Strategy Analysis and Evaluation of Ctrip.com International Ltd.

This report provides a comprehensive analysis of Ctrip.com International Ltd.'s business strategy. It begins with an executive summary outlining Ctrip's growth and market position in the travel industry. The report delves into the five key elements of Ctrip's strategy: arenas, vehicles, differentiators, staging, and economic logic, providing detailed explanations and examples for each. Furthermore, the report evaluates Ctrip's strategy using PESTLE analysis, Porter's five forces, and the VRIO framework to assess its strengths, weaknesses, opportunities, and threats. The analysis covers political, economic, social, technological, environmental, and legal factors, as well as competitive forces and key resources. The report concludes with a summary of findings and a reference list.

Running Head: GLOBAL STRATEGY 0
Global Strategy
August 26
2019
(Student’s details)

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Executive Summary
To develop the business, strategy is very important. The following report described about the
strategy of Ctrip which is a China based multinational company. Ctrip.com has been working in
this business since 1999. It has more than 30000 employees and has over 3 million members of
the company. The discussed strategy has five elements that are arena, vehicles, differentiators,
staging and economic logic. All these factors described about the base and strategy which is used
by the company to grow the business. To evaluate the strategy, report used PESTLE analysis,
Porter’s five forces analysis and VRIO framework. In these analyses, report evaluated the every
aspect of the strategy. After evaluation, report found the strengths and weaknesses of the
company.

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Contents
Introduction......................................................................................................................................3
Analysis of Strategy.........................................................................................................................3
Arenas..........................................................................................................................................3
Vehicles........................................................................................................................................4
Differentiators..............................................................................................................................6
Staging.........................................................................................................................................7
Economic logic............................................................................................................................7
Evaluation of Strategy.....................................................................................................................8
PESTLE Analysis........................................................................................................................8
Political Factors........................................................................................................................8
Economic Factors.....................................................................................................................9
Social Factors...........................................................................................................................9
Technological Factors............................................................................................................10
Environmental Factors...........................................................................................................10
Legal Factors..........................................................................................................................11
Five Forces Analysis..................................................................................................................11
The threat of New Competitors..............................................................................................11
Bargaining Power of Suppliers...............................................................................................12
Bargaining power of buyers...................................................................................................12
Threats of Substitute Products or Services.............................................................................13
Rivalry among existing competitors.......................................................................................13
Key Resources and Capabilities.................................................................................................13
VRIO Analysis...........................................................................................................................14
Value......................................................................................................................................14
Rarity......................................................................................................................................14
Imitability...............................................................................................................................14
Organization...........................................................................................................................14
Conclusion.....................................................................................................................................15
Reference List................................................................................................................................16

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Introduction
Ctrip.com International Ltd. (CTRP) is the China based travel service provider. Its
headquarters are situated in Shanghai, China. Ctrip has16 branch offices in big cities included
Guangzhou, Beijing, Shenzhen and other cities in china. Ctrip.com has been working in this
business since 1999. It has more than 30000 employees and has over 3 million members of the
company. These are the things that make this company a leader in the travel business. With this
company, about 1.2 million hotels in more than 200 countries tie up. Ctrip.com is operated by
Hong Kong Limited. Ctrip.com provides all travel-related services at the international and
national level. It is a very well-known online travel service provider (Trip, 2019).
It is a multinational company and it has achieved huge success in a very short time. This
is the main reason behind selecting this company for the report. The following report will discuss
about the strategy analysis of company, how did company achieved success in the marketplace,
evaluation of strategy and internal and external factors which can impact the company. The
report will also comprise of description of products and service which are providing by the
company, market segmentation, target market and market positioning of company.
Analysis of Strategy
The five major factors of strategy are arenas, vehicles, differentiators, staging and
economic logic. These all factors are important to analyze the strategy of company.
Arenas
Arenas are called the area in which a firm operates and active. If arenas are defined in a
wide area, it would primarily include the firm's market segments, the firm's products, the firm's
set of services, distribution channels, the technologies used by the firm, and the stages of value
creation and pricing processes (Wright, 2014).
Some analysts believe that the areas to be included in the arenas should be very specific,
and it should clearly show what the main function of the firm is and what should not be done by
the firm. Ctrip.com is a travel services provider. It also offers accommodation and reservation
along with tour packages. This company provides corporate travel management, as well as

