Ctrip Strategic Interpretation: Supply chain realizes value increment

In the traditional tourism, the profit margin has been quite thin, the overall gross profit margin is less than 10%, entry threshold Low, serious geographical division, all provinces and counties have their own travel agencies, advertising costs high, store management to maintain high operating costs.

Now, take a look at the performance of Ctrip: Just released in the 2005 annual report shows that the total revenue of 521.2 million yuan (64.6 million U.S. dollars), compared with the 2004 fiscal year growth of 56%. The net profit for fiscal year 2005 was 224.2 million yuan (27.8 million USD), which grew by 68.4% compared with the 2004 fiscal year. Ctrip's net interest rate for the 2005 fiscal year is 43%, and the net interest rate for fiscal year 2004 is 40%. Nasdaq has given Ctrip a 50 times-fold price-earnings ratio, and profits and profit margins are only 30 times multiples of China's internet first NetEase. April 2006, Ctrip's market value reached 1.5 billion U.S. dollars, is the same as the Nasdaq-listed e-dragon 5 times times, also higher than the scale of Sina, Sohu and Grand.

A tentative strategic interpretation of the success of Ctrip:

　　first, "Supply chain" system capacity is the key to success

Ctrip station like Sina, Sohu and other network portals integrated traditional media news products and resources, through the intermediary market (marketplace) to connect suppliers and consumers. As a unique resource integrator, Ctrip one palm control the country nearly hundreds of thousands of member customers, the other hand, with the country's thousands of hotels, all the airlines are closely linked.

Through Ctrip This information platform, we established the tourism demand side and the hotels, travel agencies and the aviation railway suppliers of both sides of the database. While netting a large membership card customer groups, the hotel and airlines to obtain a lower discount, their own access to the middle of the Commission-this is the simple description of the business model Ctrip. Ctrip plays the role of "channel business" of airlines and hotels, the core of the business is to air tickets, hotel reservations mainly by issuing membership card to attract business customers, while relying on a large telephone call center for scheduled services. This is the typical supply chain system integration management. Through the supply chain system integration capability to achieve value added.

　　Ii. team building based on the complementary capability elements

Ctrip was founded in the early 1999, four founders based on their experience in general set the personnel structure. Shen as CFO. Hanting and Liang Jianzhang, who are CEO, are good at marketing and sales, the latter is Oracle China District Consulting Director, specializes in it and architecture management, within the Lord. The last one to join Mr. Fan, the general manager of Shanghai Travel Agency and the new Asia Hotel management company deputy general manager, as executive vice president, take care of specific tourism business, and then gradually promoted to COO and CEO.

On the character, Hanting has passion, determined to open up, Shen, a sophisticated investment home pie. and Liang Jianzhang biased, with the number of speech, long-term vision, Mr. Fan is good at business, all aspects of the relationship between the appropriate treatment. Four people have different strengths, each end of the palm, there is considerable consensus within the company.

　　third, good corporate governance structure

Hanting holds the same shares as Liang Jianzhang and Shen. The proportion of the three is 5.2%, 6.3%, and 7.3% respectively. "If there is no equity, the last Ctrip will not have such a good development." "With the layout of the company's property rights, we have very few shares, so that enterprises will continue to expand." This is what NIU Gensheng so-called "wealth gathers people scattered, wealth scattered people gather."

Good corporate governance structure is the guarantee of enterprise strategy implementation, otherwise enterprises can not produce cohesion, internal struggle, strategy will become a power struggle weapons or compromise. This is the so-called power school strategy.

　　Iv. the application of strategic intersection thought

For the said, do it business, already have Yahoo and NetEase and so on, do network games have a grand, do travel have Cyts and national brigade and other companies, how to stand out here? They looked for a strategic intersection. is the intersection of tourism and IT industry. A large number of customers need better travel and travel services, including lower prices, more convenient and reliable booking, hotels and tourism services, for the traditional tourism "suppliers", its decentralized supply can not meet customer demand.