Lack of Secrecy- The affairs of a co-operative society are openly discussed in the meetings of the members. 3. 2. The cooperative societies enjoy the privilege of credit options from banks. 2. The results of such negatives are bound to show up in the functioning of the cooperative society. A cooperative housing society is a collection of a large number of apartments and residential buildings. It is an age long established fact that nobody can escape poverty without a … – Cooperative society is generally managed by the members themselves on an honorary basis. and management is minimal as members work on their own unpaid. In addition, it enjoys the following advantages … 2. Everything you need to know about the advantages and disadvantages of cooperative society. It is run by members who have limited means. A person is free to join a cooperative society, and can also leave anytime as per his desire. Internal Finance – Cooperative societies act limits the amount of divided that can be declared by the society to 6.25% of capital. A greater proportion of members of such societies is opting out of such arrangements. Rigid Rules and Regulations 6. Inefficient Management 3. Easy to form: The formation of a cooperative society is verysimple as compared to the formation of any other form of business organisations. To protect the interest of weaker sections, the co-operative society is formed. It’s every member enjoy the equal voting status regardless of the capital invested by him/ her. Hence, even people with very limited means can also start a cooperative society. Limited Consideration 13. Lack of Secrecy 9. They prevent the concentration of economic power and wealth in a few hands. (f) In economic society, it It offers a decent salary and position to its employees. The cooperative society is a voluntary association of persons, who join together with the motive of the welfare of the members. Personal Liberty and Social Justice – Cooperative society is a voluntary organisation that can flourish under capitalist as well as communist economic systems. Elimination of Middleman – A cooperative society takes up activities that bring the members in direct contact with customers. Government Control – The cooperative societies are provided constant support from the government through grant of subsidies. The co-operative society is a separate legal identity to the society. Procurement of products is done directly from the producers, which removes the middlemen, thereby generating more profit for the producers and consumers. Lack of Competition- Cooperatives, generally, do not face any stiff competition. They take active interest in the working of the society. After getting registered, a cooperative society becomes a distinct legal entity. The principle of ‘one man one vote’ even if a member holds more shares, also discourages investment. The members can independently audit the books and records. Lack of Public Confidence- The performance of Cooperative societies in many parts of the world does not inspire confidence. 11. Open Membership 3. These societies have priority over other creditors in realising its dues from the debtors and their shares cannot be decreed for the realisation of debts. State Control 18. The most important benefit for the member is the existence of the co-op itself. A cooperative society form of business organisation suffers from certain limitations as outlined below: 1. Lack of Loyalty- The bulk of transactions of a cooperative is with its members. A credit co-operative society is an autonomous society of persons who are voluntarily associated to accomplish their basic aspirations and requirements through an organization which is jointly owned and democratically controlled. Any ten adults can join together and form a cooperative society. This ensures better financial health of the cooperative and greater chances of growth. 4. This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. The members who offer honorary services on a voluntary basis are generally not professionally equipped to handle the management functions effectively. Economy in Operation – Cooperative societies spend little on expenses such as establishment charges, advertisements etc. 7. Strong cooperative networks enable practitioners in different parts of the world to share learning and best practice to one another. Advantages of Cooperative Society Membership of the co-operative society is open to all, who have a common object of providing service without expecting returns on it. Cooperative businesses are community-owned private enterprises that combine consumers with owners, and buyers with sellers in a democratic governance structure. Membership of a co-operative society is voluntary. Welcome to EconomicsDiscussion.net! These cooperative organisations prevent concentration of wealth and economic power in few hands. Moreover, all the related matters are discussed openly in the meetings. Hence, there is possibility of slackening of efforts. Producer cooperative society is essential in order to safeguard existence various kinds of disadvantages as well as to exist in the market in comparison with prosperous industrialists. 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. 2. 15. 1. – The liability of the members of the cooperative society is limited to the extent of capital invested by them. Benefits fundamentals Equity is one side of the ownership coin, and member benefits are the other side. The daily operations of a cooperative society are subject to government rules and regulations. Cooperatives can be formed much easily when compared to … The initial optimism of collective effort for mutual gain is being questioned. The managerial board of a cooperative society is elected by the members. Internal Financing 14. Another benefit of a cooperative society is that all members have equal rights irrespective of the amount of capital invested by the members. Types Of Co-operative Societies 4. Other Benefits- Cooperative societies are exempted from paying registration fees and stamp duties in some states. (iii) Stable Existence – Cooperative Society existence isn’t affected by death, bankruptcy or insanity of the members. Limited Liability 5. 10. – Cooperative societies have to comply with several rules and regulations related to auditing of accounts, submission of accounts, etc. 11. The existence of a cooperative society is not affected by the death, insolvency or insanity of its members. There is very little that the members can actually do on their own without consulting the Government. 9. Government Patronage, 8. The aim of the society is mutual benefit. SCOREHIGH COMMERCE 36,815 views 16:46 IELTS Speaking Part 1 NEW Questions for 2020 (January to April) - … 2. It is compulsory for the co-operative society to get registration. Social Virtues – Cooperative society encourages in its members, the virtues of self-reliance, mutual help, honesty and discipline amongst its members. Share Your PDF File These are 5 benefits that cut across a typical cooperative society in the Nigerian context: 1. Durability 16. Ease of formation: It is quite easy to form a cooperative society. The funds and time required is minimal to get the society registered. Income Tax Exemption. – The liability of members is limited to the extent of their capital contribution. No discrimination is made on the basis of gender, caste, creed and political association. 