• Journal of Distribution Science
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• v.9 no.2
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• pp.49-59
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• 2011

A franchise can be said to be the main method of distribution and marketing. It appears to be the future of the retail industry and is one of the world's fastest growing businesses sectors, as many policy reports and research results have acknowledged. Korea's franchise industry began in the 1970s, spread out into many areas (including food services, retail, and the service industry), and has grown by over 10% each year ever since. The industry's influence on the national economy becomes ever greater. Although the size of the franchise industry is expected to grow as it spreads and as the government expands its support, it has not yet attracted much academic interest. Research has so far been very fragmented. The main interest has been the relationship and conflicts between the head offices and the affiliates. No study has yet occurred on whether the concepts of satisfaction and intent to conclude a contract directly affect the success or failure of the affiliates. Few studies have empirically inquired into the demographic characteristics and abilities of the affiliates that significantly affect their results. Domestic franchise industries must prepare to leap from quantitative to qualitative growth. Most important is the need for affiliate headquarters and affiliates to build confidence between them. A friendly and reliable relationship between affiliate headquarters and affiliates will eliminate distrust from the franchise and maintain a healthy franchise system. This study suggests that current and prospective heads of affiliation should concentrate not on attracting affiliates but on investment and techniques of affiliate support. They should work on the reinforcement of brand power, the appropriate affiliate business environment, systematic education/training, taking burdens off the affiliate business persons, consolidating the relationship with the affiliate business persons, marketing mix factors (e.g. products, price conditions, logistics and shipping services, promotion, supervising and supervisor, operation procedures/processes, and material evidence); these all greatly affect the success or failure of the affiliate business. Supporting the affiliates is an important factor that enhances their results and satisfaction and consequently increases the positive recommendations to others and the ratio of recurrent conclusions of contracts, which ultimately generate the growth of the franchises. In addition, it is suggested that prospective franchise founders should make every effort to choose a good head office since the characteristics of the head office greatly influence the success of the affiliates. This study is significant in that it grasps the characteristics of the head office of affiliation and of the affiliates that influence affiliate results in ways not yet academically attempted.

• Journal of Intelligence and Information Systems
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• v.17 no.3
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• pp.187-201
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• 2011

KOSPI200 index is the Korean stock price index consisting of actively traded 200 stocks in the Korean stock market. Its base value of 100 was set on January 3, 1990. The Korea Exchange (KRX) developed derivatives markets on the KOSPI200 index. KOSPI200 index futures market, introduced in 1996, has become one of the most actively traded indexes markets in the world. Traders can make profit by entering a long position on the KOSPI200 index futures contract if the KOSPI200 index will rise in the future. Likewise, they can make profit by entering a short position if the KOSPI200 index will decline in the future. Basically, KOSPI200 index futures trading is a short-term zero-sum game and therefore most futures traders are using technical indicators. Advanced traders make stable profits by using system trading technique, also known as algorithm trading. Algorithm trading uses computer programs for receiving real-time stock market data, analyzing stock price movements with various technical indicators and automatically entering trading orders such as timing, price or quantity of the order without any human intervention. Recent studies have shown the usefulness of artificial intelligent systems in forecasting stock prices or investment risk. KOSPI200 index data is numerical time-series data which is a sequence of data points measured at successive uniform time intervals such as minute, day, week or month. KOSPI200 index futures traders use technical analysis to find out some patterns on the time-series chart. Although there are many technical indicators, their results indicate the market states among bull, bear and flat. Most strategies based on technical analysis are divided into trend following strategy and non-trend following strategy. Both strategies decide the market states based on the patterns of the KOSPI200 index time-series data. This goes well with Markov model (MM). Everybody knows that the next price is upper or lower than the last price or similar to the last price, and knows that the next price is influenced by the last price. However, nobody knows the exact status of the next price whether it goes up or down or flat. So, hidden Markov model (HMM) is better fitted than MM. HMM is divided into discrete HMM (DHMM) and continuous HMM (CHMM). The only difference between DHMM and CHMM is in their representation of state probabilities. DHMM uses discrete probability density function and CHMM uses continuous probability density function such as Gaussian Mixture Model. KOSPI200 index values are real number and these follow a continuous probability density function, so CHMM is proper than DHMM for the KOSPI200 index. In this paper, we present an artificial intelligent trading system based on CHMM for the KOSPI200 index futures system traders. Traders have experienced on technical trading for the KOSPI200 index futures market ever since the introduction of the KOSPI200 index futures market. They have applied many strategies to make profit in trading the KOSPI200 index futures. Some strategies are based on technical indicators such as moving averages or stochastics, and others are based on candlestick patterns such as three outside up, three outside down, harami or doji star. We show a trading system of moving average cross strategy based on CHMM, and we compare it to a traditional algorithmic trading system. We set the parameter values of moving averages at common values used by market practitioners. Empirical results are presented to compare the simulation performance with the traditional algorithmic trading system using long-term daily KOSPI200 index data of more than 20 years. Our suggested trading system shows higher trading performance than naive system trading.

