Co-Operative Society
1st Year POC - Principles of Commerce Notes
Co-Operative Society
http://karachiboardnotes.blogspot.com/
INTRODUCTION
Co-operative society is voluntary association of small producers or
consumers for their mutual benefits. It is formed for producing and
supplying goods in accordance with the needs and requirements of the
member who compose it. The members form and carry on the business of
co-operative societies themselves. They are the owners, workers and
mangers of the society. They have democratic control over its
organization and management. It is formed for the purpose of achieving
economic, social and educative benefits. Profit making is not the man
aim of such organizations. Its aim is to eliminate the services of
middlemen. It brings benefits for the welfare of the members with the
help of applying the principals of all for each and each for all into
practice. Its success depends on how much mutual co-operation in between
the members has been developed.
CHARACTERISTICS OF CO-OPERATIVE SOCIETY:
The following are the main features of the Co-operative society:-
1. OBJECT:
Its main aim is to bring mutual benefit to the members who compose it.
Money making is not the main aim of the Co-operative Society. The
Society looks after the welfare of the members. It aims producing and
supplying goods to meet requirement of the members.
2. CAPITAL:
It collects capital from the members. The members purchase shares in the
cooperative society and provide necessary capital to it. The cooperate
society is divided into fix number of shares. To become a member of the
society one must purchase at least one share.
3. MEMBERSHIP:
There must be at least 15 members in a cooperative society. But one
cannot become a member of the society unless he attains the age of
maturity.
4. DEMOCRATIC PRINCIPLE:
The cooperate society is based on the principle of democracy. Every
member enjoys rights. Everyone has got only one vote. Policies of the
society can be criticized by the members. So the members have a
democratic control over the affairs of the society.
6. TRANSFERABILITY OF SHARE:
The shares of the cooperative society can be transferred to the members of the society. They cannot be transferred to nonmember.
7. DIVISION OF PROFIT:
Although it is not the main idea of the cooperative society to earn
profit at any cost yet it often earns a handsome profit. The profit of
the society is distributed to the members on the paid up capital but the
profits of the consumers cooperative society are distributed in
proportion to their total purchases during the trading period.
7. ENTITY:
The cooperative society has a separate artificial entity. Thus its entity is independent of the members.
ADVANTAGES OF COOPERATIVE SOCIETY
1. ELIMINATION OF MIDDLEMAN:
The consumers get their requirements direct from the producers or they
supply their own requirements. hence the cooperative society eliminated
middleman and makes the goods available to the consumers at cheaper
rate.
2. ECONOMY:
Certain economies can be enjoyed by the members of cooperative society
in the field of production an distribution. The society has not to
bother from marketing the goods. the members are its regular customers
and it need not advertise its good in the market.
3.CAPTURE MARKET:
The cooperative society sells goods at a cheaper rate. hence it can easily attract a good number of customers.
4. NO SURPLUS STOCK:
The society has got regular customers so it has not to keep any surplus stock in hand.
5. SAVING OF MANAGEMENT EXPENSE:
Sometimes the members render free services to manage the affairs of the society. They do not demand any remuneration.
6. EDUCATIVE VALUE:
The members are able to learn the principles of cooperation. They learn
how to render services for the mutual benefits of themselves. They learn
about economic and social aspects of human life.
7. PROVISION FOR THE MAINTENANCE OF THE POOR:
Poor people accumulate and invest their small saving in the society
which brings for them a better standard of living particularly it
increases the income of agriculturists and the people who have been
engaged in small and cottage industry.
8. SOCIAL BENEFITS:
It develops self-confidence and self -reliance among the general people.
They learn the principal 'Self-help is the best help'. At the same time
it develops them a sense of cooperation and sacrifices.
9. PROVISION FOR EMPLOYMENT:
It solves unemployment problems of the under developed countries. People
find employment in small and cottage industries to earn their
livelihood.
10. INTEGRATION:
Under this system of production and distribution a complete integration
between the manufacturers wholesalers and the retailers is possible.
11. EQUAL DISTRIBUTION OF WEALTH;
Under the system of production and distribution wealth cannot be
concentrated in few hands. Equal distribution of wealth takes place
under this system.
12. EQUAL STATUS:
There is no master servant relationship in between the members of
cooperative society. All are the owners managers, and workers of the
cooperative society.
DISADVANTAGES OF COOPERATIVE SOCIETY
1. LACK OF CAPITAL:
It suffers from lack of capital because it is an organization of poor
people. They cannot afford large amount of capital so they cannot afford
to expand the size of the business.
2. LACK OF INTEREST:
As the market for the products of cooperative society has been
guaranteed so the organizers and managers do not pay keen interest in
the management of cooperative society.
3. LACK OF EFFICIENT PERSON:
It fails to accommodate men of talent, skills and initiative because it
requires free services from them. Such people may not be interested to
join the cooperative society.
4. LACK OF COOPERATION:
It requires cooperation and selflessness and other facilities which are
rarely found in the general people. There is no scarcity of mean minded
people living within individuals of the society. The society remains for
its success.
5. UN-EDUCATION:
Most of the members of the cooperative society are uneducated and
unskilled. So the management of the society may fall in the clutches of
selfish people.
6. FREQUENT CHANGE IN DEMAND OF GOODS:
The cooperative society cannot be carried on successively in the fields where the demand for goods changes frequently.
