Similarly, before the English website
team invested in a new marketing channel, it conducted a
competitive analysis, calculated the
expected investment return, and spent a small sum of money to
conduct a test. At every stage of the
experiment, the team looked at decision criteria such as cost per
new customer and return on
investment and decided whether to continue the test. Coley
Dale, senior manager of business
development of the English website, explained, “It takes some
channels a longer time to reach their
ROI threshold than others. But there might be offsetting factors
to consider. For example, a lot of
clicks from TripAdvisor would suggest high quality, meaning
that customers from that channel
would be likely to spend more if we convert them. They would
have a higher average order value,
which might be a reason for continuing the test to stage two.”
Six Sigma In 2003, Liang decided to use Six Sigma7 to
improve service quality and asked
Maria Sun to first apply it in the service department. After
reading several books and attending a
two-day training program, Sun and her colleagues carried out a
few projects. In one, they reduced the
duration of a call from 210 seconds to 180 seconds, and in
another, they reduced the percentage of air
tickets that were sold out after an order was placed from 0.6%
to 0.03%. Six Sigma was then rolled out
to other departments. Each subsequent year, the Six Sigma
committee selected 10 to 15 cross-

functional projects at the company level, based on whether the
project was likely to have significant
impact on business now or in the next few years and generate
benefits greater than RMB 1 million
(US $151,515). From 2003 to 2009, Ctrip did 78 successful
projects at the company level, with an
average benefit of RMB 1–2 million. Ctrip kept the five steps of
the traditional Six Sigma
implementation process—define, measure, analyze, improve,
and control—but chose not to use the
complex statistical tools that were difficult to understand or
expensive to use. It was the first Chinese
company to apply Six Sigma in a service business and
succeeded where many others failed. Maria
Sun explained, “In many other Chinese companies, senior
executives didn’t learn Six Sigma. Instead,
they hired someone from outside to implement it. Because this
person didn’t have much support in
the company, he was likely to fail. But at Ctrip, the process was
top down. And scientifically
managing the company by using facts and statistics gives us a
very good foundation for Six Sigma
projects.”
Leadership Style
Ctrip’s leaders encouraged an equal and open culture. Jane Sun
gave an example: “Last year our
chairman went with us to a Hope School donation program. He
was on the bus for several days, but
the bus driver didn’t realize it. When we finally told the driver,
he was very surprised because
normally in a Chinese company if the chairman is there, you
have visible displays of seniority: he
gets on and off the bus first. That’s not true at Ctrip.” Open
discussion was common as well. Tracy

Cui, general manager of online marketing, observed, “We are
direct. You say what you think,
especially in top-level discussions. Maria and I will debate with
one another in a meeting, but
afterwards it is as if nothing happened.” The company also
fostered a strong learning spirit. Ctrip
measured managers’ learning and growth using indicators such
as the number of courses they taught
and attended. It had a corporate university and offered a Ctrip
MBA program to high-potential
employees. As CEO, Fan devoted much of his time to talent
development, acting as principal of Ctrip
University and making presentations whenever a Ctrip MBA
program started and ended. Senior
leaders also recommended books for employees to read, and
leaders and employees shared what
they learned at lunch sessions.
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Operations and Infrastructure

Call Center Management
Ctrip had the largest call center in the industry. Managers
viewed it as critical in building Ctrip’s
service advantage. Liang noted, “It is difficult to imitate the
call center because nobody knows what’s
behind it and because it is difficult to see the whole thing.”
Launch and development Before Ctrip had a call center, there
was no call monitoring, so
Maria Sun developed processes, rules, and scripts to make it
easy for staff to do their work. In July
2000, Ctrip launched its first call center with 24 seats. Sun
recalled, “James said we should develop a
call center. But we didn’t know how to manage it scientifically
or measure its performance.” That
changed when Liang gave her a copy of the book Fast Forward
Call Center Management in February
2001. Sun shared some of what she learned:
First, the book helped me understand what a good call center
was. We used to evaluate call
center performance by “call-through rate”—the percentage of
all calls that are put through. But
that measure is affected by such subjective factors as how the
customer feels; it also does not
measure how easy it is to put through a call. After reading the
book, we started to use “service
level”—the number of calls that are put through in 20 seconds
divided by the total number of
incoming calls—because it is a better measure of what we can
control.
Second, I learned the queuing principle, as well as the
difference between visible and
invisible queues and their impact on a customer. This helped me

