The aim is to solve the housing problems of the members by constructing and giving the option of paying in installments. It operates in a limited geographical area and there is greater identity of interest among members. But in practice, there might be internal politics, differences of opinions, quarrels etc. The members of the ruling party dictate terms and therefore the purpose for which cooperatives are formed is lost. 3. 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. Irrespective of their religion, gender & caste, membership is open to all. Such societies are formed to provide financial help in the form of loans to members. It does not get affected by the entry or exit of its members. The main purpose of such a society is to ensure a steady and favourable market for the output of its members. The success of the co-operative society depends largely on the loyalty of the members. They cannot be personally held liable for the debts of the society. A person can join cooperative society anytime or leave as per his desire. 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Any person with common interest can become a member. All members have equal rights and can have a voice in its management. It is compulsory for the co-operative society to get registration. Co-operatives have benefited the rural rich and not the rural poor. Cooperatives societies can deal directly with the producers and with the ultimate consumers. Among the mem… The agricultural produce of the small farmers is just sufficient to fulfill the needs of their family. They are usually cheaper, per square foot than condos in the same area, with the added benefit of lower closing costs. सहकारी समितियों के विशेषताएँ (Features of Cooperative Societies) 3. Their scope is limited to only certain areas of enterprise. Commerce Mates is a free resource site that presents a collection of accounting, banking, business management, economics, finance, human resource, investment, marketing, and others. These companies are all joint stock companies. Any ten adults can join together and form a cooperative society. 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. Voluntary organization. It has a fairly stable life and continues to exist for a long period. A co – operative society is a voluntary association and may be formed with a minimum of ten adult members. Adhering to various regulations takes up much of the management’s time and effort. A minimum of 10 members are required to form a cooperative society. 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 dealing with business on a fairly large scale, a joint stock company is the most suitable form of business organisation. i. Limited liability: In most cases, the liabilities of the members of the society is limited to the extent of … Therefore co-operatives are not able to plan their activities in the right manner. Products are processed and graded before they are sold. 5. Therefore it need not depend on outsider’s funds to meet its future financial requirements. लाभ (Advantages) 5. It is because there is very little link between effort and reward. Limited […] Co-operative societies distribute their surplus equitably to all members and not based on the efforts of members. The cooperative societies promote social justice and mutual cooperation. 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. Advantages In some cases, co-ops offer a less expensive housing option. Weaknesses in its Lending System. It is not affected by the death , insolvency , lunacy or permanent incapacity of any of its members. The Cooperative Society act does not specify the maximum numbers of the cooperative society members. In cooperative organisation , there is no direct link between efforts and reward. It is open to … Since the management is taken care of by the managing committee, no individual can be made accountable for in efficient performance. They may have difference of opinion and if any member follows rigid attitude, it can lead to conflicts. 1. Co-operative societies are formed on the basis of self help and mutual help. The management of co-operative society is based on democratic lines. Cooperative Society: Meaning, Features, Types, Advantages, Disadvantages, What is Business? Cooperative societies are based on the principles of co-operation and therefore harmony among members is important. Infographic on Advantages & Disadvantages of Cooperative Societies It implies that all members have equal rights in managing the affairs of the enterprise. The output is pooled together and sold at the best price. Voluntary organisations.2. Cooperative businesses can be financed in part by their members, whose buy-in equity can go towards working capital and expansion. Since it has limited financial resources, its ability to compensate its employees is also limited. 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. A co-operative society is run on the principle of ‘one man one vote‘. When you think of all the largest companies in the world, these are not proprietorships or partnerships. Generally, the selfish motive of members starts dominating and they forget the service motive . Li… Cooperative Society is very important for small business. It can utilize the funds available in the general reserve. But business secrets cannot be maintained in cooperatives because all members are aware of the activities of the enterprise. If you continue browsing the site, you agree to the use of cookies on this website. Co-operation, work with the feeling of helping o… At the same time, any member who wants to leave the society is free to do so. 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. Features of a Cooperative Society – 14 Main Features of a Cooperative Society. Disadvantages of Co-Operative Society: As against the above merits, there are sate draw­backs or limitations of co-operative associations. It is based on the principles of collective effort, mutual self – help, equality, democracy, distributive justice and freedom. 