• Journal of Korea Port Economic Association
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• v.37 no.3
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• pp.117-128
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• 2021

In order for the users (shipping firms and shippers) and suppliers (stevedoring firms) in the container terminal industry to win-win, it is necessary to have some appropriate diverse market conditions for the industry. This study analyses the basic conditions and demand and supply characteristics of the industry and investigates the market performance of Busan container ports. First, this article analyses the basic characteristics of demand and supply. As the demand characteristics, there are five ones such as 1) exogeneity of demand, 2) function as export/import transportation and hub for transshipment, 3) increase of users' bargaining power, 4) high substituting elasticity, 5) reduction of volume growth. As the supply characteristics, there are seven ones such as 1) inelasticity of supply, 2) homogeneity of stevedoring services, 3) over-supply, 4) adoption of cutting-edge stevedoring technology, 5) scale economy and impossibility of storage, 6) labor market rigidity, 7) enhancing port's role in SCM. In addition, this study conducts the so-called structure-conduct-performance analysis. For the structure analysis, 1) lacks of scale economy in stevedoring companies, 2) high entry barrier, 3) strengthening of shipping firms' bargaining power, 4) transitory permission scheme for tariff are analyzed. For the conduct analysis, 1) price discrimination between export/import and transshipment, 2) mid-term length of terminal use contract, 3) continuous investment in equipment, 4) low level of cooperation among terminal operating firms are derived. For the performance analysis, 1) inequality in profitability, 2) reduction of export/import cost, 3) delay in adopting cutting-edge technology, 4) idle equipment are analyzed. Following this logical flow, the hypothesis that the market structure influences the market conduct is tested based on the actual dataset. As a future agenda in the conclusion, this article recommends the so-called port industrial policy.

• Journal of Korean Home Economics Education Association
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• v.33 no.4
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• pp.139-157
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• 2021

The purpose of this study is to derive implications for Korean home economics curriculum to emphasize consumer competency of adolescents by analyzing the content components of consumer competency presented in 'consumer life' area of middle school home economics curriculum of 3 states in the U.S. The analysis results and implications are summarized as follows: First, the U.S. home economics curriculum is composed of various contents, including credit management, savings/investment/ insurance, taxes, and financial situation, and financial decision-making, to improve adolescent's understanding of finance. In the next revision of Korean curriculum, for financial stability in prolonged life after retirement, it is would be necessary to include contents on basic financial knowledge and technology for financial information utilization so that students can establish financial plans for different life stages in consideration of various variables such as changes in economic environment, etc. Second, the U.S. home economics curriculum was developed to help students make better purchase decisions by applying economic concepts such as prices and interest rates, economic trends and the impact of demand and supply, purchase methods and contract conditions, etc. However, Korean home economics curriculum only focus on purchase plan and purchase decision-making process. It would be necessary to foster consumer transaction competency by introducing economic concepts suitable middle school level. Third, to emphasize "consumer civic competency", Ohio was focusing on "claim of consumer rights" and Wisconsin was focusing on the "acceptance of consumer responsibility." In order to enhance adolescent's consumer civic competency, it would be necessary for Korean curriculum to balance the claim of right and the acceptance of consumer responsibility in the following term, and to emphasize the contents on consumer policies, laws and consumer advocacy to create a consumer environment where consumer sovereignty is realized.