to set up the interactive voice
response (IVR) system. We use IVR to tell customers how many
minutes they need to wait,
which can increase their patience. Third, it taught me how to do
staffing. We used to think that
if we had 100 incoming calls within an hour and every
employee could answer 20 calls per
hour, we needed 5 employees. But calls come in randomly. We
now use a formula to calculate
staffing based on your required service level and the average
length of a call.
Sun set up new call center processes as Ctrip entered new
businesses. In 2011, Ctrip had over 7,000
employees in its call centers, divided between Shanghai (3,000
seats) and Nantong (12,000 seats).
Daily management of the call center Besides handling
reservations for hotels, domestic air
ticketing, international air ticketing, corporate travel
management, and packaged tours, the call center
also had a customer service function and a QA function (see
Exhibit 6 for a call center organization
chart). Customer service responded to customer complaints and
answered questions about topics
such as bonus points and promotions. QA assessed the quality
of all departments’ work as well as
customers’ perceptions of Ctrip’s service. The call center
provided 24/7 availability for hotel
reservations and air ticketing; other businesses were served
until 9 or 11 p.m., depending on the day
of the week. Metrics for evaluating staff performance included
the number of calls taken,
pronunciation and tone, proactiveness, accuracy, service
awareness, and service skills.

In 2011, Ctrip renamed the call center the “service and contact
center” because it communicated
with customers not only through phone calls, but also through
instant messaging, e-mail, and fax.
Moreover, if a customer placed an order online, it would still be
processed by call center staff. For
example, if a customer ordered a domestic flight ticket on the
Ctrip website, the order processing staff
in the call center would check the order information, book the
ticket, and issue it on the TravelSky
terminal. Ctrip tried to automate tasks for call center staff to
maximize efficiency, but would still use
manual labor where needed to ensure a better customer
experience. For example, after customers
placed an order, the IT system would automatically send an
instant message or e-mail to the
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customer to update him or her about progress. But if there was
any change to the order—for example,
if the airline canceled the customer’s flight—a staff member

would call the customer to inform him or
her of the change. If a large number of orders involved changes,
the system would first send a
message to customers and then staff would follow up with
telephone calls.
Staff had to respond to non-urgent complaints within half a
working day and urgent complaints
within three hours or less. Jun Qian, supervisor of the Vacation
Reservation Department, noted: “If
the complaint occurs during a customer’s trip, we will respond
to them in less than the required
period because we don’t want to waste any of the customer’s
time during their trip. For small issues,
we tend to trust the customer and solve the problem right
away.” Employees at different levels were
authorized to compensate customers for different amounts of
money. If neither staff nor their
supervisors could settle a complaint, they would transfer the
case to the customer service team.
Managers tracked key performance indicators (KPIs), such as
the number of complaints received and
processed, the amount of customer compensation, and the rate
of errors in handling complaints. QA
did spot-checks to see if complaints were handled properly and
compensation was reasonable.
Recruiting, training, and developing staff In recruiting new
call center employees, Ctrip
paid more attention to candidates’ willingness to serve others
than to skills such as typing and the
ability to speak Mandarin, which it viewed as easier to develop.
Li Yan, senior director of the Air
Ticket Booking Department, explained, “We observe whether
they are polite and assess the language
they use, their communication skills, their empathy, and

whether or not they are hot-tempered.”
Interviewers also asked candidates to describe a touching or
poor customer service experience they
had had and their vision of Ctrip in 10 years. After employees
entered the company, managers
reinforced the importance of attitude. Yan noted, “We tell them
it is fine to make mistakes since we
are all human beings, but if you don’t have a good attitude or
willingness to serve others, we won’t
excuse that. If you quarrel with any customer, speak coarse
language, or use impolite words, we will
give you a warning. If you get two warnings, you will have to
leave Ctrip.”
New employees received one month of training, and each was
assigned a mentor. To begin,
employees listened to their mentors’ conversations with
customers. After they began taking calls,
mentors would help them improve. Qian recalled, “My mentor
asked me to find my problems first.
Then he provided a detailed explanation. In this way, I knew
what I needed to improve. Gradually,
new employees turned skills into professional habits and
became very confident when we
communicated with customers.” QA provided recordings that
showed good attitudes and good skills
as well as poor attitudes and poor skills; staff members
discussed these to learn how to improve.
Rapid increases in the number of call center staff brought new
challenges. Maria Sun explained:
When you have less than 200 staff, you know every employee
and they know you. The
organization is very flat. When you have 200 to 1,000 staff, you
need detailed rules and

