Profits earned by them are very low. The affairs of a cooperative society are openly discussed in meetings. 1. Advantages of cooperative housing societies: Easy to form: A cooperative society is a voluntary association. Social Virtues – Cooperative society encourages in its members, the virtues of self-reliance, mutual help, honesty and discipline amongst its members. Cooperative Business. State Control 18. – There are often internal quarrels due to differences of opinions and lack of cooperation among members. 2. (i) Equality in Voting Status – The principle of ‘one man one vote’ governs the cooperative society. (iv) Government Control – Cooperative societies have to comply with several rules and regulations related to auditing of accounts, submission of accounts, etc. Death, lunacy and bankruptcy of any of its member does not affect the functioning of a cooperative society. 8. Economical Operations 7. eval(ez_write_tag([[300,250],'letslearnfinance_com-leader-1','ezslot_0',110,'0','0']));As one can see from the above that cooperative societies have advantages as well as disadvantages and that is the reason why before forming an opinion on this form of business organization you should carefully read above points and then take the decision accordingly. Lack of Secrecy- The affairs of a co-operative society are openly discussed in the meetings of the members. Proponents of cooperatives accentuate the overall psycho-social impacts created by the control parameters in these communities. Differences and Factionalism among Members 5. The resultant friction may spillover to other issues also. Government Patronage, 8. Ease of Formation – Any ten persons can come together and form a cooperative society. The members who offer honorary services on a voluntary basis are generally not professionally equipped to handle the management functions effectively. Advantages Of Co-operative Societies 5. A person is free to join a cooperative society, and can also leave anytime as per his desire. In addition, it enjoys the following advantages also. Disadvantages Of Co-operative Societies. The daily operations of a cooperative society are subject to government rules and regulations. Cheaper Goods 17. Government provides all kinds of help to cooperative societies in the form of relief in taxation and subsidies. iv. Open Membership 3. Democratic Management – The affairs of the cooperative society are managed by a Board of Directors duly elected by the members. 10. Credit union co-operative society: This society formed by organizations that offer credit facilities to individuals and organizations. (iii) Erroneous maintenance of the books. It ensures both personal liberty and social justice. Thus, they are unable to save much as a large part of their income is spent on paying the high interest and principle amount to the financial institutions. Any ten adults can join together and form themselves into a cooperative. They save weaker sections of the society from exploitation by the rich. Equality – All the members are equal to each other. The principle of ‘one man one vote’ even if a member holds more shares, also discourages investment. It’s every member enjoy the equal voting status regardless of the capital invested by him/ her. It is compulsory for the co-operative society to get registration. 10. All these people come together and cooperate on the formation of the society. They are also exempt from paying Stamp Duty and Registration Fees. Right now, one of the surest routes to owning a home in Nigeria is to go the cooperative society way. Easy to form: The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. Like company form of ownership, the liability of members is limited to the extent of … Limited Capital 2. Outline five benefits that a Savings and Credit Co-operative society (SACCO) provides to its members. Advantages of Cooperative Societies They sell cheap products because there is no advertisement cost. Advantages of Cooperative Society The cooperatives, being a special form of business ownership, enjoy certain advantages which are no availed of by other forms of organizations. 7. Service Motive – Cooperative societies are guided by service motive rather than profit motive. As a result, the management of such forms of organisation may not be very efficient. A greater proportion of members of such societies is opting out of such arrangements. 3. 5. Limited Consideration 13. There is no harsh rule regarding the number of people who can be part of a cooperative society. A minimum of ten persons is required to start a cooperative society. Advantages and Disadvantages of “Cooperative Society” are as follows: A cooperative society is easy to create. Any person can become a member or quit being a member at any time. The biggest disadvantage of cooperative society is that majority of societies are run by people who do not have expertise in managing the business and since these societies cannot pay remuneration incommensurate with private limited companies it fails to attract talented individuals to the society resulting in below average people managing the societies which in turn will result in society working inefficiently and ineffectively. Like the ATM cards enables you to make payments online, purchases and the likes through that savings account. Advantages In some cases, co-ops offer a less expensive housing option. ‘The Undistributed Profits’ or ‘retained earnings’ are reinvested for further growth of the society. Lack of Expertise- On account of limited resources and small scale of operations, cooperatives cannot afford to avail of the services of experts. (v) Support from Government – As it is based on democratic pattern, the cooperative society enjoys support from the Government in the form of low taxes, subsidies, and low interest rates on loans. Cash Trading- The members of the societies are generally from poor sections of the society. Lack of Understanding of Principle of Cooperative Societies 20. These persons need credit facilities. 7. According to Mr. Culvert , “It is a form of organization, Wherein persons voluntarily associate together as human beings, on a basis, of equality, for the promotion of economic interest of themselves. receive training in these societies in different fields of business. This is due to multiple factors like the members may work on honorary basis, elimination of middlemen, etc. They cannot embrace new-age selling methods such as credit sale, home delivery, discount sales, etc. Types Of Co-operative Societies 4. 3. The existence of a cooperative society is not affected by the death, insolvency or insanity of its members. As against the advantages of co-operatives, the following limitations and drawbacks of this form of organization must also be noted: 1. 4. Stability 6. 6. It offers a decent salary and position to its employees. Cooperative societies follow conventional modes of sale. Management Commitment- Members elect their representatives to manage the affairs of the society. Economy in Operation – Cooperative societies spend little on expenses such as establishment charges, advertisements etc. – Cooperative society is generally managed by the members themselves on an honorary basis. 