# Cluster Analysis with K-Mean versus K-Medoid in Financial Performance Evaluation
## 5 Discussion and Conclusions
Furthermore, an important way to improve \"traditional\" retail businesses is to stimulate consumers to buy local and traditional products, to focus on the shorter supply chains, and to consume organic products as much as possible. This strategy is quite well adopted in Hungary due to the fact that local products and the consumption of food products originating in Hungary are constantly promoted in the media. Also, these products carry a certain label/emblem so that consumers can identify local and national products on store shelves more easily. In order to improve the financial performance of companies grouped in clusters based on the K-Medoid method (which is the clustering method recommended based on our results), the authors propose the following specific measures for company management:  
1. For companies included in the clusters with negative values for all three financial indicators (in the case of Hungary, clusters 4 and 5 which contain 57 companies, representing 30% of the total companies from the Hungarian database; in the case of Romania, clusters 5 to 15, containing 400 companies, which represent 62.5% of the total companies from the Romanian database), our recommendation is an injection of capital from the owners, primarily to regain the financial stability of the company. Also, these companies should adopt strategies for attracting customers which can lead to positive results in the future (e.g., modernizing locations thus attracting customers, loyalty programs, offering quality and local products, which can support a higher commercial margin). These measures should also be aligned with efforts made by the authorities to require companies, and their owners, to protect a company's equity [66], using different measures (e.g., capital injection) in the case of longer-term and significant negative equity. It is worth mentioning that the very high level of negative equity is primarily the result of the annual accumulation of negative after-tax profit. Furthermore, taxation in Romania (in the case of small businesses) should be improved taking into consideration that the current form of taxation is not effective due to the fact that the tax paid by companies is calculated based on the result (profit), but not on revenue-sales, and that companies strive to achieve a minimal or even negative result in order to avoid taxation [68]. It is possible that this will have long-term positive effects on equity. 2. For companies whose financial indicators are close to zero, or where ROE is negative (cluster 3 from Hungary, containing 56 companies, which represents 29.47% of the total companies from the database, and clusters 3 and 4 from Romania, including 29 companies, which represent 4.53% of the total companies from the Romanian database), capital injection can be the solution that provides immediate \"oxygen\" and can restore the financial balance of a company. 3. In the case of companies with positive and also good financial results (clusters 1 and 2 from Hungary, which contain 77 companies, representing 40.52% of the total Hungarian companies from the database, and clusters 1 and 2, which include 211 Romanian companies, representing 32.96% of the total Romanian companies from the database), keeping and/or achieving even better financial performance in the future requires some specific measures, such as: long-term investments, very good inventory management, larger and varied product offerings, faster service, engagement in local social and cultural life (e.g., participation at local fairs), tastings, product presentations, promotions and continuous market research in order to retain customers [69]. The _originality of the paper_ consists in the fact that the databases on which the study was based represent 100% complete databases for the chosen \"sample\", i.e., they include all the active companies within the chosen field of activity from the two regions.