• KDI Journal of Economic Policy
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• v.13 no.1
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• pp.3-33
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• 1991

Since the early 1980's, the Korean government has gradually been widening the Korean market to foreign consumer goods. This, combined with the increased purchasing power of the Korean consumers resulting from the continued economic growth of the country, has sparked a spectacular influx of foreign consumer goods into Korea, ranging from BMW's to chopsticks. Import of foreign consumer goods amounted to more than 6 billion dollars in 1989 and is continuing to grow at a rapid rate. The increased import of foreign consumer goods doubtlessly improved the overall welfare of the Korean consumers by providing them with a wider range of options to choose from, by lowering the prices of some of the consumer goods domestically produced, and also by forcing the producers of some Korean goods to face competition with better foreign goods, thus giving them an incentive to raise the quality of their products. However, it is agreed by most economists that this increase in general welfare has been much smaller than what they had expected at the outset. Consumer prices of most imported consumer goods are easily double the import price, and in some cases, more than treble the import prices. Further, there has not been a noticeable drop in the prices of domestically produced consumer goods. Much of the blame has been attributed to the distribution sector of Korea. The objective of this paper is to analyze the imported consumer goods distribution sector of Korea, focusing on the possible sources of the poor performance of that sector, and to make policy suggestions that could potentially increase the welfare. This paper differs from all the previous research by others on this subject in that it analyzes the imported consumer goods distribution sector of Korea as a vertical structure. The distribution sector of an imported consumer good is a vertical structure since it consists of an international market, an import stage, and domestic wholesale and retail markets, in that order vertically. Our study naturally includes the analysis of the vertical restraints as well as the analysis of the industrial organization of each horizontal stage in the vertical structure. Each horizontal component of the imported consumer goods distribution sector is basically a monopolistically competitive market differentiated by characteristics of goods and by the locations and the services of firms. Further, restrictive dealership and resale price maintenance are found to be widely in use. Our main findings are the follwing; First, most consumer goods are imported monopolistically or oligopolistically through restrictive dealership contracts between foreign producers and domestic importers. Such restrictive dealership gives importers market power in the domestic market and explains many of the large discrepancies betwen the consumer prices and the import prices of many goods. Korean anti - trust law does not cover the issues arising from the market power of an importer resulting from a restrictive dealership contract. Second, some major producers of Korean goods are also importers of foreign goods that are substitutes of their products. The import of substitutes by major domestic producers is anti - competitive because it tends to raise the prices of both domestic goods and foreign goods, and also because it reduces the incentive of the domestic producers to raise the quality of their products. Third, wholesalers and retailers widely use resale price maintenance as a price fixing mechanism, and while this is against the anti- trust law, it seldom gets noticed. Fourth, the high level of rents of real estate for commercial use works as an entry barrier to the distribution sector and results in reduced competition by the firms in that sector. Finally, there are information problems. Consumers have inferior information to firms about the quality of a foreign consumer good that they have not tried before. Such information asymmetry often enables firms to raise prices. In addition, information asymmetry between importers frequently delays the import of cheaper substitutes. In order to alleviate the problems indentified above, we suggest the following policy changes. The government should strengthen the anti - trust law and its enforcement to regulate restrictive import contracts, import of competing goods by major domestic producers, and RPM by wholesalers and retailers that is aimed at price fixing. In addition, the government should loosen its tight real estate policy to encourage investment in the distribution sector. Finally, we suggest that the import price revelation policy that has been in use for some items since 1990 be expanded to most imported consumer goods that are introduced for the first time to give consumer better information and be used only for the period of time needed to inform sufficient number of consumers.

• Journal of Distribution Science
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• v.10 no.2
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• pp.29-41
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• 2012

