• Journal of Intelligence and Information Systems
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• v.21 no.2
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• pp.93-112
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• 2015

Depending on the change in consumer's consumption pattern, existing retail shop has evolved in hypermarket or convenience store offering grocery and daily products mostly. Therefore, it is important to maintain the inventory levels and proper product configuration for effectively utilize the limited space in the retail store and increasing sales. Accordingly, this study proposed proper product configuration and inventory level strategy based on RFM(Recency, Frequency, Monetary) model and SOM(self-organizing map) for manage the retail shop effectively. RFM model is analytic model to analyze customer behaviors based on the past customer's buying activities. And it can differentiates important customers from large data by three variables. R represents recency, which refers to the last purchase of commodities. The latest consuming customer has bigger R. F represents frequency, which refers to the number of transactions in a particular period and M represents monetary, which refers to consumption money amount in a particular period. Thus, RFM method has been known to be a very effective model for customer segmentation. In this study, using a normalized value of the RFM variables, SOM cluster analysis was performed. SOM is regarded as one of the most distinguished artificial neural network models in the unsupervised learning tool space. It is a popular tool for clustering and visualization of high dimensional data in such a way that similar items are grouped spatially close to one another. In particular, it has been successfully applied in various technical fields for finding patterns. In our research, the procedure tries to find sales patterns by analyzing product sales records with Recency, Frequency and Monetary values. And to suggest a business strategy, we conduct the decision tree based on SOM results. To validate the proposed procedure in this study, we adopted the M-mart data collected between 2014.01.01~2014.12.31. Each product get the value of R, F, M, and they are clustered by 9 using SOM. And we also performed three tests using the weekday data, weekend data, whole data in order to analyze the sales pattern change. In order to propose the strategy of each cluster, we examine the criteria of product clustering. The clusters through the SOM can be explained by the characteristics of these clusters of decision trees. As a result, we can suggest the inventory management strategy of each 9 clusters through the suggested procedures of the study. The highest of all three value(R, F, M) cluster's products need to have high level of the inventory as well as to be disposed in a place where it can be increasing customer's path. In contrast, the lowest of all three value(R, F, M) cluster's products need to have low level of inventory as well as to be disposed in a place where visibility is low. The highest R value cluster's products is usually new releases products, and need to be placed on the front of the store. And, manager should decrease inventory levels gradually in the highest F value cluster's products purchased in the past. Because, we assume that cluster has lower R value and the M value than the average value of good. And it can be deduced that product are sold poorly in recent days and total sales also will be lower than the frequency. The procedure presented in this study is expected to contribute to raising the profitability of the retail store. The paper is organized as follows. The second chapter briefly reviews the literature related to this study. The third chapter suggests procedures for research proposals, and the fourth chapter applied suggested procedure using the actual product sales data. Finally, the fifth chapter described the conclusion of the study and further research.

• Korean Journal of Weed Science
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• v.5 no.2
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• pp.202-210
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• 1985

Requirements in weed control in a mulberry field are much similar to those in orchards, but also feature a longer period of weed control of various kinds of persistent weeds, i.e., spring, summer, and winter annuals as well as perennials. In addition the mulberry tree is relatively more sensitive to herbicide injury. Hence, very few herbicides have been used in mulberry field. The present study was conducted to evaluate the usefulness of oxyfluorfen in comparison with alachlor and simazine, which are registered for ordinary mulberry field in Korea, for weed control efficacy in the new, rapidly increasing practice of transparent polyethylene-film mulched and densely planted younger mulberry culture. Dominant spring weeds were Galium spp., Erigeron spp., Polygonum senticosum, and Chenopodium spp. in the non-mulched interbed area in contrast to the Digitaria spp. and Potulaca spp, under mulch. Dominant summer weeds were Digitaria spp., Portulaca spp., Erigeron spp., Artemisia spp. and Calystegia japonica in the non-mulched interbed area while weeds did not occur significantly during summer under mulch which were shaded by vigorously growing mulberry trees. The weeds occurred under mulch in spring reduced shoot growth of young mulberry tree resulting in the reduced yield of mulberry leaves for silkworms. The weeds occurred in the interbed area did not affect until May, but interfered later summer- and fall-growth of mulberry tree. Early single spring application of alachlor(EC), simazine(WP) or oxyfluorfen(EC) at a rate of 650 g, 750 g or 350 g ai per ha, respectively, controlled most annuals satisfactorily to fall in the mulched bed area. In the nonmulched interbed area, however, thrice does of alchlor or simazine was necessary for satisfactory control of spring weeds, followed by summer application of alachlor or simazine at twice dose level as tank mixture with paraquat at 490 g ai per ha for satisfactory control of summer to fall weeds. Single spring application of oxyfluorfen at a rate of 1400 g ai per ha was persistently effective to control satisfactorily even summer and fall weeds. However, heavy rainfall splashed soil borne oxyfluorfen to the lower branch leaves causing some leaf burns. Spring application of oxyfluorfen at a rate of 350 g ai per ha followed by summer application of oxyfluorfen and paraquat tank mixture (350 g ai + 490 g ai) was the best choice for the non-mulched interbed area weed control among the treatments.

