Many cooperative societies have faced financial troubles and closed down because of corruption and misuse of funds. Voluntary organisations.2. A workplace where members put their effort both at an individual and collective level There cannot be any compulsion for him to join or quit a society. Since it has limited financial resources, its ability to compensate its employees is also limited. Since the management is taken care of by the managing committee, no individual can be made accountable for in efficient performance. among members which may lead to disputes. The government with a view to promote the growth of cooperative societies extends all support to them. are distributed by the government through the cooperatives. Lack of managerial skills results in inefficient management, poor functioning and difficulty in achieving objectives. All important decisions are taken by majority. Further, reports and accounts have to be submitted to the Registrar of Co-operative Societies. Social benefit: It helps in social welfare as it caters to the needs of the poor and middle sections of the society. Therefore they are not dependent on middlemen and can save the profits enjoyed by the middlemen. It is compulsory for the co-operative society to get registration. They cannot expand their activities beyond a particular level because of the limited financial resources. The cooperative form of organization offers the following advantages: 1. Co-operative societies have aided the government’s efforts to increase agricultural production. The term cooperation is derived from the Latin word ‘co-operari’, where the word “co” means ‘with’ and “operari” means ‘to work’. 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. The objective is to improve their economic status and protect themselves from exploitation by businessmen. In India the cooperative societies registered under Cooperative Societies Act 1912 or the state Cooperative Societies Act. A future sale of a unit can result in significant financial gains, even though owners aren’t building equity. Cooperative societies are based on the principles of co-operation and therefore harmony among members is important. It operates in a limited geographical area and there is greater identity of interest among members. Irrespective management of a co-operative society is democratic. A co – operative society has a separate legal existence. 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. Disadvantages 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. Lack of Managerial Efficiency: Such societies are formed to provide financial help in the form of loans to members. Easy to Form- A cooperative society is a voluntary association and may be formed with a minimum of ten adult members. This is one of the most prominent objectives of all co-operative societies. Co-operative societies have limited membership and are promoted by the weaker sections. Cooperatives help people come together as a community. A co-operative society is managed in a democratic manner. A person can join cooperative society anytime or leave as per his desire. 5. Therefore its continuance is in no way affected by the death, insanity or insolvency of its members. The rich farmers with vast tracts of land, produce in surplus quantities and the services of co-operatives such as processing, grading, correct weighment and fair prices actually benefit them. They promote self help, moral value among the members. 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. They operate in the traditional mold which may not be suitable in the modern business environment and therefore suffer losses. Among the mem… The membership fees collected is low. Therefore they cannot recruit the best talent, acquire latest technology or adopt modern management practices. They are usually cheaper, per square foot than condos in the same area, with the added benefit of lower closing costs. It cannot always be assured. As per the prevailing legislation, cooperative society cannot be formed unless and … The principle of one-man one-vote and limited dividends also reduce the enthusiasm of members. 5. It promotes saving habit, self-help and other moral values in the society. लाभ (Advantages) 5. Its registration is very simple and can be done without much legal formalities. Building cooperative Members of a building cooperative (in Britain known as a self-build housing co-operative) pool resources to build housing, normally using a high proportion of their own labour. At the end of financial year members get some return on their capital investment. 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. Disadvantages of cooperative society: Inspire of various advantages claimed of cooperatives. 