regulations to manage staff and regulate their behavior. When
you have more than 2,000 staff,
you need to build a strong culture and rely on role modeling to
influence them. Now that we
have over 7,000 staff, even a strong culture is not enough.
In 2011, Sun was working with psychologists to manage staff
members’ emotions and behavior
more scientifically. She explained, “They might be very nervous
when they start to take calls. After
three months, they might be very confident. But in a few more
months, they might feel the job is
boring. The team leader must intervene or provide training to
address these issues so that the
employee can become more mature.” Another project team was
trying to find ways to help lift
employees’ spirits after they received difficult complaint calls.
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Migration of call center service The majority of Ctrip’s
customers preferred placing an

order by phone because of the convenience and fast response of
the call center and China’s limited
Internet coverage in second-, third-, and fourth-tier cities. Jane
Sun observed, “Americans prefer to
book online because the service level of their call centers is
very poor. Every time I go to the U.S., I
test their service levels. At times, they ask me to wait 50
minutes. Their labor costs are very high, and
they do not have many staff members. China has a lot more
labor than the U.S., and our service level
is much better. The average waiting time for Ctrip’s customers
is 10 seconds.” With the growing
popularity of the Internet, the percentage of Ctrip’s reservations
made online increased from 30% to
40% between 2005 and 2011. Liang predicted a continued shift:
“In five years, more than half of the
business will be online.” Fan highlighted the growing
importance of mobile phones, predicting that
reservations through mobile platforms would account for 15%–
20% of Ctrip’s total reservations in the
future. He set up a team to develop and launch Android, iPhone,
and Symbian mobile platforms in
2010.
Quality Assurance
In 2003, Ctrip established an independent QA function. The QA
team developed evaluation
criteria and indicators for each business, such as service
reliability, service perception, timeliness of
response, and successful order fulfillment. These indicators
were then further disaggregated. For
example, indicators of service reliability for hotel reservations
included measures such as the
accuracy of an order and compliance with process requirements.
If multiple departments were

responsible for performance on a measure, QA would include
satisfaction rates for each department
as well as for the process as a whole in its weekly report.
QA collected data through spot-checks, IT reports, customer
complaints, and problems reported
by departments. Every day, the QA team listened to the
conversations of a certain number of
customers placing orders, calculated the defect rate for each
indicator, and used a formula to
calculate the score for each criterion. Every week, it sent a
report listing the scores, defects found, and
major process problems to each department as well as to top
management. QA set departmental
benchmarks for upper and lower limits based on a certain
percentage of the previous month’s highest
score. If a department had serious defects or one of its scores
was lower than the lower limit, it had to
explain to QA what caused the defects and how the department
planned to improve the next week.
IT
Hao Jiang, Ctrip’s first employee and now vice president of
Technical, summarized the value of IT
at Ctrip: “IT supports service, provides tools to improve
service, and enables us to scale up service.”
For example, IT accelerated the training of new call center
staff. Jane Sun explained, “At a traditional
travel agency, it takes at least one to two years to train a new
person. But at Ctrip, new employees can
act as experts within three months. All of the information about
a product, a customer, and our
service processes is built into the system so that employees do
not need to memorize them.” Ctrip’s
founders had decided at an early stage to develop all proprietary

systems internally; as a pioneer in
the online travel industry, the company was seldom able to find
existing IT systems that fit its needs.
Moreover, the rapid pace of scale-up, new business
development, technological and market changes,
and process optimization demanded continuous systems
development and repeated upgrades, which
outside vendors were often unable to provide.
The Business Intelligence Department of IT also provided data
mining and analysis to support
scientific decision making. For example, IT analyzed data on
people’s browsing behavior to explore
the possibility of turning browsing into order placement. In
another project, IT tracked and analyzed
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data for the team responsible for developing mobile platforms,
helping it decide whether it should
design software that encouraged customers to read all the
information on their phone and place an