• Journal of the Korean Institute of Landscape Architecture
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• v.39 no.6
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• pp.1-11
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• 2011

The research was aimed to verify the feasibility of the model of Park-Based Mixed-Use Districts(PBMUD) around urban large park to secure private-based urban parks through the revision of the urban zoning system. The PBMUD is a type of urban zoning district in which park-oriented land use is mixed with the urban land uses of residents, advertising, business, culture, education and research. The PBMUD, delineated from and based on a new paradigm of landscape urbanism, is a new urban strategy to secure urban parks and to cultivate urban regeneration around parks and green spaces to enhance the quality of the urban landscape and to ameliorate urban environmental disasters like climate change. This study performed a questionnaire survey and analysis after a review of literature related to PBMUD. The study looked for specialists in the fields of urban planning and landscape architecture such as officials, researchers and engineers to respond to the questionnaire, which asked about degree of preference. The conclusions of this study were as follows. Firstly, specialists prefer the PBMUD at 79.3% for to 20.7% against ratio, indicating the feasibility of the model of PBMUD. The second, the most preferable reasons for the model, were the possibility of securing park space around urban parks and green spaces that assures access to park and communication with each area. The third, the main reason for non-preference for the model, was a lack of understanding of PBMUD added to the problems of unprofitable laws and regulations related to urban planning and development. These proposed a revision of the related laws and regulations such as the laws for planning and use of national land, laws for architecture etc. The fourth, the most preferred type of PBMUD, was cultural use mixed with park use in every kind of mix of land use. The degree of preference was lower in the order of use of commercial, residential, business, and education(research) when mixed with park use. The number of mixed-use amenities with in the park was found to be an indicator determining preference. The greater the number, the lower was preference frequencies, especially when related to research and business use. The fifth, the preference frequencies of the more than 70% among the respondents to the mixed-use ratio between park use and the others, was in a ratio of 60% park use and 40% other urban use. These research results will help to launch new future research subjects on the revision of zoning regulations in the laws for the planning and uses of national land and architectural law as well as criteria and indicators of subdivision planning as related to a PBMUD model.

• Journal of the Korean Institute of Landscape Architecture
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• v.45 no.3
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• pp.41-53
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• 2017

