The profits earned by the co-operatives have been used for providing basic amenities to the society. A co – operative society is a voluntary association and may be formed with a minimum of ten adult members. It is not affected by the death , insolvency , lunacy or permanent incapacity of any of its members. They have by and large proved to be an unsuccessful effort and are on the decline in all the developing capitalistic countries of the world. There is no legal binding or coercion from any corner for a person to become a member. Advantages and disadvantages of Cooperative Business. among members which may lead to disputes. It is an association of persons united voluntarily to meet their economics, social and cultural needs aspirations through jointly owned enterprise. Generally, the selfish motive of members starts dominating and they forget the service motive . Co-operatives have not been successful in freeing the rural poor from the clutches of the money lenders. It is open to … 3. Protection from exploitation: One of the most obvious advantages of a co-operative society is the fact that the members are protected from exploitation from middlemen. When dealing with business on a fairly large scale, a joint stock company is the most suitable form of business organisation. A body of members is elected to conduct and control the business. They operate in the traditional mold which may not be suitable in the modern business environment and therefore suffer losses. The cooperative organisation is formed by the people who have limited resources and there is no compulsion to buy more than one share by each member. 4. Its registration is very simple and can be done without much legal formalities. The main purpose of such a society is to ensure a steady and favourable market for the output of its members. Voluntary organisations.2. These societies provide different types of service to their members. Thus, the members are protected from the exploitation of money lenders, who charge exorbitant rates of interest Another important purpose of creditco – operatives is to encourage the habit of thrift among their members. When the new member joins the society he/she needs to give some registration fees and needs to deposit some mandatory amount every month. The profits made by the society during a year are utilized for strengthening the reserve fund of the society, for declaring a moderate rate of dividend and for declaring a bonus to members according to the purchases made by them from the cooperative store. Co-operative societies are subject to excessive government regulation which affects their autonomy and flexibility. The procedure involves in the registration of a cooperative society is very simple and easy. Co-operative societies have limited membership and are promoted by the weaker sections. The reason is, in many of the co-operatives there is political interference and domination. Advantages In some cases, co-ops offer a less expensive housing option. The members are from different sections of society. Wide participation of people is lacking. A co – operative society is a voluntary association of persons of moderate means, who unite together to protect and promote their common economic and social interests. Thus, a producers ‘ society not only provides money and materials to the small artisans but also undertakes to sell their products. It represents an attempt by poor and weaker persons to protect themselves against the exploitation and oppression of the economically strong . Co-operative societies give loans only for productive purposes and not for personal or family expenses. Therefore the funds available with the co-operatives are limited. he philosophy of the formation of a cooperative society is “all for each and each for all”. Advantages of a Cooperative Organization: 1. It is based on the principle of one – man-one-vote. It enjoys perpetual existence. Such societies are formed to provide financial help in the form of loans to members. Thus, the term cooperation means working together. The agricultural produce of the small farmers is just sufficient to fulfill the needs of their family. They do not have any surplus to market. Therefore the rural poor continue to depend on the money lenders for meeting expenses of marriage, medical care, social commitments etc. Anypersonwithcommoninterest can become a member. Co-operative societies enjoy the benefit of certain preferences being shown towards them by tax authorities. Products are processed and graded before they are sold. It is based on the principles of collective effort, mutual self – help, equality, democracy, distributive justice and freedom. They may have difference of opinion and if any member follows rigid attitude, it can lead to conflicts. They promote self help, moral value among the members. There can be no use of force in it. Disadvantages Of Co-operative Societies. The co-operative credit societies suffer from the burden of bad debts. The body is elected through ‘one-man-one-vote-system’. Public confidence in the co-operative societies is low. So those who want to work together with some common economic objectives can form a society, which is termed as cooperative society.eval(ez_write_tag([[300,250],'commercemates_com-large-mobile-banner-1','ezslot_1',172,'0','0'])); The membership of cooperative societies is voluntary. If