2. They operate in the traditional mold which may not be suitable in the modern business environment and therefore suffer losses. In India the cooperative societies registered under Cooperative Societies Act 1912 or the state Cooperative Societies Act. A person is free to join a cooperative society, and can also leave anytime as per his desire. There cannot be any compulsion for him to join or quit a society. They can cooperate and manage the activities of the society in a more effective manner. Such disputes affect the functioning of the co-operative societies. among members which may lead to disputes. It represents an attempt by poor and weaker persons to protect themselves against the exploitation and oppression of the economically strong . The members are from different sections of society. 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. The surplus generated by the cooperative societies is distributed in an equitable manner among members. Hence , members are not inclined to put their best efforts . It is an association of persons united voluntarily to meet their economics, social and cultural needs aspirations through jointly owned enterprise. 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. There is limited liability of the members of co-operative society. The co-operative society is a separate legal identity to the society. 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. Co-operative societies have contributed significantly in freeing villagers from money lenders. Therefore members contribute their efforts to promote their common welfare. The membership of a cooperative society is open to all. The members of the ruling party dictate terms and therefore the purpose for which cooperatives are formed is lost. They promote self help, moral value among the members. Their sources of financing are limited and they depend on government funds. Therefore all the members of the cooperative society are benefited. The members who offer honorary services on voluntary basis are generally not professionally equipped to handle the management functions effectively. Proponents of cooperatives accentuate the overall psycho-social impacts created by the control parameters in these communities. Lack of Managerial Efficiency: 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. Marketing co-operatives eliminate middleman and ensure honest trading practices in weighing, measuring and accounting. 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. (Source: encryptedtbn0) 1. The co-operative credit societies suffer from the burden of bad debts. It is a form of businesswhere individuals belonging to the same class join their hands for the promotion of their common goals. Voluntary Association: It is a voluntary association. The following are some of the disadvantages of Cooperative societies. The formation of co-operatives is based on service motive rather than a profit motive. 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 buy and sell in bulk quantities directly from the producers or to the consumers. Its objects to serve their members and not to maximize the profits. Infographic on Advantages & Disadvantages of Cooperative SocietiesContentsAdvantages of Cooperative Societies1. 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 cooperative form of organization offers the following advantages: 1. Any 10 members who have attained majority can join together for forming a cooperative society by observing simple legal formalities. The cooperative society itself is a voluntary association, hence the membership of a cooperative society is voluntary. A future sale of a unit can result in significant financial gains, even though owners aren’t building equity. Many cooperative societies have faced financial troubles and closed down because of corruption and misuse of funds. Home » Business Studies » Cooperative Society: Meaning, Features, Types, Advantages, Disadvantages. Advantages. A consumer cooperative is a retail business which is owned by the consumers themselves. The membership of a cooperative society is opentoall. Co-operative societies enjoy the benefit of certain preferences being shown towards them by tax authorities. Co-operative societies have aided the government’s efforts to increase agricultural production. Co-operatives have not been successful in freeing the rural poor from the clutches of the money lenders. Advantages and Disadvantages of co-operative societies . The reason is, in many of the co-operatives there is political interference and domination. A cooperative society enjoys separate legal entity which is distinct from its members. If the members of the managing committee are corrupt they can swindle the funds of the co-operative society. 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. 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. A cooperative organization is owned and controlled by members. Therefore it cannot employ the best talent. Members with money power cannot dominate the management by buying majority shares. 9. 4. It reflects the desire of the poor people to stand on their legs or own merit. The term cooperation is derived from the Latin word ‘co-operari’, where the word “co” means ‘with’ and “operari” means ‘to work’. Membership in a co-operative organisation is open to all having a common interest. Since registration of cooperative societies became compulsory. Feature # 1. The membership fee is kept low so that everyone would be able to join and benefit from cooperative societies. All important decisions are taken by majority. Therefore the funds available with the co-operatives are limited. In co-operative farming societies, small farmers join together and pool their resources for cultivating the land collectively. 1. The funding and the amount of funds that would be released by the government are uncertain. In this type of society, the land of the individual members is taken by society, but the ownership remains at the members. There is no incentive for working efficiently. are distributed by the government through the cooperatives. Co-operative societies are subject to excessive government regulation which affects their autonomy and flexibility. 