4. Co-operatives provide loans at cheaper interest rates and have benefited the rural community. Irrespective management of a co-operative society is democratic. No legal formalities are […] Meaning Of Co-operative Society A cooperative society is a business organization and operated by a group of individuals for their mutual benefit. The liability of the members in a cooperative society is limited to the extent of their capital contribution. The members of the managing committee may not have the required qualification, skill or experience. Members with money power cannot dominate the management by buying majority shares. प्रकार (Types) 4. Disadvantages of Co-Operative Society: As against the above merits, there are sate draw­backs or limitations of co-operative associations. It does not get affected by the entry or exit of its members. Therefore members contribute their efforts to promote their common welfare. It is not affected by the death , insolvency , lunacy or permanent incapacity of any of its members. A cooperative society enjoys separate legal entity which is distinct from its members. Members lack motivation to put in their whole hearted efforts for the success of the enterprise. The system of owning a house through a housing cooperative society in Nigeria has its own perks and advantages on a good day, but it also has its disadvantages. Therefore the benefit of the co-operatives has still not reached many poorer sections. Therefore the funds available with the co-operatives are limited. The following are some of the disadvantages of Cooperative societies. Consumers form a society to manage the business and profit thus earned is distributed among themselves in proportion of their contribution. Limited […] Hence , members are not inclined to put their best efforts . The co-operative credit societies suffer from the burden of bad debts. Weaknesses in its Lending System. The sale proceeds are distributed in proportion to the contribution of the members to the pool. There can be no use of force in it. The funds are used in giving loans to needy members on easy terms. A person is free to join a cooperative society, and can also leave anytime as per his desire. There is no incentive for working efficiently. The members of the ruling party dictate terms and therefore the purpose for which cooperatives are formed is lost. Any ten adult persons can voluntarily form themselves into an association and get it registered with the Registrar of Co-operatives. Its registration is very simple and can be done without much legal formalities. (Source: encryptedtbn0) 1. It is based on the principles of collective effort, mutual self – help, equality, democracy, distributive justice and freedom. A body of members is elected to conduct and control the business. High yielding seeds, fertilizers, etc. A cooperative society has to transfer at-least one-fourth of its profits to general reserve. 2. Co-operative societies enjoy the benefit of certain preferences being shown towards them by tax authorities. A minimum of 10 members are required to form a cooperative society. Co-operative societies have contributed significantly in freeing villagers from money lenders. The following are some of the important advantages of co-operative societies. 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The main principle of co-operative society is “one man one vote”. Ans: Given below are the types of cooperative societies: Consumer Cooperative Society: Its purpose is to purchase goods directly from the manufacturer and deliver it to the consumers at a reasonable price. Voluntary Association: It is a voluntary association. The advantages and disadvantages of cooperative business are as follows so don’t miss out any of them: Advantages: As the name suggests, cooperation is the biggest advantage of cooperative business. Co-operative societies operate with limited financial resources. It implies that all members have equal rights in managing the affairs of the enterprise. 3. The membership of a cooperative society is open to all. A cooperative society is a voluntary association of persons of moderate means, who unite together to protect and promote their common economic interests. The formation of co-operatives is based on service motive rather than a profit motive. The procedure involves in the registration of a cooperative society is very simple and easy. Co-operative societies are formed on the basis of self help and mutual help. They also help to prevent concentration of economic power in few hands. Earlier, money lenders used to charge high rates of interest and the earnings of the villagers were spent on payment on interest alone. Voluntarily Organisation: Co-operative Organisation is a voluntarily association of individuals seeking to improve their economic conditions through joint efforts. Co-operative societies cannot be introduced in all industries. 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. It can utilize the funds available in the general reserve. he philosophy of the formation of a cooperative society is “all for each and each for all”. Their object is to achieve economies of large scale farming and maximising agricultural output. Generally, the selfish motive of members starts dominating and they forget the service motive . Cooperatives societies can deal directly with the producers and with the ultimate consumers. Co-operative societies have played an important role in changing social customs and curbing unnecessary expenditure. Maintenance of business secrets is the key for the competitiveness of any business organization. Public confidence in the co-operative societies is low. A housing cooperative is a legal mechanism for ownership of housing where residents either own shares reflecting their equity in the co-operative's real estate, or have membership and occupancy rights in a not-for-profit co-operative and they underwrite their housing through paying subscriptions or rent. It does not enjoy professionalism as they cannot employ professionals at initial stages due to limited funds. But in practice, there might be internal politics, differences of opinions, quarrels etc. 1. Anypersonwithcommoninterest can become a member. Members would be interacting with each other. They do not have to