they turn to other forms of organization to satisfy their economic needs, the cooperative society will collapse. To promote the co-operative movement and also because of the fact that it is a non-profit enterprise, government provides various exemptions and tax concessions. In cooperative organisation , there is no direct link between efforts and reward. Proponents of cooperatives accentuate the overall psycho-social impacts created by the control parameters in these communities. The output is pooled together and sold at the best price. The amount of capital generated by co-operative society is limited because of the members belonging to same locality or region or a particular section of people. The membership of a cooperative society is opentoall. Further there are legal restrictions regarding dividend and bonus that can be distributed to members. Features: Voluntary association: Everyone having a common interest is free to join a cooperative society and can also leave the society after giving proper notice. List of the Advantages of a Cooperative 1. It is based on the principles of collective effort, mutual self – help, equality, democracy, distributive justice and freedom. Therefore information relating to activities, revenues, members etc becomes public knowledge. In this type of society, the land of the individual members is taken by society, but the ownership remains at the members. Voluntary Association: It is a voluntary association. A person can join cooperative society anytime or leave as per his desire. Let us see why. Cooperative societies encourage the habit of savings and thrift among their members. The members of the ruling party dictate terms and therefore the purpose for which cooperatives are formed is lost. लाभ (Advantages) 5. Irrespective management of a co-operative society is democratic. Any ten adult persons can voluntarily form themselves into an association and get it registered with the Registrar of Co-operatives. These are summarised as follows: 1. There is no incentive for working efficiently. Disadvantages of Co-Operative Society: As against the above merits, there are sate draw­backs or limitations of co-operative associations. Such Societies are organised by the consumers to avoid exploitation by the middleman and to ensure steady supply of consumer goods and services at fair prices. A co-operative society is run on the principle of ‘one man one vote‘. A person is free to join a cooperative society, and can also leave anytime as per his desire. The membership fees collected is low. Its registration is very simple and can be done without much legal formalities. Hence , members are not inclined to put their best efforts . Cooperative societies are unable to attract and employ expert managers because of their inability to pay them high salaries. Infographic on Advantages & Disadvantages of Cooperative Societies It does not get affected by the entry or exit of its members. Among the mem… Bulk purchases and sales ensure fair prices and good quality. The success of the co-operative society depends largely on the loyalty of the members. 5. Weaknesses in its Lending System. Easy to form: The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. The membership fee is kept low so that everyone would be able to join and benefit from cooperative societies. Therefore all the members of the cooperative society are benefited. In India the cooperative societies registered under Cooperative Societies Act 1912 or the state Cooperative Societies Act. Consumers form a society to manage the business and profit thus earned is distributed among themselves in proportion of their contribution. The Cooperative Society act does not specify the maximum numbers of the cooperative society members. It provides loans at cheap interest rates, provides subsidies etc. Lack of Managerial Efficiency: Co-operative societies are formed on the basis of self help and mutual help. Definition, Nature, Types, and Objective, Advantages and Disadvantages of Joint Hindu Family Business, Merits and Demerits of Joint Hindu Family Business, Advantages and Disadvantages of Limited Liability Partnership. Cooperative Society: Meaning, Features, Types, Advantages, Disadvantages Advantages and Disadvantages of Limited Liability Partnership Importance of Memorandum of Association It is a form of businesswhere individuals belonging to the same class join their hands for the promotion of their common goals. 2. Such disputes affect the functioning of the co-operative societies. Lack of managerial skills results in inefficient management, poor functioning and difficulty in achieving objectives. Therefore they cannot recruit the best talent, acquire latest technology or adopt modern management practices. This motive does not encourage co-operatives to function effectively. Maintenance of business secrets is the key for the competitiveness of any business organization. 