Javatpoint Logo
Javatpoint Logo

AdvananksAdvantages and Disadvantages of Cooperative Society

Everything you want to recognize approximately the blessings and downsides of a cooperative society.

A cooperative shape of an enterprise corporation is different from different styles of organizations. It is a voluntary affiliation of humans with the together owned fund, organized at the democratic precept of equality, who be a part of collectively to deliver for their necessities thru mutual action, and wherein the goal is a carrier in preference to profit.

The first goal of forming a cooperative is to guard the economically weaker sections of society against the oppression of the economically organized, sturdy section of society.

Advantages and Disadvantages of Cooperative Society

Some of the benefits of a cooperative society are:

  1. Easy to Form
  2. Open Membership
  3. Democratic Management
  4. Limited Liability
  5. Stability 6. Economical Operations
  6. Government Patronage
  7. Low Management Cost
  8. Mutual Cooperation
  9. No Speculation
  10. Economic Advantages
  11. Service Motive
  12. Internal Financing
  13. Income Tax Exemption
  14. Durability
  15. Cheaper Goods
  16. State Patronage
  17. Elimination of Middleman
  18. Equality
  19. Perpetual Existence
  20. Scope for Self-Government.

Some of the Negative Aspects of a Cooperative Society are:-

  1. Limited Capital
  2. Inefficient Management
  3. Absence of Motivation
  4. Differences and Factionalism amongst Members
  5. Rigid Rules and Regulations
  6. Lack of Competition
  7. Cash Trading
  8. Lack of Secrecy
  9. Weightage to Personal Gains
  10. Lack of Incentives and Initiative
  11. Corruption
  12. Limited Consideration
  13. High-Interest Rate
  14. Undue Government Intervention
  15. Differences in Opinion
  16. Lack of Expertise
  17. State Control
  18. Lack of Loyalty
  19. Lack of Understanding of the Principle of Cooperative Societies
  20. Lack of Universal Applicability.

Advantages of Cooperative Society:

The cooperative shape of the agency gives the subsequent advantages:

  1. Easy to Form- A cooperative society is a voluntary affiliation and can be shaped with at least ten grownup contributors. Its registration is quite simple and may be performed without many prison formalities.
  2. Open Membership- Membership in a cooperative organization is open to everyone with an unusual place of interest. An individual can be a member at any time he likes and may depart the society by returning his shares without affecting its continuity.
  3. Democratic Management- A cooperative society is controlled democratically. It is primarily based on the precept of 'one guy one vote'. All contributors have the same rights and may have a voice in their management.
  4. Limited Liability- The legal responsibility of the contributors of a cooperative society is restricted to the quantity of capital contributed via means of them. They no longer need to endure non-public legal responsibility for the money owed to society.
  5. Stability- A cooperative society has a separate prison existence. It isn't stricken by the death, insolvency, lunacy, or everlasting disability of any of its contributors. It has a reasonably solid existence and keeps to exist for a protracted period.
  6. Economical Operations- The operation of a cooperative society is relatively expensive because of the removal of intermediaries and the voluntary offerings furnished with the aid of using its members.
  7. Government Patronage- Government, offers all forms of assistance to cooperatives, which include loans at decreased prices of hobbies and alleviation in taxation.
  8. Low Management Cost- Some control fees are stored using the voluntary offerings rendered by using the members. They take energetic hobbies withinside the operating of society. So, society is optional to spend big quantities on managerial personnel.
  9. Mutual Cooperation- Cooperative societies sell the spirit of mutual understanding, self-assist, and self-government. They shop weaker sections of society from exploitation by using the rich. The underlying precept of cooperation is "self-assist via mutual assist."
  10. No Speculation- The proportion is usually open to new members. The stocks of a cooperative society aren't bought at prices better than their par values. Hence, it's far unfastened from the evils of hypothesis in proportion values.
  11. Economic Advantages- Cooperative societies offer loans for effective functions and economic help to farmers and different decreased profits incomes people.
  12. Other Benefits- Cooperative societies are exempted from paying registration expenses and stamp responsibilities in a few states. These societies have precedence over different lenders in realizing their dues from the borrowers, and their stocks can't be decreed to realize debts.