This study was performed to determine what the plant material were selected to reflect in the 2016 Korea Garden Show designer's garden. It was analyzed that plant material was used to display the theme of the garden and to create a specific space. Under the given theme of 'K-Garden, Shinhallyu Garden(new style garden culture) with the most Korean taste', the plants were used to highlight the theme in two types: 'representation' and 'expression'. There were two 'representation' gardens that imitate a particular space of Korean taste and four 'expression' gardens that showcase the designer's thoughts with abstract concepts and concrete objects. Three gardens included both types of garden. The way of revealing the subject with plants was used more for 'expression' than for 'representation'. There were eleven spaces for 'representation' of the Korean taste, a vegetable garden, faucet, pond, field, nature, a Hanok court garden, groves of bamboo, tile roof, stone wall, rock and backyard of a Hanok connected to the mountain. The planting material was used in two ways: reflecting only the ecological characteristics of the plant, and considering the ecological and visual characteristics together. Vegetation plantings reflecting the ecological characteristics were observed in all eleven spaces. Nine of the spaces reflected the growth environment of the plants, but the other two did not reflect the ecological characteristics of the plants, unlike the designer's intention. In the case of the four spaces that considered the ecological and visual characteristics together, color and size were considered visual characteristics. The plants in the seven spaces that included 'expression' as the theme were selected to reflect the visual characteristics in the order of color, shape, texture, and size, rather than reflecting ecological characteristics. A group planting method was applied. When the plants were used as materials for creating space, Norman(1989) analyzed three enclosure factors(overhead, vertical, ground plane). Only two deciduous trees were used in the overhead plane while five species of evergreen shrubs and thirty species of various deciduous plants were used in the vertical plane. There were forty-five species (nine trees and thirty-six herbaceous plants) forming the ground plane, and various herbaceous plants were utilized without duplication in each garden. The designer's garden of the Garden Show played a role in introducing new groundcover plants to the public. Three of the nine gardens did not include ornamental plants, and the use of decorative plants in other gardens was few compared to the number of plantings. In the Korea Garden Show designer's garden, most of the plants were being used with the intention of exposing the theme or architectural uses. In the 2016 Korea Garden Show designer's garden, many species of plants were used as materials for showcasing themes rather than for creating spaces. Also, the method of 'expression' was used more than the method of 'representation' in order to highlight the theme. This indicates that the planting materials reflect visual characteristics such as color, shape, texture, size rather than ecological characteristics.

• Journal of Periodontal and Implant Science
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• v.25 no.3
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• pp.720-732
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• 1995

The use of transforming growth $factor-{\beta}1$ which functions as a potent biologic mediator regulating numerous activities of wound healing has been suggested for the promotion of periodontal regeneration. The mitogenic effects of transforming growth $factor-{\beta}1$ on human periodontal ligament cells and human gingival fibroblasts were evaluated by determining the incorporation of $[^3H]-thymidine$ into DNA of the cells dose-dependently. Cells were prepared with primary cultured fibroblasts and periodontal ligament cells from humans, and used in experiments were the fourth or sixth subpassage. Cells were seeded with serum free Dulbecco's modified Eagle medium containing 0.1% bovine serum albumine. The added concentrations of transforming growth $factor-{\beta}1$ were 0.25, 0.5, 1, 2.5, 5ng/ml and transforming growth $factor-{\beta}1$ were added to the quiescent cells for 24hours, 48hours, 72hours. They were labeled with lnCi/ml $[^3H]$ thymidine for the last 24hour of the each culture. The results were presented as the mean counts per minute (CPM) per well and S.D. of four determinations. The results were as follows. : The DNA synthetic activity of human gingival fibroblasts was increased dose-dependently by transforming growth $factor-{\beta}1$ at 24 hours, 48 hours and 72 hours. The maximum mitogenic effects were at the 48 hour application of transforming growth $factor-{\beta}1$. The DNA synthetic activity was generally more decreased at the 72 hour application than at the 48 hour the application of transforming growth $factor-{\beta}1$. The DNA synthetic activity of human periodontal ligament cells was increased dose-dependently by transforming growth $factor-{\beta}1$ at 24 hours and 48 hours. But the DNA synthetic activity was decreased at 5ng/ml of the 72 hour application. The maximum mitogenic effects were also at the 48 hour application of transforming growth $factor-{\beta}1$. The DNA synthetic activity of human periodontal ligament cells was generally more decreased at the 72 hour application than at the 48 hour application of transforming growth $factor-{\beta}1$. In the comparision of DNA synthetic activity between the human gingival fibroblasts and human periodontal ligament cells, the human gingival fibroblasts had more activity than the human periodontal ligament cells at all time application with the concentration of transforming growth $factor-{\beta}1$. In conclusion, transforming growth $factor-{\beta}1$ has an important roles in the stimulation of DNA synthesis in human periodontal ligament cells and human gingival fibroblasts, which means an increase in collagen synthesizing cells and thus, may be useful for clinical application in periodontal regenerative procedures.

