Case interpretation: Ctrip has many stories, full of sadness and joy.

The "Management Community" of Qianqi School shares a case every week, guiding everyone to see the essence through the phenomenon, thinking deeply about enterprise management from the same events that everyone can see, improving insight, structured thinking ability and enterprise management system view through repeated training, and enriching relevant knowledge of enterprise management. This article is a summary of the Ctrip case shared last Thursday.

2020 is destined to be an extraordinary year. At the beginning of the year, people's footsteps were disrupted because of the epidemic. For many enterprises, they have to take various measures to ensure their survival.

If the epidemic has a greater impact on which industries, then tourism must be among the best. As a giant in the tourism industry, Ctrip also launched the "China Tourism Renaissance V Plan" to lead the industry recovery. For Ctrip, who is already in his twenties this year, this is not the first time to encounter such a black swan incident. After 20 years of ups and downs, there are many stories worth sharing.

Generally speaking, the development process of Ctrip can be divided into the following stages:

1. 1999, Four Gentlemen founded Ctrip;

It was listed on NASDAQ in 2003. I met SARS before going public and almost died.

3. Dominate the market after listing, and the founders began to leave one after another;

4. After 2006, competitors began to rise, eroding Ctrip's market share, and Ctrip was once again facing a crisis;

In 5.20 13, the founder Liang Jianzhang returned to China and began to study both inside and outside, thus re-consolidating the dominant position in the industry.

Many friends may know Ctrip's entrepreneurial story. Ctrip has a strong entrepreneurial team. Liang Jianzhang was the consulting director of China District, Oracle Bone Inscriptions, Miracle was the general manager of Huaying Company in East China with rich entrepreneurial experience and management experience, Shen Nanpeng was a banker with many years of investment experience, and Fan Min, the former general manager of Shanghai Wuzhou Hotel, had travel agency experience. These four people are combined together, some have technology, some have entrepreneurial management experience, some have rich investment and financing experience, and some have industry experience, each with its own strengths. In addition, the four are both entrepreneurial partners and alumni friends in private, which can digest the contradictions arising from work during the entrepreneurial period. So these four founders get together, also known as Ctrip Four Gentlemen.

In terms of business, Ctrip started with hotels and air tickets in the early days. At that time, Sijunzi thought that the company's future was to help China people solve the problem of inconvenient travel, and to solve this problem, the first thing to do was to solve the problem of hotel accommodation when going out. At that time, Ctrip issued free reservation cards in transportation hubs and office buildings in major cities, and users could book foreign hotels by themselves according to the phone numbers on the cards. This move made Ctrip's booking volume surge in a short period of time and achieved profitability. In terms of air ticket business, Ctrip has set up a national air ticket booking platform to realize the functions of purchasing tickets in different places and round-trip air tickets. Solving the pain point of buying air tickets at that time became another big profit source for Ctrip.

In 2002, Ctrip's operating income reached US$ 2.8 million, and its operating profit margin reached 23%. With the continuous growth of business, Ctrip began to plan to list on Nasdaq.

In the preparatory stage of Ctrip's listing, SARS broke out in 2003, and the whole country was shrouded in panic caused by the epidemic. ? For a time, the company's performance suddenly went to zero from the original high-speed growth, which brought a huge blow to Ctrip, and Ctrip also fell into a state of panic. In this case, Liang Jianzhang has put forward six measures to deal with the epidemic from three aspects: stabilizing military morale, increasing revenue and reducing expenditure, and improving management.

With regard to stabilizing the morale of the army, Liang Jianzhang sent several internal letters to encourage employees. After SARS, tourism is bound to usher in retaliatory growth, and Ctrip's prospects will be broader. In addition, in the face of the epidemic, the firm decision not to lay off employees can stabilize the anxiety of employees on the one hand, and the company can also have enough personnel to deal with the business outbreak after SARS on the other hand.

In order to survive, it is not enough to stabilize people's hearts, but also to have cash flow. Ctrip has taken measures to increase revenue and reduce expenditure. In terms of reducing expenses, a rotation system was adopted to pay part of wages and reduce labor costs. In terms of open source, cooperate with China Merchants Bank to develop credit card sales projects and rent idle call centers to obtain valuable cash flow.

In terms of management improvement, during the gap period of SARS, we have time and energy to improve the process, improve the management system, train and train employees, enhance business ability, and lay a solid foundation for future development.

Fortunately, a few months later, SARS passed, and Liang Jianzhang's slogan of "Ctrip will be better after SARS", which encouraged employees, also became a reality. In February 2003, Ctrip was successfully listed on Nasdaq. After the listing, Ctrip is the only one. Maybe Ctrip was invincible at that time, and it was boring to stand on the top of the mountain. In addition to Fan Min, several founders left one after another. After Shen Nanpeng left, Sequoia Capital China was established. Miracle successively founded Home Inn and Hanting Hotel (later expanded to China Hotel Group). Liang Jianzhang also left Ctrip in 2006 and went to the United States to study for a doctorate in economics and began to study the field of population.

In the time after several founders left, online travel platforms such as E Long and Qunar began to rise, eroding Ctrip's market share.

