Posted by Chester Morton / Saturday 21 October 2017 / No comments
The advantages of co-operative societies
THE ADVANTAGES OF CO-OPERATIVE SOCIETY
Definition co-operative society
Co-operatives describes a form of business organisations where a group of consumers or producers come together voluntarily or out of their free will to form an association with the aim to produce, distribute or consume a particular good or service. A co-operative can therefore be seen both as a business organization and an association.
Advantages of Co-operative Society
Easy to form
A cooperative society is easy to form. Forming a co-operative society does not demand that one follows a set of difficult legal requirement. It is not usually very difficult to find a number of people who are interested in the same goal to come together to form a co-operative. Furthermore, registering a Co-operative is not cumbersome or difficult and the things one needs to register a co-operative society are less demanding.
A relaxed Membership
To become a member of a co-operative society, one only needs to be interested in the objective(s) of the society, and be ready to follow the ground rules set in the organization. Membership is not limited to one's sex, religion, tribe or the race of the individual seeking to join a co-operative. Members can also decide to leave the society freely when they so desire.
Limited liability
The debt incurred by a co-operative must not extend to the properties of individual members. Members are only liable to the amount they provide as contribution towards the formation and running of the co-operative. There is also the advantage derived from the fact that because membership is often unrestricted a financial problem in the co-operative will have several people sharing the financial burden as opposed to the sole proprietor for instant.
Bulk Purchases Reduces unit price
Because Co-operatives purchase their goods in bulk they have the chance of buying at a reduced price. This lowers the price of goods and services sold to its members.
Democratic Decision-Making
In making decision in a co-operative, members have one vote each. This is so even if the member has more shares than anybody in the society. This means that every decision will have to be subjected to the view of every member. This democratic nature helps to avoid a situation where one person or a group of persons hijacks the society and autocratically impose himself/herself or themselves on the membership. Managers are also elected by their own members ensuring equality and social justice among its members.
Elimination of middlemen
Since co-operatives are able to deal directly with producers, all middlemen between the producer and the consumer such as the wholesaler and retailers are eliminated. Because both retailers and wholesalers add their profit margin, dealing directly with producers helps co-operatives to keep price low and benefit from higher profit margins.
