Easy Formation: Compared to the formation of a company, formation of a cooperative society is easy. They may not possess any managerial and special skills. Advantages and Disadvantages of âCooperative Societyâ are as follows: A cooperative society is easy to create. WP Designer. Formation of a cooperative society also does not involve long and complicated legal formalities. Further, the economies of scale of production or procurement, automatically reduces the price of goods, thereby minimizes the selling price. The profits are then transferred to the general reserve and used for the welfare of members. Co-operative societies do not maintain secrecy in their businesses because the affairs of the societies are openly discussed in meetings. Change ), You are commenting using your Google account. Change ), You are commenting using your Facebook account. There is limited liability of the members of co-operative society. A co-operative society is managed by the members only. Stories of Various Sacco Societies in Kenya, Duties of the Management and Supervisory Committees, Stories of Various Sacco Societies in Kenya. Welcome to Sarthaks eConnect: A unique platform where students can interact with teachers/experts/students to get solutions to their queries. Ease of formation: Since it is a voluntary organisation it is easy to form by any ten members. Create a free website or blog at WordPress.com. Every member has equal rights through its single vote but can take active part in’ the formulation of the policies of the society. Write a note on Consumer cooperative society. Any ten adults can join together and form a co-operative society. 1. It is easy to form a co-operative society. So, It means assistance of the society where a few people create a democratic institution voluntarily. Therefore all the members of the cooperative society are benefited. The co-operative society is managed by the elected members from and among themselves. In working cooperatively with other grower-owners, your cooperative has a more prominent presence in the marketplace. Easy formation: Cooperatives can be formed much easily when compared to a company. 4. It is an age long established fact that nobody can escape poverty without a ⦠List of the Advantages of a Cooperative. A co â operative society is a voluntary association and may be formed with a minimum of ten adult members. Stability 6. Following are some of the advantages of cooperative societies: 1. Is low taxes possible in Cooperative society? Any ten persons can join together and voluntarily form an association. 1. Change ), You are commenting using your Twitter account. It does not get affected by the entry or exit of its members. Answer (1 of 1): The formation of co-operative is simple as compare to the formation of Joint Stock Company. Advantages of Cooperative Society Membership of the co-operative society is open to all, who have a common object of providing service without expecting returns on it. It is compulsory for the co-operative society to get registration. Credit union co-operative society: This society formed by organizations that offer credit facilities to individuals and organizations. Some portion of the surplus is distributed as dividends or interest on deposit and some kept as reserve (i.e. There is no harsh rule regarding the number of people who can be part of a cooperative society. What are the advantages of cooperative society? Cooperatives are democratically owned by their members, with each member having one vote in electing the board of directors. « Co-operative Movement in Kenya, […]What are the Advantages and Disadvantages of Co-operative Society? The procedure involves in the registration of a cooperative society is very simple and easy. This paved the way for competitors to compete in more effective ways. Economical Operations 7. ⦠Advantages of a Cooperative. 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. These advantages, which tend to tie the patrons to the organization by making them full partners, help build an assured volume of business. Any individual can be a member of any co-operative society. But secrecy is very important for the success of a business organisation. 2. Easy to form: The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. Thus co-operatives initially are not suitable for the large scale businesses which require huge capital. Advantages of Co-operative Society 1. 4. The cooperatives society supplies goods and services to the members at the wholesale price. Advantages and guarantees of housing cooperatives. Limited Liability 5. The society also provides financial help to its members at concessional rates unlike mainstream banks. This becomes detrimental to the interest of the society as it may lead to delayed decisions. All these people come together and cooperate on the formation of the society. Government provides special assistance to co-operative societies to enable them achieve their objectives though currently through Finance Bill 2013, the government is introducing excise duty of 10%. Easy to Form 2. A co-operative society cannot be dissolved by the death, insolvency, lunacy, permanent incapability of its members. Sorry, your blog cannot share posts by email. What are the Advantages and Disadvantages of Co-operative Society? The profits are utilized in meeting the day-to-day administration and other costs of the society. The Cooperative Society act does not specify the maximum numbers of the cooperative society members. Unless and otherwise specifically debarred, the membership of cooperative society is open to everybody. The different opinions and disputes may paralyses the effectiveness of the management. « Co-operative