By pooling resources at purchasing time, the cooperative can receive volume discounts. Democratic Management The management of a co-operative society is carried on democratic principles. It has limited scope in the sense that it cannot cover the entire economic system. Co-operatives have not been successful in freeing the rural poor from the clutches of the money lenders. 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.
Unwanted interference by the departmental personnel: Co-operatives are being exposed to a considerable degree of regulation by the Co-operative department. This is why, co-operative stores cannot get success as they should. Since the members of a co-operative organization belong to a local area or a particular class or group who are entrusted by the ideals of co-operation, its management actually benefits from a perfect coordination among the members of the Managing Committee. Cooper did not escape criticism. Get financing: Whatever your cooperative does, you will need financing. However, they can reduce their exposure to taxation by paying their members in the form of patronage dividends in the form of refunds and discounts on products and services. There are many cooperative advantages and disadvantages that you need to consider before you decide whether it is the right type of business for you What Are the Advantages of a Cooperative? The help one another with all aspects of the farming.
Hence, the Government offers a number of grants, loans and financial assistance to the cooperative societies — to make their working more effective. When businessmen try to exploit consumers by increasing prices of their goods, co-operatives supply commodities at reasonable prices. It implies that all members have equal rights in managing the affairs of the enterprise. Cooperative businesses also exempt members from income tax, up to a point. Lack of motivation: Co-operation brings an end to the feeling of individual self-interest. Nobody is barred from joining societies on the basis of economic position, caste, color or creed. Lack of secrecy Maintenance of business secrets is the key for the competitiveness of any business organization.
It adversely affecting the flexibility of its operation and the efficiency of its management. After meeting the expenses, some portion of the surplus spent for welfare of the members, some portion kept as reserve and balance is distributed among the members. Cash trading: The co-operative societies sell goods for cash and do not extend credit facilities. There is often lack of harmony and amity among them. The Cooper Union also provided free public lectures and was home to the offices of many celebrated Unitarians and Universalists, including Susan B. Sharing of surplus: The societies sell goods to its members on a nominal profit to cover up administrative costs.
Lack of capital: The co-operatives are launched by economically weaker sections of society. Lack of motivation: Honorary office-bearers of a cooperative society have very little incentive to work hard for the society. State patronage: Government provides special assistance to the societies to enable them to achieve their objectives successfully. The membership fee is limited for which they are unable to raise large amount of resources as their members belong to the lower and middle class. These businesses run pretty much across the board in terms of size. No legal formalities are required for the formation of cooperative society.
It can utilize the funds available in the. Another disadvantage associated with the democratic management style of a cooperation revolves around voting powers. Members would be interacting with each other. There are housing cooperatives where residents own a share ofinvested property. Disadvantages of a Cooperative Organization: 1.
Traditional firms, by contrast, often use a range of financial incentives and intangible perks to attract high-performing talents at every level. A few of them even use their resources to create new enterprises or services that will meet the specific needs of the areas where they operate. They can limit your choice of external finance. The structure of a cooperative organization ensures: i. In the case of cooperative society, the recurring and non-recurring expenses are very less. As a result of this the advantages of large-scale operation like Joint Stock Company are not available to this organization.
These organizations are viable enterprises that put the needs of their members and communities first. As far as control is concerned, there is, again, a difference from a regular business. But in India, the co-operative movement was initiated and established by the government. Lack of Secrecy Maintaining business secrets is an important factor for the success of any business. Earlier, money lenders used to charge high rates of interest and the earnings of the villagers were spent on payment on interest alone. In cooperatives that employ an egalitarian voting system to determine rewards may drive off highly talented individuals that believe superior performance warrants a larger return.