Assessing Ctrip's Sustainable Competitive Advantage: A Porter Analysis

This essay analyzes the competitive advantages of Ctrip, a Chinese travel services company, using Michael Porter's "Strategy as Choice" perspective. The analysis focuses on Porter's value proposition, including customer segmentation (budget and premium), needs, and pricing strategies. It examines Ctrip's activities, such as online reservations and database utilization, and how these align with its strategies. The essay also explores Porter's "order of fits," including the consistency of activities with the overall strategy, the reinforcing nature of organizational activities, and the optimization of effort through coordination and information exchange. The essay concludes that Ctrip's non-hierarchical, customer-centric culture and scientific management approach contributed significantly to its competitive advantage in the travel industry.

Running head: CTRIP ANALYSIS
CTRIP ANALYSIS
Name of the student
Name of the university
Author Note

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The respective paper is an analysis of the competitive advantages of the company “Ctrip”
according to Porter’s strategy as choice perspective from the article “Ctrip: Scientifically
managing travel services” (Hua Dai, G. (2019). Competitive advantage is a particular
circumstance that puts the company in a better market position from that of the other companies
(Mantere 2013, pg 1438). Porter’s strategy of competitive advantage is a generic strategy that
comprehends, analyses and interprets the competitive advantages of a company (DaSilva and
Trkman 2014, pg 379). The respective paper introspects on every aspects of the company Ctrip
in order to find out the circumstance that keeps the company in a better position from its
competitors.
Ctrip is a Chinese tours and travel services which was formed in the year 1999 that
provides premium services such as accommodation reservation, ticket booking for transportation,
corporate travel management and packaged tour. Ctrip has become one of the largest travel
agencies of China (Hua and Dai, 2019).
According to Porter, a value proposition is an intellectual insight and exercise about the
strategic choices a company can take in terms of customers, needs and price (Dong-sung and
Hwy-Chang, 2013). Uniqueness and differentiation are the two factors on which Porter’s value
proposition is based. In the arena of value proposition, Porter had classified the respective
strategy into three divisions, namely, What customers? Which needs? And What relative price?
(Bosch-Badia, Montllor-Serrats and Tarrazon, 2013, pg 11). Therefore, in order to analyze Ctrip,
if Porter’s value proposition is taken into account, it is analyzed hereafter.
What customers section deals with what users and channels need to be taken in order to
provide a commendable strategy for the company. Ctrip has always catered to the needs and

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desires of two types of customers: Budgeted and Premium. For the budget customers, Ctrip
revisited their operations by focusing on hotel reservations, shrunk the air ticketing services and
others, and changed the reservation media from call centers to online, thereby, minimizing the
chances of having loss. In case of Ctrip, the medium that it chose to publicize themselves was the
internet. The initial website that was developed for Ctrip was also a success. The website had
unusually premium and quality content, extensive online communities and the user-friendly
design and operative modes of the website, the respective company became famous all through
the internet as well, apart from its offline popularity. The website of Ctrip was considered to be
the top travel website of China among the 300 travel websites that were available.
Under the section “Which needs?” the firm focuses on what kind of products, services
and features they can best provide to keep them superior and apart from the rest of its
competitors (Edvardsson, 2014). In the case of Ctrip, the company utilized the internet to handle
the operations such as tickets and hotel reservation unlike the existing competitors who called the
hotels and tickets to negotiate with them on telephone that wasted time and resource. Ctrip’s
services were fast and accurate. Ctrip consisted of databases about the customers and their
preferences and provided the services accordingly, which was highly unlikely among the
competitors in the time of 1990s and 200s. with facilities such as e-booking networks and own
ticket delivery teams in the cities, Ctrip gained competitive advantage in China.
Under the section “What relative Price?” the firm focuses on premium, parity and
discount strategies to gain competitive advantage. In the case of Ctrip, the company provided
different packages to different customers (budget and premium). The company had different
kinds of packages according to the affordability of the customers. In case of premium customers,
the company experimented with sales and discount by offering a 60 day world tour of 24 luxury