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transportation tickets, in-destination services and other types of facilities, provides to passengers
(Tavana & Madjid, 2012). This company makes its online services; it is available on the mobile
application as well as on the website. This company provides comprehensive information about
their favorite place to passengers. This company's customer care service is also good and all the
employees of this company are very helpful.
Ctrip is focusing on clients and customers who are interested in enjoying luxury style
travelling. Ctrip did not change its market segment in last 5-10 years but it has changed their way
to attract customers. In this present time, the travel market is divided into two parts, one is as a
business and the other is as a holiday or leisure. If look at the total revenue of these days, the
contribution of each is 45%, the remaining revenue is collected from joint business or leisure
trips. This market is divided into two parts: first is domestic travel and second is international
travel. Passengers are classified in the following way as part of holiday/leisure travel:
 Travel by leisure travelers.
 Leisure passenger's Income.
 Age of leisure travelers.
Mutually leisure travelers are divided into the following groups:
 Adventure travel
 Travel based on rest and relaxation.
 Honeymoon trip.
 Focused travel on sightseeing.
Vehicles
Ctrip.com founders James Liang, Neil Shen, Min Fan and Qi Jie, founded it in Shanghai,
China in 1999. The company achieved another feat in 2003 with a Merrill Lynch-led listing
NASDAQ, Which earned $ 75 million, as soon as, it was listed and then after a tremendous
increase of 86%, in other words a jump of 86%, its first day trading closed at $ 33,94. After
Transmeta IPO, Ctrip proved to be the first company to reach its trading double on the first day
since 2000. Its growth soared in 2006 that 70% of the business came from only a few cities from
China, these cities were Beijing, Shanghai, Shenzhen and Guangzhou (Ctrip, 2018).

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After this the company achieved another achievement and the company acquired a US
company in 2013 for $ 100 million the company was Tours4fun. After this, in the month of May
2015, this company took a step towards further success and that was another investment of $ 250
million by Priceline Group. In November 2016, the company acquired a Scottish company; the
name of that Scottish company was Skyscanner. After this acquisition, Ctrip appointed Jane Jie
Sun as the new CEO of this company (Ctrip, 2018).
In recent years, the business of the Ctrip has grown a lot. In 2015 the net revenue of this
company was 10.9 billion RMB which was US $ 1.7 billion which was seen to increase by 48%
per year. In 2016, the business of the Ctrip saw a jump of 76%, now it was RMB19.2 billion,
which if calculated in US dollars was equal to US $ 2.9 billion (Ctrip, 2018).
In November 2017, Ctrip made another step to sky highs and the company took over the
United States travel research website Trip.com and the company declared it the brand of its
global website.
As of December 31, 2018, Ctrip operating its business through many significant
subsidiaries and these are:
 Ctrip.com Limited (Hong Kong)
 C-travel International Limited
 Ctrip Travel Information Technology (Shanghai)
 Ctrip Computer Technology (Shanghai)
 Ctrip Travel Network
 Shanghai Hecheng International Travel Agency Co. Ltd.
 Wancheng (Shanghai) Travel Agency Co. Ltd.
 Skyscanner Holdings Limited
 Chengdu Ctrip International Travel Agency Co. Ltd.
 Shanghai Ctrip International Travel Agency Co. Ltd.
 Chengdu Information Technology Co. Ltd.
Over time, the company invested in many companies so that the business continued to
grow. In December 2017, Ctrip initiated a new partnership with Tennis Australia which is a
leading body for tennis in Australia. This initiative allows the tennis fans to purchase Australia

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Open tickets from Ctrip online platform. Much other different type of products and services
accounted for a small part of whole profits in 2018. Mainly benefits and revenues of Ctrip
generated from the transportation ticketing, accommodation reservation, corporate travel and
packaged- tour services (Ctrip, 2018).
Differentiators
Differentiators are characteristics of products and company which are offering by the
company that help company to beat its other competitors in the market. Companies can achieve
success in market with the common dimensions such as image, customization, price, reliability,
technical superiority and quality (corporatefinanceinstitute, 2019).
The main thing which attracts customers to the Ctrip is excellent customer service.
Superior customer service creating the focus on Ctrip and this is the biggest reason behind the
brand popularity of company. In 2012, Ctrip was one and only online travel Service Company to
start 4PS evaluation in China which creates a brand name.
Ctrip.com believes that they remain a favorite company of customers with a share of
around 80% of the revenue every year (Ctrip, 2018). The company says that it provides reliable
travel information to customers through online platforms. The company's payment system is also
customer reliable. Company employees say that during the past few years, Ctrip.com website has
been made user-friendly, in addition to the search option; the booking system has also been made
easier. The company's website currently provides every type of facilities to customers in a very
easy way. Travel related latest photos are also available on the company website so that the user
does not have any problem related to their journey.
The company also says that its website and mobile application platform is multilingual
though those customers get information about that location through their own language. All the
customer service centers of Ctrip are also multilingual and 24 hours company employees are
ready to serve customers. Ctrip's customer service center is centralized though that the
company's focus is always on its employees. The company also claims that Ctrip's mobile
application has been downloaded in maximum number in 2018.