4. Housing Cooperative Society: This committee is formed to help the members who need lands and houses. Any 10 members who have attained majority can join together for forming a cooperative society by observing simple legal formalities. If the members of the managing committee are corrupt they can swindle the funds of the co-operative society. The formation of co-operatives is based on service motive rather than a profit motive. These are generally formed by poor people or weaker sections of people in society. Marketing co-operatives eliminate middleman and ensure honest trading practices in weighing, measuring and accounting. Co-operative societies operate with limited financial resources. Its objects to serve their members and not to maximize the profits. When you think of all the largest companies in the world, these are not proprietorships or partnerships. The liability of the members of a co – operative society is limited to the extent of capital contributed by them. Any person with common interest can become a member. They cannot expand their activities beyond a particular level because of the limited financial resources. Co-operatives provide loans at cheaper interest rates and have benefited the rural community. The following are some of the important advantages of co-operative societies. Their basic objective of establishing cooperative stores is to eliminate middlemen. The Multi-state Cooperative Societies are registered under the Multi-State Cooperative Societies Act 2002. This is one of the most prominent objectives of all co-operative societies. Co-operative societies have played an important role in changing social customs and curbing unnecessary expenditure. Co-operatives have benefited the rural rich and not the rural poor. It operates in a limited geographical area and there is greater identity of interest among members. In multi-state cooperative societies the minimum numbers of member is 50 from each state in case the member are individuals. Advantages & Disadvantages of Cooperative Societies, Infographic on Advantages & Disadvantages of Cooperative Societies, Trade Associations | Definition | Features | Functions | Advantages, Sole Trader Business | Meaning | Definition | Important Features, Statutory Meeting | Objectives | Statutory Report, Business Enterprise – Meaning | Public | Private | Joint, Classification of Organization | Features | Merits | Demerits, Factors influencing optimum size of a Business unit, Weaknesses of Trade Union Movement in India and Suggestion to Strengthen, Audit Planning & Developing an Active Audit Plan – Considerations, Advantages, Good and evil effects of Inflation on Economy, Vouching of Cash Receipts | General Guidelines to Auditors, Audit of Clubs, Hotels & Cinemas in India | Guidelines to Auditors, Depreciation – Meaning, Characteristics, Causes, Objectives, Factors Affecting Depreciation Calculation, Inequality of Income – Causes, Evils or Consequences, Accountlearning | Contents for Management Studies |. Since the management is taken care of by the managing committee, no individual can be made accountable for in efficient performance. They have improved the life of the people in rural areas. There are Features and Advantages of Cooperative Society in 2020. types of cooperative society. It implies that all members have equal rights in managing the affairs of the enterprise. This approach to financing is an advantage when members are buying in and making contributions, but it can be a disadvantage when member-owners leave and the business has to pay back their investments. Limited […] The members of these societies consist of people want residential accommodation at lower costs. सहकारी समितियों के विशेषताएँ (Features of Cooperative Societies) 3. They can cooperate and manage the activities of the society in a more effective manner. Right now, one of the surest routes to owning a home in Nigeria is to go the cooperative society way. Cooperative societies are based on the principles of co-operation and therefore harmony among members is important. Since registration of cooperative societies became compulsory. Therefore members contribute their efforts to promote their common welfare. They also help to prevent concentration of economic power in few hands. The members of the managing committee may not have the required qualification, skill or experience. The members of the ruling party dictate terms and therefore the purpose for which cooperatives are formed is lost. The membership of a cooperative society is open to all. Advantages and Disadvantages of co-operative societies . The reason is, in many of the co-operatives there is political interference and domination. Further the society is also benefited because a sum not exceeding 10 per cent of the surplus can be utilized for promoting the welfare of the locality in which the cooperative is located. Co-operative societies buy and sell in bulk quantities directly from the producers or to the consumers. Disadvantages It is because there is very little link between effort and reward. Membership is open to all the people. Since it has limited financial resources, its ability to compensate its employees is also limited. If you continue browsing the site, you agree to the use of cookies on this website. Easy to Form- A cooperative society is a voluntary association and may be formed with a minimum of ten adult members. A consumer’s co – operative store purchase the consumers good either from the manufacturers or the wholesalers and then sells them to its members at reasonable prices. In the right manner function effectively only for productive purposes and not based on principles! The profits able to plan their activities beyond a particular level because of corruption and misuse of that! 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