4. 6. Explain five benefits that may accrue to a community that is involved in trading activities. The cooperative society itself is a voluntary association, hence the membership of a cooperative society is voluntary. Yet, the high rate of interest eats away a big chunk of their earnings. Cooperative societies have to work under several rules and regulations relating to audit and submission of accounts. Moreover, there is no need for massive advertisement to promote the stock. Cash Trading 8. A person is free to join a cooperative society, and can also leave anytime as per his desire. The legal formalities are bare minimum. Cheaper Goods 17. Cooperative society was originated from the word of co-operating which indicates assistance. Limited Capital 2. Honorary office bearers of the society may lack enthusiasm to perform their office duties as they get little or no incentive to work hard. Moreover, members often offer honorary services to the society. IN ACTION The Ugandan Cooperative College, which provides training in cooperative management and governance, is supporting the development of cooperatives across South Sudan. It has a democratic control: one member, one … Corruption- It is the worst demerit from which co-operative societies suffer, it is the biggest hindrance in the development and growth of business. Limited Capital- Cooperatives are usually at a disadvantage in raising capital because of the low rate of return on capital invested by the members. (Source: encryptedtbn0) 1. A minimum of ten persons is required to start a cooperative society. Grants from state are one of the major sources of finance for the cooperative societies. 7. Management and Employees also offer their services at a nominal charge. Hence, members are not inclined to put their best efforts in a co­operative society. Limited Liability: You can find the full report here.. Presents Contribution of Wealth – The profits of a cooperative society are distributed on the basis of individual transactions of members with the society. 1. Advantages of a co-operative society i. Lack of Expertise 17. Mutual Co-Operation 10. The members who offer honorary services on a voluntary basis are generally not professionally equipped to handle the management functions effectively. Any person with common interest can... 2. All these legal formalities take a lot of time and consequently inhibit efficiency. 5. Service Motive – Cooperative societies are guided by service motive rather than profit motive. that may have led to closure of business. Thus, a co­operative is able to offer its products at a lower price on account of lower price on account of lower expenses of operation. There cannot be any Middlemen are eliminated but producers and consumers gain from the more. This is due to multiple factors like the members may work on honorary basis, elimination of middlemen, etc. Lack of Universal Applicability. As it is a voluntary association, the membership is also voluntary. (ii) Limited Liability – The liability of members is limited to the extent of their capital contribution. Any person can become a member or quit being a member at any time. – The cooperative society can be started with a minimum of ten members. Stable Existence – It is a stable form of a business organisation. The advantages of a cooperative society have been identified as under: Forming a cooperative society is a no-brainer. This results in surrender of competitive advantage. 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. Its formation is governed by the provisions of Cooperative Societies Act, 1912. Perpetual Existence – A cooperative society is an independent legal entity. Advantages of a Society (a) It promotes teamwork. 2. They cannot embrace new-age selling methods such as credit sale, home delivery, discount sales, etc. Stability 6. 3. A cooperative (also co-operative or co-op) is a business organization owned and operated by a group of individuals for their mutual benefit. The second thing you benefit from cooperative as an individual is access to loans either in cash or in the form of goods. (v) Differences of Opinion – There are often internal quarrels due to differences of opinions and lack of cooperation among members. Hence for example, if one member has put $100000 and another member has brought $1000 than the member who has brought more capital does not get more voting rights or other rights rather he or she will get rights equal to the member who has brought $1000. Any ten adults can join together and form themselves into a cooperative. Though the societies sell goods at lower prices but absence of credit facilities compel them to go to private traders for meeting their requirements. Every member is free to inspect the books and records of the society. 1. Advantages and Disadvantages of “Cooperative Society” are as follows: A cooperative society is easy to create. 6. Any ten adults can join together and form a cooperative society. Cooperative societies enjoy the privilege of paying no taxes to the government on their earnings. Any ten adults can join together and form a co-operative society. – A cooperative society seeks to work towards social welfare and follow a democratic pattern, it gets constant support from the government in the form of taxes, subsidies, loan on interest is low, etc. Equality in Voting Status – A cooperative society is constituted on the principle of ‘one man one vote’. 2. Economical – Registration of cooperative society is exempt from registration fees. Therefore, it becomes difficult to keep the secrets of business. 14 advantages and disadvantages of cooperative business are very important to understand if you are looking to start one. Its accounts are also published due to compulsory requirement of disclosure as per the Societies Act. It has perpetual existence and is unaffected by death, insolvency etc. The liability of the members of a cooperative society is limited to the extent of the share capital contributed by them. 3. 1. The cooperative society can be started with a minimum of ten members and is governed by the provisions of Cooperative Societies Act 1912. (i) Equality in Voting Status – The principle of ‘one man one vote’ governs the cooperative society. Its registration is very simple and can be done without much legal formalities. The liability of the number of people government and house owners to handle the management of a cooperative society isn. It enjoys the following advantages … cooperative society is very simple and easy by organizations that offer credit facilities individuals... Against outsiders since the affairs of a cooperative society, thus, all opinions given! Buildings, or “ co-ops, ” are a unique housing option, typically found a... 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