Disadvantages of Cooperative Society:

As in opposition to the benefits of cooperatives, the subsequent boundaries and disadvantages of this shape of the agency have to be noted additionally:

  1. Limited Capital- Cooperatives are commonly at a drawback in elevating capital due to the low price of going back on capital invested with the aid of using the members.
  2. Inefficient Management- The control of a cooperative society could be more efficient because the coping with committee includes part-time and green people. Qualified managers are attracted to something other than the direction of a cooperative attributable to its constrained capability to pay ok remuneration.
  3. Absence of Motivation- A cooperative society is shaped for mutual advantage, and the hobby of character participants is only sometimes absolutely satisfied. There isn't any direct hyperlink between the attempt and the reward. Hence, participants prefer to avoid placing their first-rate efforts in a cooperative society.
  4. Differences and Factionalism amongst Members- Once the preliminary enthusiasm for the cooperative perfect is exhausted, variations and organization conflicts arise among participants. Then, it will become tough to get complete cooperation from the participants. The selfish reasons of participants start to dominate, and provider reason is once in a while forgotten.
  5. Rigid Rules and Regulations- Excessive Government law and management over cooperatives affect their functioning. For example, a cooperative society is needed to get its bills audited via way of means of the auditors of the cooperative branch and to post its bills often to the Registrar. These rules and management can also adversely affect the power of operations and control performance in a cooperative society.
  6. Lack of Competition- Cooperatives normally now no longer face stiff competition. Markets for their items and offerings are more or less prepared and assured. Hence, there's the opportunity of slackening efforts.
  7. Cash Trading- The contributors of the societies are normally from negative sections of the society. These people want credit score centers. On the opposite hand, personal investors expand credit score centers to consumers. However, the societies promote items at decreased fees; however, the absence of credit score centers compels them to visit personal investors to assemble their requirements.
  8. Lack of Secrecy- The affairs of a cooperative society are overtly mentioned within the contributors' conferences. Every member is unfastened to check out the books and information of the society. Therefore, it becomes challenging to maintain the secrets and techniques of business.
  9. Weightage to Personal Gains- Cooperation erodes over time, and individuals begin giving weightage to their private gains.
  10. Lack of Incentive and Initiative- In a cooperative society shape of organization every person is the proprietor of the society. Everyone is the proprietor; however, commercial enterprise no longer belongs to one of them. Over time, it becomes useless because of a loss of incentive and initiative.
  11. Corruption is the worst demerit from which cooperative societies suffer; it's the most important drawback of commercial enterprises' improvement and boom.

Types Of Cooperative Society

  1. In Producer's Cooperative Societies, many small manufacturers must supply on a big scale. However, they need more financial phrases and can't meet their goals. The Producer's Cooperative Society works for the manufacturers who need to promote the merchandise on a big scale. However, do now no longer have the specified resources. In Producers' Cooperative Societies, the participants are the manufacturers, and they together produce the products and meet the needs of consumers. This society is fashioned to combat the capitalist segment of society, which has big capital and quite a few resources. It is a dealer and purchaser of uncooked materials, overheads, and equipment. Generally, earnings are shipped among the participants in line with their funding withinside the resources.
  2. Consumer's Cooperative Societies Such societies are fashioned for the welfare of consumers, and it contains participants inclined to pay affordable charges for the right great merchandise. It purchases merchandise at once from the wholesalers, gets rid of the intermediaries, and sells the products at once to the consumers. If there may be any benefit from the sales, it's far allotted among the participants in line with their capital contribution or purchases made through every one of the participants. In easy phrases, a consumer's cooperative society protects the pastimes of consumers.
  3. Farmer's Cooperative Societies the farmers, inclined to supply on a big scale, shape a cooperative society and together absorb the farming activities. The principal purpose of a Farmer's Cooperative Society is to earn earnings through growing productivity thru much less value. Anything produced in bulk could value much less. When one-of-a-kind farmers part together, they can mix their land, which solves the hassle of fragmented landholdings. These societies are aware of contemporary-day strategies of farming, HYV seeds, fertilizers, machinery, and different contemporary-day equipment, which assist in enhancing the yields and return.
  4. Credit Cooperative Societies offer financial help to their contributors by supplying loans at a low fee for the hobby. These loans are furnished to the contributors out of the quantity amassed through them as capital at a low fee for the hobby. This enables the contributors to get clean credits. Its essential goal is to guard mortgage seekers against the exploitation of cash lenders, who expenses an excessive fee for a hobby at the mortgage.
  5. Cooperative Housing Societies work for individuals who need to assemble homes for themselves. It gives the contributors to pay the quantity in installments and offers them the favored plot or land on which the contributors may want to assemble the residence in line with their choice. However, now no longer have the desired cash for production and procurement. There are exclusive kinds of housing societies. A few construct new homes, a few are shaped to shop for current properties, and others improve homes and infrastructure.
  6. Marketing Cooperative Societies a Marketing Cooperative Society includes manufacturers who need affordable produce. Therefore, this society enables those small manufacturers by pooling the quantity contributed through all contributors and acting capabilities like warehousing, packaging, transportation, etc. The income earned through the sale of that merchandise is dispensed to the various contributors to society according to the quantity they contributed to the output pool. The foremost goal of an advertising cooperative society is to eliminate the intermediaries from the distribution chain and enhance the manufacturer contributors' aggressive role.

Youtube For Videos Join Our Youtube Channel: Join Now


Help Others, Please Share

facebook twitter pinterest

Learn Latest Tutorials


Trending Technologies

B.Tech / MCA