• Korean Journal of Agricultural Science
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• v.14 no.2
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• pp.232-247
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• 1987

Three rice varietis, Dongjinbyeo, Daecheongbyeo and Chucheongbyeo, which are leading cultivars in the Chungnam area, were planted to determine their effects of mixture on the plant characteristics and the blast occurrence. The summary obtained is as follows; 1. The heading dates of each cultivars were not affected by the mixing culture. Only a day was delayed in heading date of Chucheongbyeo under commonly standard fertilizer level. 2. The effects of cultivar mixture on the plant height was high when low level of fertilizer were applied. Of the cultivar mixture, the mixing of Dongjinbyeo and Daecheongbyeo shoed 5.1% of plant height increase. The effects of mixture on the tillering number were apparent only under the standard fertilizer level. The mixture of Dongjinbyeo and Chucheongbyeo was effective in increasing the tillering number up to 5.7% over mean tillering number of each cultivars. 3. The stem height tended to increase as the fertilizer level increased and the effects of cultivar mixture on the stem height was high. The stem height of mixture of Dongjinbyeo and Daecheongbyeo was highest compared with other mixture cropping. On the contrary, the panicle length was shortened as the fertilizer level decreased and cultivars were mixed. Among the cultivar mixtures, the mixture of Dongjinbyeo and Daecheongbyeo showed the most effectives of increasing the panicle length. 4. The total dry weight of mixed and pure cultivars were compared. The mixture of two cultivars was effective in increasing the dry weight of rice upto 3.5% over the average of dry weight of each cultivars. When three cultivars were mixed, there were 8.5% of dry weight increase over not mixed cultivars. The effects of mixture on the dry weight were more apparent under standard fertilizer level. 5. The rates of Neck and Node and Branch Blast occurrence were reduced when cultivars were mixed, and their reduction rates were 11.7% and 14.0%, respectively. The occurrence of Blasts was also decreased under the lowest fertilizer level than the standard fertilizer level. The least Blast occurrence was obtained when Dongjinbyeo and Daecheongbyeo were mixed cropped. 6. Significantly high number of spikelets of per square meter was observed when Chucheongbyeo and Dongjinbyeo were mixed. However, the spikelets of panicle were the lowest when Chucheongbyeo and Dongjinbyeo were mixed. The number of panicles per square meter was increased as the fertilizer levels increased, while the number of spikelets per panicle increased as the fertilizer level decreased. 7. The effects of mixture on the maturing were apparent regardless of the fertilizer level. The 1000 grain weight was higher when lower level of fertilizer was applied. The effects of cultivar mixture on the 1000 grain weight were more apparent in the plots of Chucheongbyeo and Dongjinbyeo mixture and three cultivar mixture. 8. The grain yield increased when cultivars mixed. The increment under mixing cropping was 4.6% over mono cropping. The effects of cultivar mixture on the yield increase were more apparent under lower levels of fertilizer application. The highest yield increase was obtained when Chucheongbyeo and Daecheongbyeo were mixed, and the rate of yield increase was 6.8% over mono-cropping. 9. The grain yield was highly correlated with number of panicles per square meter and dry weight. There was not any significant relationships found among grain yield, spikelets of panicle and ripening percentage.

• KDI Journal of Economic Policy
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• v.13 no.4
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• pp.91-116
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• 1991