bear personal liability for the debts of the society. The Multi-state Cooperative Societies are registered under the Multi-State Cooperative Societies Act 2002. सहकारी समितियों का अर्थ (Meaning of Cooperative Societies) 2. The reason is, in many of the co-operatives there is political interference and domination. Formation of a cooperative society also does not involve long and complicated legal formalities. Such disputes affect the functioning of the co-operative societies. The agricultural produce of the small farmers is just sufficient to fulfill the needs of their family. The members get return on their capital investment in the form of dividend. Feature # 1. Cooperatives can be formed much easily when compared to a company. Co-operative societies are not able to raise their own resources. From that period the every cooperative society came under the control and supervision of the government. These companies are all joint stock companies. Therefore it cannot employ the best talent. Co-operative societies buy and sell in bulk quantities directly from the producers or to the consumers. Easy Formation: Compared to the formation of a company, formation of a cooperative society is easy. At the same time, any member who wants to leave the society is free to do so. Cooperative Society: Meaning, Features, Types, Advantages, Disadvantages Advantages and Disadvantages of Limited Liability Partnership Importance of Memorandum of Association It is open to … Home » Business Studies » Cooperative Society: Meaning, Features, Types, Advantages, Disadvantages. Commerce Mates is a free resource site that presents a collection of accounting, banking, business management, economics, finance, human resource, investment, marketing, and others. Their basic objective of establishing cooperative stores is to eliminate middlemen. Advantages. 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. Members can give their suggestions, opinions and problems. Cooperative housing societies are established to help people with limited income to construct houses or flats at reasonable costs. Further there are legal restrictions regarding dividend and bonus that can be distributed to members. Cooperative businesses can be financed in part by their members, whose buy-in equity can go towards working capital and expansion. They may have difference of opinion and if any member follows rigid attitude, it can lead to conflicts. The funding and the amount of funds that would be released by the government are uncertain. 2. These are generally formed by poor people or weaker sections of people in society. 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. This motive does not encourage co-operatives to function effectively. Thus, the term cooperation means working together. Advantages In some cases, co-ops offer a less expensive housing option. Membership in a co-operative organisation is open to all having a common interest. They have improved the life of the people in rural areas. The profits earned by the co-operatives have been used for providing basic amenities to the society. Adhering to various regulations takes up much of the management’s time and effort. There is a tendency to shift responsibility among the members of the managing committee. The body is elected through ‘one-man-one-vote-system’. Limited liability: In most cases, the liabilities of the members of the society is limited to the extent of … It reflects the desire of the poor people to stand on their legs or own merit. Advantages and disadvantages of Cooperative Business. There is no legal binding or coercion from any corner for a person to become a member. It is a form of businesswhere individuals belonging to the same class join their hands for the promotion of their common goals. Housing Cooperative Society: This committee is formed to help the members who need lands and houses. Advantages of a Cooperative Organization: 1. If they turn to other forms of organization to satisfy their economic needs, the cooperative society will collapse. It provides loans at cheap interest rates, provides subsidies etc. Co – operative farming makes it possible for members to use modern tools and equipments good seeds, fertilizer and irrigation facilities in order to achieve higher production. A person can become a member at any time he likes and can leave the society by returning his shares without affecting its continuity. The management of co-operative society is based on democratic lines. ADVERTISEMENTS: Read this article to learn about the definition, features, advantages and limitations of co-operative organization. These are summarised as follows: 1. Disadvantages Of Co-operative Societies. The main purpose of such a society is to ensure a steady and favourable market for the output of its members. Features of a Cooperative Society – 14 Main Features of a Cooperative Society. Therefore the rural poor continue to depend on the money lenders for meeting expenses of marriage, medical care, social commitments etc. Co-operative marketing societies are voluntary associations of small producers, who find it difficult to individually sell their products at a profit. Advantages and Disadvantages of co-operative societies . सहकारी समितियों के विशेषताएँ (Features of Cooperative Societies) 3. Voluntary organization. Religion, gender & caste do not matter in cooperative society. Cooperative societies encourage the habit of savings and thrift among their members. Therefore information relating to activities, revenues, members