order online or software that encouraged customers to contact
the Ctrip call center after reading the
information.
Managing through Processes
In a traditional travel agency, one staff member handled an
order from beginning to end. Ctrip, by
contrast, had a clear division of labor, with separate teams
handling different parts of an order. For
example, it separated activities such as making hotel
reservations or booking domestic air tickets into
order taking and order processing; each was handled by a
different call center team. All teams
reported to Maria Sun, but their performance was partially tied
to the business they served. Moreover,
when a business scaled up or involved complicated functions,
tasks would be further subdivided. For
example, the order-taking team for international air ticketing
was separated into a front-end team
that took orders for simple flights and an expert team that took
orders for more complicated routes.
Similarly, the packaged tours business had a supporting team
and a customer service team in
addition to its order-taking and order-processing teams. When
the IT system received a customer’s
vacation order, it would automatically separate it into smaller
orders for hotel reservations, flight
booking, ground tours, and visa applications; each would be
handled by a different person within
that supporting team. Staff in the order-processing team could
track the progress of these smaller
orders in the system and confirm the order with the customer
when all steps were completed.
To ensure service quality, Ctrip broke down all critical tasks in

a process into discrete steps and
control points, identifying potential failure modes. Maria Sun
gave an example: “To book an air ticket,
we have over 20 steps, 66 control points, and 213 chances for
defects” (see Exhibit 7 for a partial
process flow chart). For example, getting a customer’s name for
flight booking was a control point.
Call center managers would monitor and analyze the data on
each process’s control points, and the
system would include a reminder for staff about serious defects
that were most likely to occur. Every
department had a process manager who understood the complete
work flow in that department. Any
time a business change involved a process change, the process
manager had to participate in all
discussions with other teams to understand the new business
needs and develop process solutions.
The process manager was then responsible for issuing a request
to IT, as well as working with other
departments to develop the new or improved process.
Ctrip followed a similar set of systematic steps for new product
and new business development.
The process usually included strong customer participation,
cross-functional collaboration, and
triggers for further investment. For example, Fan anticipated the
rapid economic growth in China’s
second- and third-tier cities and championed Ctrip’s expansion
to these cities, starting in 2006. Before
Ctrip launched business in a new city, it would track a number
of travel indexes, such as the increase
of flights to or the opening of new four-star or five-star hotels
in that city (see Exhibit 8 for a partial
process flow). If these indicators were promising, Ctrip would
then send a survey team to the city to
collect data on local income levels and travel habits. After the

team returned, it would share its
findings with both the product team, so that it could develop
products attuned to local needs, and the
call center team, so that it would prioritize calls from that city
to ensure that customers had an
especially good experience when they called Ctrip for the first
time. To understand customers’ needs
and habits more clearly, Fan decided in 2009 to set up an
interactive study room where Ctrip staff
could observe how customers used the Ctrip website and
improve their product and website design
accordingly. Similarly, when managers discovered that many
diamond users booked tickets on their
way to the airport, they decided to develop “one-hour express
ticketing,” which allowed these
customers to order tickets as little as 60 minutes before flight
departure. Multiple departments
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worked closely together in the development process. Jiang
explained, “We considered how long it

takes us to fulfill an order, what payment method is viable since
we cannot collect cash for this
service, what we can do if our connection to the TravelSky
system has a glitch or if any of the
locations where we cooperate with different ticketing counters
has a problem, and also the different
check-in deadlines of each airport. For every scenario, we
needed to have a back-up plan.”
Broadening the Customer Base
Budget Travelers
Travel customers with annual incomes of RMB 60,000 (US
$9,091) or less were considered to be
budget-oriented. Jane Sun noted, “This market is very large.
Once you establish a model, you have
repeat customers, and products can be used again and again.”
Established competitors such as eLong
and new competitors such as Taobao chased this segment.
eLong, which started online travel services
in 2001, initially suffered several years of losses. A new CEO
was hired in 2007; he repositioned the
firm to focus on hotel reservations, shrunk air ticketing and
other businesses, and pushed
reservations away from the call center and toward online. eLong
turned profitable in 2009. In 2011, it
had over 23,000 hotel suppliers in China and over 140,000 hotel
suppliers abroad through its
connection with Expedia, the world’s largest OTA and eLong’s
largest shareholder, with a 56% stake.
In 2011, it also gained access to 674 million active user
accounts of Tencent, China’s largest Internet
player, when Tencent acquired a 16% stake in the company.
eLong hoped to expand its hotel supplier
base in China to 60,000 and to compete on price.8