Market liberalization progressing simultaneously with high and rapidly rising domestic wages has created an adverse business environment for domestic firms. Korean firms are losing their international competitiveness in comparison to firms from LDC(Less Developed Countries) in low-tech industries. In high-tech industries, domestic firms without government protection (which is impossible due to the liberalization policy and the current international status of the Korean economy) are in a disadvantaged position relative to firms from advanced countries. This paper examines the division of roles between the private sector and the government in order to achieve a successful structural adjustment, which has become the impending industrial policy issue caused by high domestic wages, on the one hand, and the opening of domestic markets, on the other. The micro foundation of the economy-wide structural adjustment is actually the restructuring of business portfolios at the firm level. The firm-level business restructuring means that firms in low-value-added businesses or with declining market niches establish new major businesses in higher value-added segments or growing market niches. The adjustment of the business structure at the firm level can only be accomplished by accumulating firm-specific managerial assets necessary to establish a new business structure. This can be done through learning-by-doing in the whole system of management, including research and development, manufacturing, and marketing. Therefore, the voluntary cooperation among the people in the company is essential for making the cost of the learning process lower than that at the competing companies. Hence, firms that attempt to restructure their major businesses need to induce corporate-wide participation through innovations in organization and management, encourage innovative corporate culture, and maintain cooperative labor unions. Policy discussions on structural adjustments usually regard firms as a black box behind a few macro variables. But in reality, firm activities are not flows of materials but relationships among human resources. The growth potential of companies are embodied in the human resources of the firm; the balance of interest among stockholders, managers, and workers of the company' brings the accumulation of the company's core competencies. Therefore, policymakers and economists shoud change their old concept of the firm as a technological black box which produces a marketable commodities. Firms should be regarded as coalitions of interest groups such as stockholders, managers, and workers. Consequently the discussion on the structural adjustment both at the macroeconomic level and the firm level should be based on this new paradigm of understanding firms. The government's role in reducing the cost of structural adjustment and supporting should the creation of new industries emphasize the following: First, government must promote the competition in domestic markets by revising laws related to antitrust policy, bankruptcy, and the promotion of small and medium-sized companies. General consensus on the limitations of government intervention and the merit of deregulation should be sought among policymakers and people in the business world. In the age of internationalization, nation-specific competitive advantages cannot be exclusively in favor of domestic firms. The international competitiveness of a domestic firm derives from the firm-specific core competencies which can be accumulated by internal investment and organization of the firm. Second, government must build up a solid infrastructure of production factors including capital, technology, manpower, and information. Structural adjustment often entails bankruptcies and partial waste of resources. However, it is desirable for the government not to try to sustain marginal businesses, but to support the diversification or restructuring of businesses by assisting in factor creation. Institutional support for venture businesses needs to be improved, especially in the financing system since many investment projects in venture businesses are highly risky, even though they are very promising. The proportion of low-value added production processes and declining industries should be reduced by promoting foreign direct investment and factory automation. Moreover, one cannot over-emphasize the importance of future-oriented labor policies to be based on the new paradigm of understanding firm activities. The old laws and instititutions related to labor unions need to be reformed. Third, government must improve the regimes related to money, banking, and the tax system to change business practices dependent on government protection or undesirable in view of the evolution of the Korean economy as a whole. To prevent rational business decisions from contradicting to the interest of the economy as a whole, government should influence the business environment, not the business itself.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.13
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• pp.869-895
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• 2000

The US supports the Information and Communication (IC) industry as a strategic one to wield a complete power over the World Market. However, several other countries are also eager to have the support for the IC industry because the industry produces a high added value and has a significant effect on other industries. Korea is not an exception. Korea recently succeeded in the commercialization of CDMA for the first time in the world, after the successful development of TDX. Hence, it is highly likely to get tracked by the US. Although the IC industry is a specific sector of IT, there is a concern that there might be a trade friction between the US and Korea due to a possible competition. It will be very important to prepare a solution in advance so that Korea could prevent the friction and at the same time increase its share domestically and globally. It will be our important task to solve the problem with the minimum cost if the conflict arises unfortunately in the IT area. The parties that have a strong influence on the US trade policy are the think tank group and the IT-related interest group. Therefore, it would be important to have a close relationship with them. We found some implications by analyzing the case of Japan, which has experienced trade frictions with the US over the long period of time in the high tech industry. In order to get rid of those conflicts with the US, the Japanese did the following things : (1) The Japanese government developed supporting theories and also resorted to international support so that the world could support the Japanese theories. (2) Through continual dialogue with the US business people, the Japanese business people sought after solutions to share profits among the Japanese and the US both in the domestic and in the worldwide markets. They focused on lobbying activities to influence the US public opinion to support the Japanese. The specific implementation plan was first to open culture lobby toward opinion leaders who were leaders about the US opinion. The institution, Japan Society, were formed to deliver a high quality lobbying activities. The second plan is economic lobby. They have established Japanese Economic Institute at Washington. They provide information about Japan regularly or irregularly to the US government, research institution, universities, etc., that are interested in Japan. The main objective behind these activities though is to advertise the validity of Japanese policy. Japanese top executives, practical interest groups on international trade, are trying to justify their position by direct contact with the US policy makers. The third one is political lobby. Japan is very careful about this political lobby. It is doing its best not to give impression that Japan is trying to shape the US policy making. It is collecting a vast amount of information to make a correct judgment on situation. It is not tilted toward one political party or the other, and is rather developing a long-term network of people who understand and support the Japanese policy. The following implications were drawn from the experience of Japan. First, the Korean government should develop a long-term plan and execute it to improve the Korean image perceived by American people. Second, the Korean government should begin public relation activities toward the US elite group. It is inevitable to make an effort to advertise Korea to this elite group because this group leads public opinion in the USA. Third, the Korean government needs the development of a relevant policy to elevate the positive atmosphere for advertising toward the US. For example, we need information about to whom and how to about lobbying activities, personnel network who immediately respond to wrong articles about Korea in the US press, and lastly the most recent data bank of Korean support group inside the USA. Fourth, the Korean government should create an atmosphere to facilitate the advertising toward the US. Examples include provision of incentives in tax on the expenses for the advertising toward the US and provision of rewards to those who significantly contribute to the advertising activities. Fifth, the Korean government should perform the role of a bridge between Korean and the US business people. Sixth, the government should promptly analyze the policy of IT industry, a strategic area, and timely distribute information to industries in Korea. Since the Korean government is the only institution that has formal contact with the US government, it is highly likely to provide information of a high quality. The followings are some implications for business institutions. First, Korean business organization should carefully analyze and observe the business policy and managerial conditions of US companies. It is very important to do so because all the trade frictions arise at the business level. Second, it is also very important that the top management of Korean firms contact the opinion leaders of the US. Third, it is critically needed that Korean business people sent to the USA do their part for PR activities. Fourth, it is very important to advertise to American employees in Korean companies. If we cannot convince our American employees, it would be a lot harder to convince regular American. Therefore, it is very important to make the American employees the support group for Korean ways. Fifth, it should try to get much information as early as possible about the US firms policy in the IT area. It should give an enormous effort on early collection of information because by doing so it has more time to respond. Sixth, it should research on the PR cases of foreign enterprise or non-American companies inside the USA. The research needs to identify the success factors and the failure factors. Finally, the business firm will get more valuable information if it analyzes and responds to, according to each medium.