etc becomes public knowledge. Its objects to serve their members and not to maximize the profits. It is because there is very little link between effort and reward. Right now, one of the surest routes to owning a home in Nigeria is to go the cooperative society way. The societies are by the small producers to fight against the big producers. Since the funds available are limited they cannot undertake large scale operations and is not suitable in industries requiring large investments. A cooperative organization is owned and controlled by members. Therefore co-operatives are not able to plan their activities in the right manner. There are Features and Advantages of Cooperative Society in 2020. types of cooperative society. Li… Their scope is limited to only certain areas of enterprise. They serve as a link between the government and agriculturists. As it is a voluntary association, the membership is also voluntary. List of the Advantages of a Cooperative 1. The funds of these societies consist of share capital contributed by the members and the deposits made by them and outsiders. The members of these societies consist of people want residential accommodation at lower costs. There is limited liability of the members of co-operative society. In the Western countries, co-operative societies were voluntarily started by the weaker sections. Therefore it need not depend on outsider’s funds to meet its future financial requirements. Such societies are particularly important in the case of countries like India , where agriculture suffers from excessive sub – division and fragmentation of land . Co-operative societies are managed by the managing committee elected by its members. 9. It represents an attempt by poor and weaker persons to protect themselves against the exploitation and oppression of the economically strong . When you think of all the largest companies in the world, these are not proprietorships or partnerships. ADVERTISEMENTS: Advantages: 1. Infographic on Advantages & Disadvantages of Cooperative Societies Any ten adults can join together and form a cooperative society. Since registration of cooperative societies became compulsory. 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. The cooperative society itself is a voluntary association, hence the membership of a cooperative society is voluntary. A person is free to join a cooperative society, and can also leave anytime as per his desire. It enjoys perpetual existence. The success of the co-operative society depends largely on the loyalty of the members. The members of the ruling party dictate terms and therefore the purpose for which cooperatives are formed is lost. If the members of the managing committee are corrupt they can swindle the funds of the co-operative society. The aim is to solve the housing problems of the members by constructing and giving the option of paying in installments. 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. The output is pooled together and sold at the best price. Cooperative Society: Meaning, Features, Types, Advantages, Disadvantages, What is Business? Co-operative societies are subject to excessive government regulation which affects their autonomy and flexibility. हानियां (Disadvantages… It is based on the principle of one – man-one-vote. After the establishment of co-operatives, the rural people were able to come out of the grip of money lenders. Co-operative societies give loans only for productive purposes and not for personal or family expenses. The society supplies these things to the members and takes over their purchases for sale. Cooperative Society is very important for small business. Let us see why. i. The liability of the members of a co – operative society is limited to the extent of capital contributed by them. These stores are, in fact, associations organised by consumers […] Co-operatives do not function efficiently due to lack of managerial abilities. 3. 2. Thus, a producers ‘ society not only provides money and materials to the small artisans but also undertakes to sell their products. When the buildin… The rich people elect themselves to the managing committee and manage the affairs of the co-operatives for their own benefit. A cooperative society is a voluntary association started with the aim of the service of its members. A co-operative society is run on the principle of ‘one man one vote‘. Infographic on Advantages & Disadvantages of Cooperative SocietiesContentsAdvantages of Cooperative Societies1. It assists the member who need capital, materials and equipment to use their skills for the production of goods and services. Co-operation, work with the feeling of helping o… There are no entry or exit barriers. In this type of society, the land of the individual members is taken by society, but the ownership remains at the members. Any person with common interest can become a member. These societies procure land from the government and construct flats or provide plots to members on which the members themselves can construct the houses as per their choice. co operative societies, features, advantages, disadvantages Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. 4. It is an association of persons united voluntarily to meet their economics, social and cultural needs aspirations through jointly owned enterprise. Proponents of cooperatives accentuate the overall psycho-social impacts created by the control parameters in these communities. 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