Taobao, China’s largest online retailer, had recently entered the
online travel market. It acted as an
online department store, allowing a wide range of hotels,
airlines, travel agencies, and ticketing
agencies to open stores on the Taobao website and sell their
products and services directly to
consumers while paying Taobao a service fee. In the year after
Taobao launched its business, many
airlines and over 200 air ticketing agencies opened stores on the
website. During the same period,
domestic flight tickets issued by Taobao tripled.9 Ctrip
managers believed that while Taobao’s low-
price strategy was attractive to budget travelers, its service
standards varied widely. James Tang,
senior vice president of sales and marketing, explained, “On
Ctrip, people get one-stop full service,
no matter what the hotel, air ticket, or vacation package;
however, through Taobao, people get
products from different agents or individuals.” Jane Sun added,
“It is like asking eBay to provide
travel services. They will not do so because it requires totally
different industry expertise.”
Luxury Travelers
Fan also suggested experimenting with sales to luxury travelers,
with annual incomes above RMB
1 million (US $151,515). In early 2011, Ctrip experimented
with a vacation product for this segment,
offering a 60-day world tour for 24 customers from mainland
China, Hong Kong, and Taiwan priced
at RMB 500,000 (US $75,758). The eight tickets available for
mainland China sold out in nine minutes.
The team monitoring this group made several surprising
observations. They discovered that

mainland Chinese customers, who had less overseas experience
than customers from Hong Kong and
Taiwan, craved Chinese food after only three days of traveling.
Yet the tour featured only high-end
foreign cuisine. They also learned that travelers valued cross-
cultural contacts. Ctrip had put
customers from Hong Kong and mainland China in one group
and Taiwanese customers in another
group, even though a number of managers had argued that Hong
Kong and Taiwanese customers
should be placed together because they had similar standards.
Jane Sun noted, “The people from
Hong Kong said, ‘What I enjoyed most was traveling with
mainland Chinese travelers because they
totally opened my eyes. I learned how differently they viewed
the world.’”
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The Decisions
While both segments were promising, Fan and the management

team needed to decide whether
Ctrip should remain focused on FITs. Jane Sun observed,
“China’s GDP is growing at 7%–10% per
year. Based on prior experience, the travel industry as a whole
expands at 2%–3% above the rate for
GDP, so it will probably grow at 10%–13%, perhaps even 15%.
We assume that Ctrip will outpace the
travel industry by 10%, so we should be growing at 20%–25%
annually.” Even without diversifying
into the budget or luxury travel segments, Ctrip might be able to
achieve these targets. Moreover,
these two segments had different needs and service
expectations, which required the integration of
new resources and the development of new capabilities. Was it
premature to broaden Ctrip’s
customer base?
On the other hand, competitors were already chasing budget
travelers aggressively. Should Ctrip
ignore them or fight back? If Ctrip decided to pursue budget
travelers, it could leverage its scale to
offer competitive prices. But how much emphasis should Ctrip
place on price? Would focusing on
budget travelers dilute its brand image? And if Ctrip did pursue
budget travelers, should it push
them online or try to offer them superior service through its call
center?
Luxury travelers posed different issues. Sun noted, “Did we
make money from that world tour?
We made some. But compared with serving the mass market,
this tour generated very little profit.
However, given how fast the tour sold out, we learned that there
is a market we can explore and that
the branding from this segment is probably five times as
effective as our other tours.” At the same

time, luxury travelers had very high expectations, which were
challenging for Ctrip to meet because
of its limited experience with this group. Should Ctrip try to
overcome these challenges, or should it
stick with its current set of customers?
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Exhibit 1 2010 Market Share of OTAs in China
Ctrip.com, 51.60%
eLong.com, 8.70%
Best Tone
(118114.cn), 8.00%
Mangocity.com, 6.70%
12580.10086.cn, 5.30%
HUBS1, 4.40%

17u.cn, 1.60%
Others, 13.60%
Ctrip.com
eLong.com
Best Tone (118114.cn)
Mangocity.com
12580.10086.cn
HUBS1
17u.cn
Others
Source: Adapted from “iResearch: Release of 2010 Travel
Reservation Data,” January 17, 2011, iResearch website,
http://www.iresearch.com.cn/Report/View.aspx?Newsid=131563
, accessed August 9, 2011.
Notes: Market share calculation was based on revenue of OTAs.
118114.cn was launched by China Telecom,
and 12580.10086.cn was launched by China Mobile.
Exhibit 2 Ctrip Partial Organization Chart
Purchasing
Management

Financial
Settlement
Legal Affairs
CEO
Packaged
Tours
Marketing
Northern
China
Subsidiary
Corporate
Travel
Management
Information
Security
Technical
R&D
Technical
Operation
Business
Intelligence
English Website