On 20 10, E Long made a slogan of "Book a hotel and find E Long", and said that if the hotel is more expensive than Ctrip, it will pay three times the price difference and directly challenge Ctrip. In addition to the pressure from E Long on the hotel side, air tickets, another big profit source, have also been besieged by Qunar.com..

20 1 1 year, Ctrip's net profit decreased1/billion yuan, 20 12 years, and the annual net profit decreased again. 20 13, Liang Jianzhang returns to Ctrip. After returning to Ctrip, Liang Jianzhang adopted capital operation to solve external competitors, and internally adopted organizational changes to establish a business division system.

With regard to the operation of foreign capital, in 20 14, Tongcheng and eLong decided to join hands with Ctrip, and the two sides issued a "peer-to-peer" strategic cooperation conference. However, this cooperation was destroyed by Ctrip shortly after the announcement. Liang Jianzhang met with Wu Zhixiang, the founder of Tongcheng in Suzhou, saying that if the two sides continue to fight, both sides will lose, so it is better to develop together. In the end, Ctrip invested 220 million yuan in Tongcheng, and Tongcheng chose to pay 30 million yuan as liquidated damages to E Long.

After successfully participating in "Art from Peer" for one year, Ctrip invested 400 million US dollars to acquire 37.6% shares of E Long, becoming the largest shareholder in E Long.

In addition to taking shares in Tongcheng and Yilong, before Tuniu went public, Ctrip and Tuniu reached an agreement to acquire shares worth150,000 USD at the issue price when Tuniu's IPO was completed. After the transaction is completed, Ctrip can assign a director to Tuniu. The agreement made Ctrip and Tuniu become "friends" from competitors.

After fixing the rivals of Tongcheng, Yilong and Tuniu, there was a strong rival Ctrip in the market at that time. On August 20 15, qunar. com submitted an anti-monopoly document, indicating that it would go shopping with Ctrip. However, in June of 10, Liang Jianzhang secretly met with Baidu Robin Li, the major shareholder of Qunar.com, and exchanged 25% equity of Ctrip for 50% equity of Qunar.com (including 45% voting rights). At this point, the competition between the two sides has come to an end.

Externally, through capital operation, competitors are placed under their control. Internally, Ctrip will adjust its internal organizational structure and establish a business division system. This PPT is the original organizational structure of Ctrip. Relatively speaking, it is traditional and lacks flexibility, while Internet companies often require higher speed and flexibility than general industries. In addition, under this organizational structure, it is easy to tilt resources to big business sectors such as hotels and air tickets, which is not conducive to the development of small creative businesses and new businesses.

In terms of organizational structure adjustment, Liang Jianzhang dismantled the original organizational structure and established a business division system. On the whole, according to the company's business, it is divided into several major business divisions, such as accommodation, transportation, tourism and business travel. Each business department is divided into smaller SBU (small business unit), such as air tickets, train tickets, group purchases, etc. In addition to SBU, there is a smaller startup unit, the EU (startup unit), to encourage employees.

For entrepreneurial units, similar to internal entrepreneurial companies, companies provide resources, and employees' income includes daily salary income and project options. When the start-up units reach a certain valuation, they can be extended to SBU. After promotion to SBU, it is equivalent to internal listing. Employees' original options can be cashed out, and they can also get a certain proportion of Ctrip options or stocks. Of course, entrepreneurial units will be swallowed up by other units if they do not do well.

The valuation method of each business unit is unified, mainly depending on whether it can be healthy and profitable. Every employee knows the valuation method, which is 2 times the income times 10 times the net profit and then divided by 2.

In addition, if cross-BU needs to be solved in a coordinated way, Ctrip will control it through the "committee" mechanism. Ctrip has a product committee, a marketing committee, a service committee, a strategy committee and other committees. Members can vote to resolve conflicts and ensure Ctrip's highest interests and consistent external image. ?

Generally speaking, this kind of organizational structure is flexible as a whole and can maintain the creativity and vitality of the organization.

Finally, let's summarize the development of Ctrip at all stages. First, it is the start-up period. During this period, Ctrip has well grasped the blank field of an industry and grasped the pain point of the market, thus growing rapidly and developing at a high speed.

After the listing, in a relatively blank market, Ctrip had the original accumulation and naturally became the leader of the industry. At this time, Ctrip, who has stood on the top of the mountain, seems to be unable to find the next goal. Perhaps this is also the reason why the founders have left. Qi Ji, one of the founders, said: "Ctrip has succeeded, but I can't rest. There are many other opportunities."

In the following years, although other competitors began to enter the market and gradually became stronger, Ctrip has a rich historical accumulation, coupled with the consumer's consumption inertia, which seems to be unable to shake Ctrip. But with the passage of time, the threat to Ctrip will become bigger and bigger. 1 1 and 12 years, Ctrip felt the crisis, the founder Liang Jianzhang returned, and after a series of adjustments, the OTA market was unified. /kloc-in 0/6, Liang Jianzhang stepped down again.

Where will Ctrip go in the future? In the face of constant challenges from new competitors such as Meituan and Zhu Fei, can we still maintain the momentum of triumphant progress and stabilize the position of the industry leader? ......

Editor-in-Chief: Qian Qi Consulting | Chen Yong

Source: Qianqi Management Review

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