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Staging
Ctrip has achieved significant growth in business in a short time. This has become
possible due to the business model and strategies of this company. The company has paid special
attention to the business model and strategy since its inception, which is the main reason for its
fame. Only after 4 years, in 2003, this company confirmed its place in NASDAQ stock
exchange.
By 2006, the Ctrip had become so famous that 70% of the started business coming from
four cities in China, or 70% of their sales started coming from four cities. These four cities were
Beijing, Guangzhou, Shanghai and Shenzhen.
Apart from all this, 56% of their revenue came from the hotel industry; their total revenue
from air ticketing was 37%, while the remaining 7% of this revenue was received by the
company through package tours, products and services, advertising, VIP cards and some other
types of cards.
After 2006, the company's dominance grew and by 2012 Ctrip also invested in Taiwanese
company 'ezTravel’ and Hong Kong Company 'Wing on Travel' and since then Ctrip has spread
its company's services across Asia. In 2012, Ctrip also entered into a commercial agreement with
Booking.com. As everyone knows Booking.com is a global website; Ctrip got the benefit of this
and Ctrip, also invested in 'ToursForFun.com' of North America in 2014.
In this period of time, the company's gross transactions reached $ 24.5 billion and during
this time the company was transacting more than $1 million per day.
Since listing on NASDAQ in 2003, the business of the company has seen a lot of growth
and by 2015, the market capitalization of the Ctrip had grown by more than 30 times. In 2015
itself, Ctrip invested $ 500 million with Priceline Group.
Economic logic
The Ctrip Company could provide services to its customers at a very low price and also
could offer discounts. The company can make collaborations with many more companies to
increase its profits and to provide good services to customers such as telecom companies, hotels

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and many more. In last 5- 10 years company created so many collaborations with different type
of companies which gave a high boost to the profits of company.
With the low cost, company can also provide premium products at special offers to the
customers. Ctrip can provide premium products with the help of new technologies and special
hotel coupons. For example, the company can offer its customers that one day stay in a hotel is
free with two flight tickets. For this type of offers, Ctrip can collaborate with the hotel and it can
promote the Ctrip as well as that hotel.
From the above analysis, it can summarize that company’s strategy is based on the
organic growth of company. A biggest strategy which is giving a push to business is
collaborations. To grow the business, Ctrip is developing new collaboration with different
companies and it is also helpful to provide more services to customers. With changing times, the
company is also changing its technology.
Evaluation of Strategy
PESTLE Analysis
PESTLE is an analysis that expands operational challenges (Wallis, 2017). Ctrip.com is
working in the area of the international market.
Political Factors
Political factors play an important role in international business. Ctrip.com is also not
untouched by political factors as it is also an important part of the international market. If the
political situation of a country is stable, then the market there can give long term benefits to any
business. If the political condition is even slightly stable then it also has the opposite effect on
the business (50MINUTES.COM, 2015).
Ctrip.com is working in the international market in the lodging sector and that is why it
has to face many political factors and their systems and this company would have exposed the
risks of that political system. If Ctrip.com wants to establish its business in the market of any
country, then it should pay special attention to the following:

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 How can the lodging sector give its support in political stability and economy of
any country and how much importance it has in that economy?
 Identify the threat of military.
 To what level is corruption and in what ways it can affect business.
 How much interference is there in the bureaucracy industry?
Economic Factors
Economic sector of any country can influence the business. Similarly, economic factors
of the country can influence the business of Ctrip.com, mainly the inflation rate, growth rate and
economic indicators of the industry are the most important (Berry, Pestle Analysis Essntials,
2017). Because of the unrest in the Africa and Middle East, the global economy facing many
issues and in this situation, economic condition of China is also very sensitive (Ctrip, 2018).
Ctrip mainly operating its business in China and majority of its revenues are consequent from the
operations in China. According to this, the growth of Ctrip is affecting by the economy.
The main economic factors under PESTEL are:
 Stability of Economic System
 Government interference in the free market and related services
 Currency of Country
 Stability of the country's exchange rate
 Financial market potentiality in the lodging industry
 Comparative study of the service sector with any particular country
Social Factors
The society of a country and the way of doing anything also leaves an impact on the
business. Society plays an important role in the international market (Bates & McGrath, 2013).
The international market also affects by the population and attitude of the population there. The
main social factors that Ctrip.com should do under its leadership are:
 Skill level of the population
 Social structure of a country and the power structure of society
 The education level of country
 The culture of country

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 Gender equality
Technological Factors
Technology is influencing international business at a very fast pace as well as disrupting it. If
companies look at the travel industry, then technology has the biggest hand in it. In the last few
years, technology has managed to handle many old companies if these companies not accepted it
then they are no longer the part of the market. Technology is going on the very high at a fast
pace (Berry, 2017).
The company should not only do technical analysis of the new technology but should also
remove the factors that are hindering it. If the technology grows at a very fast pace, the business
also has to adopt the technology at the same speed, they may be out of the race as soon as they
are a bit slow. The business of Ctrip is also depends on technology and Ctrip also changing the
way of doing things with technology.
Environmental Factors
Analysis of the environment helps companies understand the current environment and all
possible changes that occur in it. Along with knowing the current environment, the future
situation also has to be estimated. This helps in formulating the future strategy and these types of
changes affect the business of Ctrip. International business mostly depends on environmental
factors (Robertson, 2015). For example, in the rainy season, people love to travel which fact is
very beneficial for Ctrip. In short, it can be said that the benefits of the study of the environment
are -
 Assisting in firm strategy and long term policy formulation
 To help develop the program of technological progress
 Forecasting national and international and socio-economic impacts on the firm's
sustainability
 Analyzing competitors' strategies and preparing for an effective response, and
 Maintaining mobility
Legal Factors
There are many countries where it is very difficult to trade. The legal system of that
country affects trade based on many aspects (Perera, 2017). The Ctrip also had to go through

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many such aspirations so that it could make a name in the international market. Because
whenever a firm enters the markets of a new country, the risk of theft of its intellectual property
increases. The firm should also evaluate all these things before entering these markets. This type
of system increases overall competitiveness in the market. Ctrip.com should consider some new
factors, which are as follows:
 Law of discrimination
 Copyright and patent law
 Law for intellectual property
 Law for data security
Five Forces Analysis
It is a strategy given by Michael Porter, using which any firm can make a profit in its
industry. These five forces are known as Porter's Five Forces in the business world
(50MINUTES.COM, 2015).
Porter Five Forces is a complete strategy format in today's time, by which any company
can compete with its competitors. It is also known as the framework of the overall strategy. By
using these five forces, Ctrip.com can evaluate the above strategy.
The threat of New Competitors
Whenever a new company enters the lodging industry, it has an impact on Ctrip.com.
Whatever new company is launched, they attract customers to the company in their new ways,
which makes Ctrip to a low level (Porter, 2017). The pressure of all these things increases on
Ctrip and for managing customers; Ctrip also has to offer new prices to customers.
How Ctrip.com can deal with its new competitors:
1. Ctrip can implement new ideas in its industry and gets new products provided to
customers.
2. Offer new types of services to the customers so that the customer stays with the Ctrip
and maintain their trust with the Ctrip.
3. Reduce costs to keep old customers with the company and attract new customers to
the company.