Internet
Marketing
Marketing
Communication
National Sales
Telephone
Marketing
Marketing
Cooperation
Hong Kong
Subsidiary
Western
China
Subsidiary
Hotel
Reservations
Air Ticketing
CEO’s Office
Human
Resources
Southern
China

Subsidiary
New Business
Development
Administration
Auditing
Investor
Relations
CFO
Finance
Call Center
Reservation
for Hotel
Reservation
for Domestic
Air Ticketing
Quality
Assurance
Reservation
for Packaged
Tours
Customer
Service
Reservation

for Corporate
Travel
Management
Reservation
for
International
Air Ticketing
Source: Company documents.
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http://www.iresearch.com.cn/Report/View.aspx?Newsid=131563
16
Exhibit 3 Ctrip’s Revenues and Net Income, 2000–2010
779 5312
12083

20920
40333
64586
99941
164383
217223
291245
436551
-2896 -1843
1714 6502
16085
27787 30825
54605
65095
97683
159392
-100000
0
100000

200000
300000
400000
500000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Revenue (in US$'000)
Net income (loss) (in US$'000)
Source: Ctrip annual reports.
Exhibit 4 Ctrip’s Revenue Breakdown by Product Lines
2004 2005 2006 2007 2008 2009 2010
Hotel
Reservations
78% 65% 57% 53% 48% 44% 42%
Air Ticketing 18% 30% 35% 39% 41% 41% 39%
Packaged
Tour
Bookings

3% 4% 5% 5% 7% 8% 12%
Corporate
Travel
Management
NA NA 4% 4% 4%
Others 1% 1% 3% 3% 1% 3% 3%
Source: Company presentation.
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Exhibit 5 Ctrip’s Cultural Framework
One Mission:

ful travel service company in
China
with substantial service, superb service standard,
and permanent service commitment
Two Ultimate Pursuits:
Three Responsibilities:
development path, and opportunities to share
company success for employees
industry and social economy
Four Core Competencies:

Five Core Values:
mer (customer needs to guide Ctrip)
between customers and partners)
ts
partners)
-win cooperation with all its
partners)
Six Service Concepts:

Source: Company documents.
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Exhibit 6 Partial Organization Chart of Ctrip’s Call Center
Call Center
Quality
Assurance
Reservation
for Hotel
Order
Taking
Team
Order
Processing
Team

Reservation
for Corporate
Travel
Management
Order
Taking
Team
Authorization
Team
Dedicated
Team
Onsite
Team
Customer
Service
Customer
Complaint
Handling
Team
Customer
Inquiry
Handling
Team
Reservation for

Packaged Tours
Order Taking
Team
Supporting
Team
Order
Processing
Team
Customer
Service
Team
Hotel
Reservations
Ground Tours
Air Ticketing
Visa Service
Reservation
for Domestic
Air Ticketing
Order
Taking
Team
Order
Processing

Team
Order
Modification/
Cancellation
Team
Reservation for
International
Air Ticketing
Order
Taking
Team
Order
Processing
Team
Order
Modification/
Cancellation
Team
Front-end
Team
Expert team
Source: Developed by casewriters from company interviews.

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Exhibit 7 Partial Process Flow for Flight Booking at the Call
Center
Step 1:
Staff receives a
customer call
Step 2:
Staff checks customer’s
Ctrip membership card no.
Step 3:
Staff asks about customer’s
planned itinerary
Step 4:
Staff provides quotation for

available tickets
Step 5:
Staff gets customer
information for the order
Control point 1:
customer name
Chance for defect 1: how
to ask for a Chinese
name properly
to ask for an English
name properly
to verify an English name
Control point 2:
…
Control point 3:
…
Step 6:
…
Control point 1:
whether to ask for
card no. or not