This paper undertakes a conceptual review of transaction cost to broaden the understanding of the transaction cost analysis (TCA) approach. More than 40 years have passed since Coase's fundamental insight that transaction, coordination, and contracting costs must be considered explicitly in explaining the extent of vertical integration. Coase (1937) forced economists to identify previously neglected constraints on the trading process to foster efficient intrafirm, rather than interfirm, transactions. The transaction cost approach to economic organization study regards transactions as the basic units of analysis and holds that understanding transaction cost economy is central to organizational study. The approach applies to determining efficient boundaries, as between firms and markets, and to internal transaction organization, including employment relations design. TCA, developed principally by Oliver Williamson (1975,1979,1981a) blends institutional economics, organizational theory, and contract law. Further progress in transaction costs research awaits the identification of critical dimensions in which transaction costs differ and an examination of the economizing properties of alternative institutional modes for organizing transactions. The crucial investment distinction is: To what degree are transaction-specific (non-marketable) expenses incurred? Unspecialized items pose few hazards, since buyers can turn toalternative sources, and suppliers can sell output intended for one order to other buyers. Non-marketability problems arise when specific parties' identities have important cost-bearing consequences. Transactions of this kind are labeled idiosyncratic. The summarized results of the review are as follows. First, firms' distribution decisions often prompt examination of the make-or-buy question: Should a marketing activity be performed within the organization by company employees or contracted to an external agent? Second, manufacturers introducing an industrial product to a foreign market face a difficult decision. Should the product be marketed primarily by captive agents (the company sales force and distribution division) or independent intermediaries (outside sales agents and distribution)? Third, the authors develop a theoretical extension to the basic transaction cost model by combining insights from various theories with the TCA approach. Fourth, other such extensions are likely required for the general model to be applied to different channel situations. It is naive to assume the basic model appliesacross markedly different channel contexts without modifications and extensions. Although this study contributes to scholastic research, it is limited by several factors. First, the theoretical perspective of TCA has attracted considerable recent interest in the area of marketing channels. The analysis aims to match the properties of efficient governance structures with the attributes of the transaction. Second, empirical evidence about TCA's basic propositions is sketchy. Apart from Anderson's (1985) study of the vertical integration of the selling function and John's (1984) study of opportunism by franchised dealers, virtually no marketing studies involving the constructs implicated in the analysis have been reported. We hope, therefore, that further research will clarify distinctions between the different aspects of specific assets. Another important line of future research is the integration of efficiency-oriented TCA with organizational approaches that emphasize specific assets' conceptual definition and industry structure. Finally, research of transaction costs, uncertainty, opportunism, and switching costs is critical to future study.

• Journal of Distribution Research
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• v.17 no.3
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• pp.1-24
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• 2012

Franchises have recently emerged as the most rapidly expanding industry positioned to create a large impact in the domestic economic. The Chinese franchise industry developed rapidly in the period prior and subsequent to WTO accession with more than 50% of new franchises brands emerging since 2000. M&A transactions in the Chinese franchise industry have progressed actively. In the period from 2005-2007, due to the wholesale and retail market opening in accordance with the guidelines laid forth within the MOU by the WTO the Chinese franchise market is now the largest market in the world all despite a short history of only 20 years. The amount of franchise market research on China is disproportional to its current size and development potential. Beginning in the 1990s, market research conducted by the International Franchise Association focused on emerging markets in Eastern Europe and China. While the research dealt with the Chinese investment environment, it insufficiently explained the market region and cultural environment. The purpose of this research is (i) to investigate the determinants of the performance of franchise systems in China and (ii) new contract renewals based on performance factors. This study will complement existing research in terms of the franchisee perspective. This study may also prove of the benefit to the franchise companies entering the Chinese franchise market enabling them to develop an effective strategy. This study shows that support, incentives, and system standardization by franchisor yielded a positive effect on management performance. This is consistent with previous studies by Shin (2000) and Kim (2008) targeting Korean franchises. Therefore, in the Chinese market, the franchisor must focus on support, incentives, and system standardization rather than concentrate only on the recruitment of franchisees in order to improve revenue. Hypotheses regarding franchisor control have been dismissed in existing research, in the opinion of this study, due to their complexity and inability to control the merchant as a one-kind-assessment-standard. Our findings show that the franchisees' financial condition, management ability and entrepreneurial spirit, among franchisee's characteristics, have a positive effect on franchisor's business performance and satisfaction for the franchisee. This is consistent with previous studies on headquarters' management performance of Lussier (1996), Heo and Jang (2008), and franchisees' financial condition, management ability and entrepreneurial spirit effect on franchisor's satisfaction of Weaven and Franzer (2007), Kim (2009), Han (2009), and Yoon etc. (2008). Therefore, when permitting a franchisee, financial condition, management ability, entrepreneurship of the franchisee should be carefully considered. Among relational factors between franchisor and franchisee, trust has the positive influence on the management performance of the franchisor while conflict has a negative effect. However, trust, commitment and conflict factors have been shown not to have any impact on the satisfaction of the franchise headquarters. This result is consistent with the previous studies of Pavlou and Ba (2000), Morrison (1999), Weaven and Frazer (2007), Kim and Park (1994), Sohn (2007) which show that trust between franchisor and the franchisees have a positive effect and that conflict has a negative impact on franchisor's management performance. Other factors causing a negative effective on the franchisor's management performance are a rapid environmental changes and uncertainty in the business. This is consistent with Campbell et al (2007), Kim and Kim (2009), Han and Baek (2008). Finally, the high management performance and satisfaction of the franchise headquarters has a positive effect on the intention of franchise renewal. In the case of large markets such as China, the franchisor's strategy and the role is very important. In this study, we also investigated the characteristics of franchisor and franchisee, relationship, and environmental uncertainty affecting on the management performance and satisfaction of franchisor. Recently, Korean franchises are attempting to enter foreign markets through the rise in popularity of Korean culture and entertainment commonly referred to as the Korean wave. This study provides recommendations for Korean franchises intending on entering the Chinese market. First, in order to achieve stable profits, the franchise corporation needs to support the operation of the individual franchisee through incentives and standardization of services. Second, because trust between the franchisor and franchisee has a positive effect on management performance, on-going discussion and cooperation is necessary to reduce the level of conflict.