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customers priced RMB 500,000 which led out to be a massive success. For the budgeted
customers, Ctrip provided the customers with one stop full service even though there had been
chances of cost shrink.
According to Michael Porter’s order of fits, it has been stated and discussed that:
Strategies are based on unique activities, a substantial strategic position needs trade-offs, fit is a
factor that drives both competitive advantage and sustainability under which three sections are
classified, namely, first order fit, second order fit and the third order fit (Dobbs, 2014, pg 32).
While elaborating the concept of order of fits, It can be said that:
First order fit (Huggins and Izushi, 2015 pg 458), which is a depiction and analysis of
the consistency between each activity of the firm and the overall strategy of the firm.
Consistency, in the respective case, ensures that the activities comply by the competitive
advantages and the strategies made accordingly. Consistency also makes it easier to
communicate the strategy to customers, employees, and shareholders, and improves
implementation through single-mindedness in the corporation (Sheehan & Bruni-Bossio, 2015
pg 397). In case of Ctrip, the company had been quite consistent with its strategy as well as its
activity. According to Dong-sung and Hwy-Chang (2013), The activities such as broadening the
customer base, quality assurance, synergizing the activities through information technology and
experimentations with sales and discounts are in consistency with the strategies that are taken by
the company in order to prove themselves to be having a separate competitive advantage.
Strategies that they have taken are well synchronized with the activities that they have been
doing. According to the findings of Nickols (2016, pg 4), it can be said that strategies such as
creating a collaborative, cooperative, adjustable and innovative organizational culture have
proved to be one of the reasons for popularity of the company. Activities taken up by Ctrip about

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scientific management includes a premium scientific approach and temperament featuring a
systematic, data driven, decision making process which includes formulation of hypothesis,
extensive data collection for research purposes, rigorous analysis, adoption of standardized tools
for quality management, measurement of work, division and management of labor and process
analysis are well aligned with their strategies.
Second order of fit, which is also defined as the situation or circumstance where the
activities of the organizations are reinforcing, states that the activities within an organization
might increase their efficiency with innovative and collaborative approach in order to stay apart
from the competitors (Wang, 2014). Ctrip is a company has remarkable organizational features.
Ctrip had opted for experimentation in the field of decision making unlike its other conservative
competitors (Shambaugh. 2014 pg 317). For instance, the sales team of the company gave
training to the new members of the company with the help of technology which helped to
understand the expertise of the employees as well as reducing the cost up to a certain extent.
Another remarkable approach of the company was the “Six Sigma” approach that helped the
company to maximize outcome with minimum effort, in order to replenish and improve the
service quality.
Third order of fit is also called optimization of effort. The most customary type of effort
localization and optimization include Coordination and information exchange across activities to
eliminate redundancy and minimize wasted effort (Wang, 2014). With proper leadership style
and management of Ctrip, the company was able to popularize itself. Ctrip encouraged
egalitarianism and frank attitude in their organization. Open discussion, strong learning spirit,
Ctrip MBA programs for the highly talented employees and sharing the learning experiences
helped the company to grow and develop, unlike other companies of its contemporary times.

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With a daily call center management, the company automated tasks with the help of premium
technologies in order to maximize the efficiency of the customer care executives and the call
center employees. The managers utilized the Key Performance Indicators (KPI) in order to track
the performance and daily activities of the employees working in the call centers, apart from
providing them with refreshment and amicable facilities. The willingness to serve the people was
the key factor for the success of the recruitment department of the company. The company Ctrip
had a clear organizational structure with proper division of labor and designation. Ctrip had been
known to break down all the critical tasks and divide the tasks among the employees and the
individuals in order to maintain the quality and enhance the performance of the company. The
culture of Ctrip inside its organization and workplace was remarkably flexible, lenient and
liberal. Ctrip was successful in creating a culture that was highly unprejudiced, non-hierarchical,
extremely devoted, customer centric and having a scientific temperament in terms of its growth,
development and expansion. According to Mekić and Mekić (2014), The team of Quality
Assurance (QA) was responsible and accountable for measuring customer satisfaction rates that
also provided data to each department giving them instructions to change or modify/ enhance
their work patterns to meet the target as well as the objectives of the business. The main point of
distinction that made the company achieve competitive advantage was that it was non-
hierarchical, a very peculiar characteristic unlike the other Chinese companies that are generally
hierarchical in nature (Zhu et al., 2016 pg 262).
The respective paper concludes to be an analysis of the competitive advantages of the
company “Ctrip” according to Porter’s strategy as choice perspective that includes Porter’s order
fits and value propositions for analysis of the respective company. Competitive advantage is a
particular circumstance that puts the company in a better market position from that of the other

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companies. Porter’s strategy of competitive advantage is a generic strategy that comprehends,
analyses and interprets the competitive advantages of a company. The respective paper
concludes to be an introspection on every aspects of the company Ctrip in order to find out the
circumstance that keeps the company in a better position from its competitors.

7CTRIP ANALYSIS
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