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Bargaining Power of Suppliers
Ctrip is a very big name in the lodging industry. All the big companies in the lodging
industry buy raw materials from some companies (Magretta & Porter, 2012). To reduce cost,
Ctrip can purchase products from direct suppliers. The big company has to reduce the margin to
sell goods. Ctrip can make a big profit from the goods received from this low margin. Ctrip can
also take advantage of being a big company to not let any small companies stay in the market.
All companies in the lodging industry buy their raw materials from many suppliers.
This is how Ctrip deals with raw material companies:
1. By keeping a special relationship with many raw material companies.
2. By building an efficient supply chain.
3. Creating different lines of your product design using different materials, this will benefit
if the price of any raw material increases, soon switch to another product.
Bargaining power of buyers
When the buyer reaches the market, there is often a lot of demand for the buyer. The
buyer may want to buy only one product, but his desire increases after coming into the market.
The buyer wants to buy the best product out of the market but wants to pay the lowest price for
it. Due to this demand, the Ctrip has shown signs of a decrease in profit and there has been
pressure on the company to make a profit for a long time (Miller, Vandome, & McBrewster,
2011). One of the main reasons for this is that the buying power of the customers has increased,
giving the company discounts and offers.
How Ctrip Deals With Bargaining Power of Buyers:
1. The Ctrip will first have to create a large customer base for the company, which will have
the effect that the bargaining power of the buyers will be less. The second effect will be
that the production process can be streamlined.
2. Whenever new products come in the market, by adopting them and luring customers
discount on old products.

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Threats of Substitute Products or Services
Whenever a new product comes in the market, the old product has to be removed from
the market or say that whenever a product is substituted, it reduces the profit of the company
because it will meet the needs of the customers (Johannes , 2013). The best example of that since
the arrival of Drop box and Google Drive in the market, hard drive sales have been affected, that
is, the sale of hard drives has also come down and the prices are also on a low level.
How to deal with substitute products and services:
1. The Ctrip should focus more on service rather than just focusing on the products.
2. Understanding the main requirement of the customer and producing accordingly
3. Customers should not be allowed to switch.
Rivalry among existing competitors
Whenever a new company comes in the market, then its rivalry starts with the old
company, if the competition becomes intense, then it leaves a bad impression on the profit and
due to this rivalry, the prices drop (Bischoff, 2016). Ctrip also has to face this same competition
and whenever a new company comes they also bring new services, which Ctrip has to reduce the
prices of its services.
How Ctrip can deal with intense competition:
1. The Ctrip would have to create discrimination between companies.
2. Setting a scale for the company so that it can create good competition.
3. Instead of working on a small market, establish a big market and then establish
competition.
Key Resources and Capabilities
The key resources of company are good financial condition, significant capital, marketing
relationships, managerial and human resources and alliances. The business of Ctrip is mostly
depending on the technology but to use it properly, it is very important to have the effective and
efficient employees. The main capability of Ctrip is its customer service. Ctrip gives excellent
customer service to the customer which makes it the most different.

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VRIO Analysis
It is an analysis tool which is very useful to evaluate the strategy (Russell & Cohn, 2012).
Value
Provide excellent customer service, superior service quality, cost- effective travel
solutions and extensive resources are the value of the Ctrip.
Rarity
No other company can provide this type of excellence in customer service.
Imitability
Superior customer service is both costly and tough to imitate. To achieve this type of
quality, companies need high educated and skilled employees and technology.
Organization
The employees of Ctrip have the capability to attract customers and provide satisfaction
to the customers.
The competitors of Ctrip are also trying to use same technology but Ctrip is very
innovative to compete with the competitors. There are many competitors in the market to
compete with Ctrip. The main competitors of Ctrip are TripActions, Jalan.net, Checkfrond and
Stride Travel which are working in same industry and giving same services. All the above
elements of strategy are internally consistent (Fleisher & Babette, 2015).
From the above evaluation of strategy, it is summarized that the strategy of Ctrip is very
strong. It has strength to fight with competitors as well as it has some weaknesses also. High
technology, modernization service and advanced management are the strengths of the company
whereas high operating costs and simple structure of the net income is the weaknesses of the
company. Company can reduce its weaknesses with the help of strengths and achieve the future
objectives.
Conclusion
From the above discussion, it can be concluded that the strategy of Ctrip is very effective.
Ctrip is attracting customers with the superior service, high technology and excellent customer

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service. Ctrip grew the business in very less time with these qualities. But lodging industry is
very wide and in these days, competitors are increasing. In this situation, company can grow the
business with some different services.
From the PESTEL analysis, it can be concluded that company’s overall business is
depend on the economic and political condition of the China. But technology and developing
society are positive factors for the Ctrip. The evaluation of strategy clearly described that
competitors are the biggest threat from the Ctrip but it has strengths and opportunities to compete
with the other companies.

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Competition and Strategy. Brighton: Harvard Business Press.

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