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Office supplies vendor zeros in on responsiveness

Like many companies operating before 1989, the office furniture and warehouse supplies' producer and distributor OZAP enjoyed a monopoly as a supplier to various outlets and factory furnishers in the former Czechoslovakia. With the advent of the market economy, though, the company started to rapidly lose its position on the market. But a joint venture in 1995 changed all that, as OZAP partnered with the Swedish company AJ Produkter, one of the biggest European catalog furniture vendors, to form AJ OZAP.
The alliance proved to be a vital injection. In two years, the company has doubled its turnover, from 60 million Sk in the first 9 months of the joint venture's operation to 120 million Sk in 1996, and is probably heading for yet another increase this year, according to Zuzana Kormanová, the company's executive director. Kormanová added that AJ OZAP's total revenue this year is expected to exceed 150 million Sk.



Like many companies operating before 1989, the office furniture and warehouse supplies' producer and distributor OZAP enjoyed a monopoly as a supplier to various outlets and factory furnishers in the former Czechoslovakia. With the advent of the market economy, though, the company started to rapidly lose its position on the market. But a joint venture in 1995 changed all that, as OZAP partnered with the Swedish company AJ Produkter, one of the biggest European catalog furniture vendors, to form AJ OZAP.

The alliance proved to be a vital injection. In two years, the company has doubled its turnover, from 60 million Sk in the first 9 months of the joint venture's operation to 120 million Sk in 1996, and is probably heading for yet another increase this year, according to Zuzana Kormanová, the company's executive director. Kormanová added that AJ OZAP's total revenue this year is expected to exceed 150 million Sk.

Today, AJ OZAP has over 4,000 customers, including major corporations and small businesses, Kormanová said. Every quarter the company sends out 30-40,000 catalogues. The range of offered products includes warehouse and workshop furnishing shelves, containers, washbasins, kitchen machinery, refrigerators, and office furniture - altogether more than 6,000 items.

The competition is fierce, though, as several other firms, such as Ikea and MIT Topoľčany, to name a couple, wage war for market share.

"Now that we're fighting for customers, only quality can win, said František marko, marketing director for MIT, which had 750 million Sk in turnover in 1996.

Different approach

Kormanová said that there is a different approach to the trade in Slovakia. "In Scandinavia and Germany, the Swedish company [AJ Produkter] operates only warehouses, while clients choose the furnishings via catalogue," she said. "Our customers, on the other hand, need to see and feel the products."

That's why AJ OZAP will open two more presentation centers in Banská Bystrica and Žilina, and a third in Košice in early 1998, which will double its current network of three branches in the country, Kormanová said.

According to Kormanová, the biggest advantage AJ OZAP offers is a wide range of products and short delivery periods. In Slovakia, she said, furnishing companies still try to sell on their own. However, they are gradually discovering that keeping a hold on the market requires a concentrated effort to reach the customer.

"Responsiveness is the key," Kormanová said. "We often find that Slovak producers are able to make a good quality product at a reasonable price, but they are not able to keep the delivery times, and with repeat supplies they are not able to uphold the quality."

AJ OZAP relies on domestic producers for one half of its products, while another 20 percent comes from the Czech Republic; the rest is supplied mostly by Swedish manufacturers. AJ OZAP also has two daughter firms: AJ SERVIS provides services and Tanád produces leather furniture.

Kormanová said her company has plans to expand abroad, mentioning specifically the potential of the Košice branch to serve markets further east. That expansion may have to wait for clearer legislation, as Kormanová related that AJ OZAP had to terminate its operation in Ukraine due to everchanging customs fees that made it impossible to keep fixed prices over a period longer than one or two months. However, she added, AJ OZAP will keep an eye on these markets.

Other expansion plans are a go, as Kormanová said this year the company will probably open a branch in Budapest, and later in the Czech Republic, Poland and Austria.


AJ OZAP At a Glance (1996 figures unless otherwise noted)

No. of employees: 57
Total revenue : 120 mil. Sk
Gross profit: 575,000 Sk
Net profit: 575,000 Sk
Total assets: 113.27 mil. Sk
Share capital: 91 mil. Sk
No. of subsidiaries: 3 (2 more to open this year)
Ownership: OZAP a.s. Praha , AJ Produkter a.s. Bratislava, ZŤS Strojárne Námestovo, KOIN s.r.o. Bratislava

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