6. Lack of Expertise 17. Is a cooperative society ? It is difficult to maintain secrecy. The main benefits claimed by different kinds of cooperative societies, in brief, are as under; Advantages of Cooperative Society The aim is the elimination of middleman. The death or bankruptcy of the members has no effect on its functioning. Presents Contribution of Wealth – The profits of a cooperative society are distributed on the basis of individual transactions of members with the society. This is because it has a separate legal entity independent from its members. Often, their views on important issues may differ from each other leading to strong resentment and disharmony among them. The personal assets of the members are, therefore, safe from being used to repay business debts. Lack of Public Confidence- The performance of Cooperative societies in many parts of the world does not inspire confidence. The legal procedures for registration are very simple. The customers or producers themselves are members of the society, which also reduces the risk of bad debts. The members of cooperative society come from different walks of life. (iv) Hindrances created due to the conservative and illiterate mindset of the members. Perpetual Existence 21. No Speculation- The share is always open to new members. (iii) Stable Existence – Cooperative Society existence isn’t affected by death, bankruptcy or insanity of the members. Since their members have an equal voice on any issue, they are likely to create confusion and problems for other members. Qualified managers are not attracted towards a cooperative on account of its limited capacity to pay adequate remuneration. Lack of Incentive and Initiative. So, it is difficult to maintain secrecy about the operations of a cooperative society. Members give preference to personal benefit over the society’s benefit. 1. Advantages of Cooperative Societies 1. There are some other types of business and we suggest you skim it quickly to know about all of them. High Interest Rate 14. Shared responsibilities. Hence, there is possibility of slackening of efforts. Other Problems- Inefficiency, ignorance of principles of cooperation, misappropriation of funds, pursuing sectional goods and political propaganda have resulted in recurring losses and also relative inefficiencies in the cooperative study. 17. Durability 16. Cooperative farmers eliminated price fluctuation risk factors through a guaranteed market ensured by a cooperative society which motivates farmers to produce more milk to increase income. iii. Honorary office bearers of the society may lack enthusiasm to perform their office duties as they get little or no incentive to work hard. A cooperative society is formed by the people of limited means for self help through mutual help. (e) It sets norms of behaviour for peaceful living. Article shared by Advantages of Co-operatives: The following are the main advantages of co-operatives: 1. The people elected also may not be keen to continue for a long period, as remuneration is only honorary. This is due to multiple factors like the members may work on honorary basis, elimination of middlemen, etc. Lack of Secrecy 9. It enjoys a stable existence. The members can independently audit the books and records. Hence, members are not inclined to put their best efforts in a cooperative society. Lack of Universal Applicability- A cooperative society form of business cannot be applicable in all circumstances. Personal Liberty and Social Justice – Cooperative society is a voluntary organisation that can flourish under capitalist as well as communist economic systems. The low rate of dividend offered on investment also acts as an obstacle in attracting membership or more capital from the members. Economical – Registration of cooperative society is exempt from registration fees. Economical Operations- The operation of a cooperative society is quite economical due to elimination of middlemen and the voluntary services provided by its members. A co-operative society is an association and at the same time it is a business organization. (c) It teaches to share and care. The aim of cooperative societies is to serve and strengthen the weaker sections of the society. [1] A cooperative is defined by the International Cooperative Cooperative Society – Meaning, Features, Advantages, Disadvantages Who can form Co-operative Societies? No Secrecy- The membership of a cooperative is always in a state of new members keep joining, while old members might withdraw. It is based on the principles of collective effort, mutual self – help, equality, democracy, distributive justice and freedom. The membership fee is less as most members belong to middle and low income groups. 6. Savings. Its registration is very simple and can be done without much legal formalities. 7. The existence of a cooperative society is not affected by the death, insolvency or insanity of its members. 4. Grants from state are one of the major sources of finance for the cooperative societies. A cooperative society is different from other forms of business organization because other business organizations like partnership firm or private limited companies work with the sole objective of earning profits whereas in this form of business organization member’s voluntary join the society so to work for the benefit of the members of the society while doing business. Our mission is to provide an online platform to help students to discuss anything and everything about Economics. If you’re thinking about joining one, then these are the cooperative advantages and disadvantages that you’ll want to consider. It not only ensures that the members of the society are able to earn more, but society is also benefited. It has a fairly stable life and continues to exist for a long period. Advantages of Cooperative Society 1. Some members attempt to give preference to personal interest at the cost of welfare motive. The registration procedure is … Every member is free to inspect the books and records of the society. A person is free to join a cooperative society, and can also leave anytime as per his desire. 1. Moreover, all the related matters are discussed openly in the meetings. There cannot be any The reports have to be submitted to the registrar. The membership of cooperative society is open for all and the members can walk out of the organisation of their own free will. To protect the interest of weaker sections, the co-operative society is formed. Low Management Cost 9. Open Membership- Membership in a cooperative organisation is open to all people having a common interest. Normally, lot of members will be given a chance to participate in management. Welcome to EconomicsDiscussion.net! Lack of Secrecy – Since the business is governed by the regulations of the Cooperative Societies Act, it is difficult to maintain secrecy in its operations. (ii) Limited Liability – The liability of members is limited to the extent of their capital contribution. Government Patronage- Government gives all kinds of help to co-operatives, such as loans at lower rates of interest and relief in taxation. Besides members join the societies voluntary which helps the society in saving a lot of costs associated with employees hence in a way cooperative societies are economical to operate as compared to other forms of business organizations where employee’s costs and other operating costs are on the higher side. These are 5 benefits that cut across a typical cooperative society in the Nigerian context: 1. Mutual Co-Operation 10. There are no special legal formalities required to form a co-operative society. Democratic institution voluntarily run on ‘ all for each ” society faces of! 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