• International Commerce and Information Review
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• v.10 no.4
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• pp.457-491
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• 2008

As stage equipment export markets along with special lighting service lack the attraction for already globally established businesses, such markets can be viewed as an advantageous opportunity for SMEs as in general. In reality, global businesses tend to focus on large construction projects and this indicates relatively less substantial markets such as stage equipment and special lighting service export are more suitable for SME businesses. However, possible problems may be recognized as following; doubtful capabilities by such businesses to join in the vast and competitive global market and pursue manufacturing and service based export. This point is also supported by the fact that such in general SME businesses have substantially less experience in exporting products and services abroad. Realizing the distinctive features of the Korean economy, it is unarguable that every sector and area of global market must be regarded and monitored closely. Hence, it can be argued that there is an imminent need for establishment of supportive institution to assist export process of combination of stage equipments and special lighting service. This study emphasizes the need to improve export process of stage equipments, special lighting services as well as other related products and services which have been focused in domestic market only until now. Further, it also analyzed the potential prospect of such direction reconciling current crisis our manufacturing industry is facing. Even though it maybe regarded as one of the niche market for export of Korea in the short term view, stage equipment and special lighting service industry may rapidly grow as the global cultural industries have grown along with the increase of national income earnings overall. Due to such advantageous features, it can be expected that such industries will show strong growth in the near future. After analyzing the fact that Korea's plants (eg. powerplants) export sector is at its boom, there is a need to transform stage equipment and special lighting service export market into a primary market from a secondary(niche) market for SMEs. This study is viewed from the Korean economic and export sector aspect in the aim of seeking a solution to conquest our realistic limit in our export sector by developing a suitable export model. There have been cases of very few attempts to expand abroad by SMEs who have failed miserably due to their failure to adapt to foreign culture, practice and languages as well as substantial lack in experience in export marketing. Despite this, neglecting our manufacturing industry as it is which is showing its limit and problems is out of option therefore, it is imminent that we come up with an effective measure to address this problem and service export can be suggested as one of them. This study reveals manufacturing-service export model of stage equipment and special lighting service and its related areas is recognized as a field with a very strong future and furthermore, it is expected to bring synergy effects in manufacturing and services sector as well. Further, the operation strategy contains combination, composition and fusion(convergence) of manufacturing and service sectors which could derive various of export products which displays greater success probability or this export model. The outcome of this research is expected to become a useful source for enterprises related to such industry which are seeking a possible global expansion. Furthermore, it is also expected to become a catalyst which fastens the process of global expansion and not only that, we are firmly assured that this study will become an opportunity to improve our current policies and institutions related to this area's export market.

• 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.