CTRIP CASE ANALYSIS

During Ctrip’s early years, the Chinese travel market consisted of small, independent agencies scattered across the country. Many were state-owned and offered poor service to their customers, such as travel packages that consisted of overnight flights, mandatory shopping outings, and low-quality cuisine. According to Ctrip’s CEO Min Fan, “few people cared about service quality.”1 A national hotel inventory did not exist. Hotel chains made up less than 5% of the market and, since the Internet was in its infancy, travelers had to rely on newspapers to know which hotels were available in which cities. Customers that did have Internet could not book airfare online. They had to go to a local travel agent, who used a …show more content…

According to CFO Jane Sun, this reputation gives Ctrip a major competitive advantage because it positions the company “so far ahead of the market that the second player can’t catch up…for at least 5 or 10 years.”10 An example of the superior service that the firm provides is the wait time experienced by customers when they call in to make a reservation. Ctrip makes sure to keep it under 10 seconds. Another example is the cost-control service provided to corporate clients: if a corporate employee is given choices for a certain flight and doesn’t select the lowest-priced option, Ctrip contacts his supervisor. Barney argues that a resource also must be rare for it to give a firm a competitive advantage. One example of a rare resource that Ctrip uses to deliver excellent service is its Six Sigma program. The reason the program is rare is because Ctrip was “the first Chinese company to apply Six Sigma in a service business,” and because “it succeeded where many others failed.”11 Ctrip should be able to sustain a