• Journal of Intelligence and Information Systems
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• v.23 no.2
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• pp.107-122
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• 2017

Volatility in the stock market returns is a measure of investment risk. It plays a central role in portfolio optimization, asset pricing and risk management as well as most theoretical financial models. Engle(1982) presented a pioneering paper on the stock market volatility that explains the time-variant characteristics embedded in the stock market return volatility. His model, Autoregressive Conditional Heteroscedasticity (ARCH), was generalized by Bollerslev(1986) as GARCH models. Empirical studies have shown that GARCH models describes well the fat-tailed return distributions and volatility clustering phenomenon appearing in stock prices. The parameters of the GARCH models are generally estimated by the maximum likelihood estimation (MLE) based on the standard normal density. But, since 1987 Black Monday, the stock market prices have become very complex and shown a lot of noisy terms. Recent studies start to apply artificial intelligent approach in estimating the GARCH parameters as a substitute for the MLE. The paper presents SVR-based GARCH process and compares with MLE-based GARCH process to estimate the parameters of GARCH models which are known to well forecast stock market volatility. Kernel functions used in SVR estimation process are linear, polynomial and radial. We analyzed the suggested models with KOSPI 200 Index. This index is constituted by 200 blue chip stocks listed in the Korea Exchange. We sampled KOSPI 200 daily closing values from 2010 to 2015. Sample observations are 1487 days. We used 1187 days to train the suggested GARCH models and the remaining 300 days were used as testing data. First, symmetric and asymmetric GARCH models are estimated by MLE. We forecasted KOSPI 200 Index return volatility and the statistical metric MSE shows better results for the asymmetric GARCH models such as E-GARCH or GJR-GARCH. This is consistent with the documented non-normal return distribution characteristics with fat-tail and leptokurtosis. Compared with MLE estimation process, SVR-based GARCH models outperform the MLE methodology in KOSPI 200 Index return volatility forecasting. Polynomial kernel function shows exceptionally lower forecasting accuracy. We suggested Intelligent Volatility Trading System (IVTS) that utilizes the forecasted volatility results. IVTS entry rules are as follows. If forecasted tomorrow volatility will increase then buy volatility today. If forecasted tomorrow volatility will decrease then sell volatility today. If forecasted volatility direction does not change we hold the existing buy or sell positions. IVTS is assumed to buy and sell historical volatility values. This is somewhat unreal because we cannot trade historical volatility values themselves. But our simulation results are meaningful since the Korea Exchange introduced volatility futures contract that traders can trade since November 2014. The trading systems with SVR-based GARCH models show higher returns than MLE-based GARCH in the testing period. And trading profitable percentages of MLE-based GARCH IVTS models range from 47.5% to 50.0%, trading profitable percentages of SVR-based GARCH IVTS models range from 51.8% to 59.7%. MLE-based symmetric S-GARCH shows +150.2% return and SVR-based symmetric S-GARCH shows +526.4% return. MLE-based asymmetric E-GARCH shows -72% return and SVR-based asymmetric E-GARCH shows +245.6% return. MLE-based asymmetric GJR-GARCH shows -98.7% return and SVR-based asymmetric GJR-GARCH shows +126.3% return. Linear kernel function shows higher trading returns than radial kernel function. Best performance of SVR-based IVTS is +526.4% and that of MLE-based IVTS is +150.2%. SVR-based GARCH IVTS shows higher trading frequency. This study has some limitations. Our models are solely based on SVR. Other artificial intelligence models are needed to search for better performance. We do not consider costs incurred in the trading process including brokerage commissions and slippage costs. IVTS trading performance is unreal since we use historical volatility values as trading objects. The exact forecasting of stock market volatility is essential in the real trading as well as asset pricing models. Further studies on other machine learning-based GARCH models can give better information for the stock market investors.