Control point 2:
how to ask when the
customer has
multiple cards
Chance for defect 1:
should address customer
by his name without
checking card no. because
info. already in system
Chance for defect 2:
…
Exhibit 8 Partial Process Flow for New City Entry
Product team identifies
potential cities
for entry for certain products
Product team develops
travel indexes to
monitor these cities
Do indicators
reach the trigger

point for a
marketing
campaign in any
city?
Continue to monitor
travel indexes
for these cities
No
Yes
Survey team does a survey
in that city to learn income
level and travel habits
of local people
Survey team communicates
findings to product team
Product team develops
products based on local needs
Marketing team runs a
campaign to promote
products developed
for the city
Survey team communicates
findings to the call center
team to prioritize calls

from that city
Call center staff receive calls
from customers in that city
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Endnotes
1 The conversion of renminbi (RMB) into U.S. dollars (US $)
for 2010 was based on the certified exchange rate
of US $1.00 = RMB 6.60 on December 30, 2010, as published
by the Federal Reserve Board, indicated in Ctrip’s
2010 Annual Report. The exchange rate for any other year used
in this case also follows the exchange rate
included in the Ctrip annual report for that year.
2 Link to James Liang and Min Fan’s bios at

http://pages.english.ctrip.com/webhome/purehtml/en/
public/Management.html; link to Qi Ji’s bio at
http://ir.htinns.com/management.cfm; and link to Neil Shen’s
bio at http://www.sequoiacap.com/china/neil-shen.
3 Yingshi Zhu and Lei Ma, WE ARE ONE, But We Are Not the
Same [in Chinese], 1st ed. (Beijing: China CITIC
Press, 2008), p. 72.
4 Longzhao Ye, “Disappearing Agents: Online Air Ticketing
Brought Turbulence to the Channel [in
Chinese],”China Business Herald, July 13, 2011, http://www.cb-
h.com/news/dcdb/2011/713/11713664008F5395I39116.html,
accessed September 9, 2011.
5 The V-booking system is a ground service supplier order-
confirmation system. It helps Ctrip’s service
vendors to manage transportation, tours, ticketing for scenic
spots, tour guide service, and other ground service.
6 Fan Xing, “The Chinese Cultural System: Implications for
Cross-Cultural Management,” S.A.M. Advanced
Management Journal, Winter 1995, via ProQuest, accessed
October 11, 2011.
7 Six Sigma was a methodology to reduce variation in a process
and decrease product and service defects to
no more than 3.4 per million opportunities. Source: General
Electric, “What is Six Sigma,” General Electric
website,
http://www.ge.com/en/company/companyinfo/quality/whatis.ht
m, accessed July 26, 2011.
8 Shenghui Xu, “Focus on Hotel Reservations: eLong’s Chase
with Differentiation—An Interview with
Guangfu Cui, CEO of eLong [in Chinese],” Advertiser Market

Observer, no. 9 (2011): pp. 60–61, via CNKI database,
accessed December 7, 2011.
9 “Competition in Online Travel Market is Heating Up [in
Chinese],” China Business Journal, March 28, 2011,
via ISI Emerging Markets database, accessed April 8, 2011.
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Faculty of Business and Law
Department of Business & Management:
Strategy & Operations Management Cluster
aCADEMIC YEAR 2018-19
assessment brief: APPLIED ESSAY
Module Title:

Strategic Management
Submission Deadline:
9th July 2019
Assessment Component
Component B
Assessment Instructions
To complete this assignment you must produce a 1500 word
academic essay.
This essay is to be based on the application of ideas from the
“Strategy as Choice” View literature to the organisation in the
case study that will be made available.
Q. Drawing on Porter’s Strategy as Choice perspectiv, evaluate
whether and how C-TRIP generates sustainable competitive
advantage.
You need to draw on ideas from Michael Porter on values
proposition, activities and orders of fit, and appropriate
evidence from the case study provided, to evaluate C-TRIP’s
sustainable competitive advantage. The key to doing well is to
demonstrate that you can use these theoretical ideas and apply
them.
Please note that your assignment MUST be written around the
evidence in the case study provided. There is no need to do any
additional research on C-TRIP, and we are not interested in
what C-TRIPis doing now. All evidence drawn from the case
study must be appropriately referenced, as should all of the
academic ideas that you draw on. All citations (in text
references) of the case study must include the page number from
the case that you are referring to.
Learning Objective: To demonstrate your ability to apply

concepts from the module to an organisation or firm, to
undertake a theoretically informed analysis and to draw
conclusions that links the topic of study to the objective of
sustaining competitive advantage. For this essay you will be
required to independently investigate the academic literature on
the topic and apply your knowledge of this literature to the C-
trip.
Word Limit
To complete this assignment you must produce a 1500 word
academic essay (the word count excludes the reference list and
in-text citations).
Reference
Minimum on 10 references to be used. Only academic journals,
books, e-books and academic websites to be used. Reference
should be in Harvard Referencing format.
2

Assessment Criteria (Tutors will highlight the appropriate comme.docx

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