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. Earlier, money lenders used to charge high rates of interest and the earnings of the villagers were spent on payment on interest alone. Advantages and disadvantages of Cooperative Business. The following are some of the important advantages of co-operative societies. Disadvantages of cooperative society: Inspire of various advantages claimed of cooperatives. The membership fees collected is low. Co-operative societies have limited membership and are promoted by the weaker sections. These societies provide different types of service to their members. Co-operatives, are formed to render service to its members than to earn profit. Irrespective management of a co-operative society is democratic. The members get return on their capital investment in the form of dividend. Co-operative societies operate with limited financial resources. There can be no use of force in it. It provides loans at cheap interest rates, provides subsidies etc. Any ten adult persons can voluntarily form themselves into an association and get it registered with the Registrar of Co-operatives. A cooperative society is a voluntary association of persons of moderate means, who unite together to protect and promote their common economic interests. Further there are legal restrictions regarding dividend and bonus that can be distributed to members. The liability of the members of a co – operative society is limited to the extent of capital contributed by them. Cooperatives can be formed much easily when compared to a company. Co-operative societies have played an important role in changing social customs and curbing unnecessary expenditure. Lack of managerial skills results in inefficient management, poor functioning and difficulty in achieving objectives. A workplace where members put their effort both at an individual and collective level The funds are used in giving loans to needy members on easy terms. The liability of the members in a cooperative society is limited to the extent of their capital contribution. Its registration is very simple and can be done without much legal formalities. The main principle of co-operative society is “one man one vote”. It does not enjoy professionalism as they cannot employ professionals at initial stages due to limited funds. 2. 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. The Multi-state Cooperative Societies are registered under the Multi-State Cooperative Societies Act 2002. The funds of these societies consist of share capital contributed by the members and the deposits made by them and outsiders. Disadvantages 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. Public confidence in the co-operative societies is low. Easy Formation: Compared to the formation of a company, formation of a cooperative society is easy. Co-operative societies cannot be introduced in all industries. These are summarised as follows: 1. Thus, the term cooperation means working together. हानियां (Disadvantages… 4. When the new member joins the society he/she needs to give some registration fees and needs to deposit some mandatory amount every month. They serve as a link between the government and agriculturists. Their basic objective of establishing cooperative stores is to eliminate middlemen. Therefore they cannot recruit the best talent, acquire latest technology or adopt modern management practices. 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. The societies are by the small producers to fight against the big producers. Irrespective management of a co-operative society is democratic. Co-operative societies are not able to raise their own resources. The society supplies these things to the members and takes over their purchases for sale. If they turn to other forms of organization to satisfy their economic needs, the cooperative society will collapse. Lander Cooperative Society: Its purpose is to provide financial assistance to poor … These stores are, in fact, associations organised by consumers […] 2. These are generally formed by poor people or weaker sections of people in society. Wide participation of people is lacking. Thus, a producers ‘ society not only provides money and materials to the small artisans but also undertakes to sell their products. Therefore the rural poor continue to depend on the money lenders for meeting expenses of marriage, medical care, social commitments etc. Formation of a cooperative society also does not involve long and complicated legal formalities. A cooperative society is a voluntary association started with the aim of the service of its members. Consumers form a society to manage the business and profit thus earned is distributed among themselves in proportion of their contribution. Public confidence in the co-operative societies is low. The members of the managing committee may not have the required qualification, skill or experience. Their object is to achieve economies of large scale farming and maximising agricultural output. At the end of financial year members get some return on their capital investment. Since the funds available are limited they cannot undertake large scale operations and is not suitable in industries requiring large investments. Membership is open to all the people. Easy to form: The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. Advantages of a Cooperative Organization: 1. They do not have to bear personal liability for the debts of the society. ADVERTISEMENTS: Read this article to learn about the definition, features, advantages and limitations of co-operative organization. They do not have any surplus to market. It enjoys perpetual existence. 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. There is a tendency to shift responsibility among the members of the managing committee.