• Journal of Distribution Research
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• v.17 no.5
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• pp.1-23
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• 2012

The conflict between major corporations and small and medium-sized businesses is being aggravated, the trickle down effect is not working properly, and, as the controversy surrounding the effectiveness of the business limiting system continues to swirl, the plan proposed to protect the business domain of small and medium-sized businesses, resolve polarization between these businesses and large corporations, and protect small family run stores is the suitable business type designation system for small and medium-sized businesses. The current status of carrying out this system of selecting suitable business types among small and medium-sized businesses involves receiving applications for 234 items among the suitable business types and items from small and medium-sized businesses in manufacturing, and then selecting the items of the consultative group by analyzing and investigating the actual conditions. Suitable business type designation in the service industry will involve designation with priority on business types that are experiencing social conflict. Three major classifications of the service industry, related to the livelihood of small and medium-sized businesses, will be first designated, and subsequently this will be expanded sequentially. However, there is the concern that when designated as a suitable business type or item, this will hinder the growth motive for small to medium-sized businesses, and designation all cause decrease in consumer welfare. Also it is highly likely that it will operate as a prior regulation, cause side-effects by limiting competition systematically, and also be in violation against the main regulations of the FTA system. Moreover, it is pointed out that the system does not sufficiently reflect reverse discrimination factor against large corporations. Because conflict between small to medium sized businesses and large corporations results from the expansion of corporations to the service industry, which is unrelated to their key industry, it is necessary to introduce an advanced contract method like a master franchise or local franchise system and to develop local small to medium sized businesses through a franchise system to protect these businesses and dealers. However, this method may have an effect that contributes to stronger competitiveness of small to medium sized franchise businesses by advancing their competitiveness and operational methods a step further, but also has many negative aspects. First, as revealed by the Ministry of Knowledge Economy, the franchise industry is contributing to the strengthening of competitiveness through the economy of scale by organizing existing individual proprietors and increasing the success rate of new businesses. It is also revealed to be a response measure by the government to stabilize the economy of ordinary people and is emphasized as a 'useful way' to revitalize the service industry and improve the competitiveness of individual proprietors, and has been involved in contributions to creating jobs and expanding the domestic market by providing various services to consumers. From this viewpoint, franchises fit the purpose of the suitable business type system and is not something that is against it. Second, designation as a suitable business type may decrease investment for overseas expansion, R&D, and food safety, as well negatively affect the expansion of overseas corporations that have entered the domestic market, due to the contraction and low morale of large domestic franchise corporations that have competitiveness internationally. Also because domestic franchise businesses are hard pressed to secure competitiveness with multinational overseas franchise corporations that are operating in Korea, the system may cause difficulty for domestic franchise businesses in securing international competitiveness and also may result in reverse discrimination against these overseas franchise corporations. Third, the designation of suitable business type and item can limit the opportunity of selection for consumers who have up to now used those products and can cause a negative effect that reduces consumer welfare. Also, because there is the possibility that the range of consumer selection may be reduced when a few small to medium size businesses monopolize the market, by causing reverse discrimination between these businesses, the role of determining the utility of products must be left ot the consumer not the government. Lastly, it is desirable that this is carried out with the supplementation of deficient parts in the future, because fair trade is already secured with the enforcement of the franchise trade law and the best trade standard of the Fair Trade Commission. Overlapping regulations by the suitable business type designation is an excessive restriction in the franchise industry. Now, it is necessary to establish in the domestic franchise industry an environment where a global franchise corporation, which spreads Korean culture around the world, is capable of growing, and the active support by the government is needed. Therefore, systems that do not consider the process or background of the growth of franchise businesses and harm these businesses for the sole reason of them being large corporations must be removed. The inhibition of growth to franchise enterprises may decrease the sales of franchise stores, in some cases even bankrupt them, as well as cause other problems. Therefore the suitable business type system should not hinder large corporations, and as both small dealers and small to medium size businesses both aim at improving competitiveness and combined growth, large corporations, small dealers and small to medium sized businesses, based on their mutual cooperation, should not include franchise corporations that continue business relations with them in this system.