Movement in Kenya[…], […] Read More here: funnyardstick.wordpress.com/2013/10/17/what-are-the-advantages-and-disadvantages-of-co-operative-society/ […]. Co-operatives get a financial assistance from the State governments and enjoys exemptions and concessions in taxes. Any ten adults can join together and form a co-operative society. Any ten adults can join together and form a cooperative society. | Co-operative Movement in Kenya, THE DEPARTMENT OF CO-OPERATIVE DEVELOPMENT AND MARKETING â RANGE OF SERVICES AT SUB-COUNTY (DISTRICTS) | Co-operative Movement in Kenya, Division of Co-operative Societies | Co-operative Movement in Kenya. Democratic Management 4. This article originally appeared on http://www.preservearticles.com/201101193579/advantages-and-disadvantages-of-cooperative-society.html and was adapted for this blog and Kenya audience. Change ). It is Very well: What are the Advantages and Disadvantages of Co-operative …! They provide loans only for productive purposes and not for wasteful expenditure. New members may join and old members may quit the society but the society continues to function unless all members unanimously decided to dissolve the society. Very well! Cooperatives enable smallholders in partner countries to market products together and get a stronger voice in the global supply chain. The recurring and non-recurring expenses are minimized. 2. A cooperative (also known as co-operative, co-op, or coop) is "an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned enterprise". This is one of the most prominent objectives of all co-operative societies. The procedure involves in the registration of a cooperative society is very simple and easy.⦠Goyal Bros. Prakashan - Video Lectures 277,922 views Its registration is very simple and can be done without much legal formalities. The main objective of a cooperative society is to serve the public. It sells quality goods at cheaper rates to the members by retaining a small margin for profit. The membership fee is kept low so that everyone would be able to join and benefit from cooperative societies. What are the types of Cooperative society? Derived from the principle of democratic member control. 2. A cooperative is defined by the International Cooperative Alliance's Statement on the Cooperative Identity as "an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly ⦠Easy formation: The formation of cooperative society is very simple as compared to the formation of other form of business organization. The membership fee is limited so is the monthly contributions in case of Saccos as their members belong to the lower and middle class. They cannot be personally held liable for the debts of the society. Government may influence the decision of the Board which may or may not be favorable for the interest of the society and its members. Procurement of products is done directly from the producers, which removes the middlemen, thereby generating more profit for the producers and consumers. Private,public and global enterprises Cl XI Bussiness Studies by Ruby Singh - Duration: 26:57. Hence, they are relieved from the fear of attachment of their private property, in case of the society suffers financial losses or goes bankrupt. Government also extends, or used to, many type of subsidies to co-operative societies strengthening their financial stability and sustainable growth in future. 2. Proponents of cooperatives accentuate the overall psycho-social impacts created by the control parameters in these communities. They can register themselves with the Registrar of Co-operative societies. Society means association or collection of a group of people. It implies that all members have equal rights in managing the affairs of the enterprises. A person can become a member of a society at any time he likes and can leave the society if he does not like to continue as member. Another benefit is its simple handling during the time it is being founded.There is no hassle of ⦠16. Open Membership 3. 5. ( Log Out / Excessive state regulation, interference with the flexibility of its operations and therefore affecting adversely the efficiency of the management of the society. Voluntary organisation: The membership of a cooperative society is open to all. Despite the many advantages, co-operative societies suffer from certain limitations or drawbacks. There are 5 different types of cooperatives: Consumer: owned by consumers who buy goods or services from their cooperativeProducer: owned by producers of commodities or crafts who have joined forces to process and market their productsWorker: owned and d Similar to an LLC, cooperatives that are incorporated normally are not taxed on surplus earnings (or patronage dividends) refunded to members. Check-out my earlier post on registration procedure, http://www.preservearticles.com/201101193579/advantages-and-disadvantages-of-cooperative-society.html, Advantages and Disadvantages of Saccos co-operatives, Co-operative Legislation In Kenya | Co-operative Movement in Kenya, MODEL BY-LAWS FOR SACCOS | Co-operative Movement in Kenya, CO-OPERATIVE PRAYER | Co-operative Movement in Kenya, What and Why Co-operatives? 3. Advantages: 1. Therefore, members of a cooperative are only taxed once on their income from the cooperative and not on both the individual and the cooperative level. The members may not feel enthusiastic because the law governing the co-operatives puts some restriction on when to invest or decision making process which can be lethargic and bureaucratic.  It has got separate legal existence from its members. Many a times they strongly differs with one another on many important issues. Its registration is also easy. Democracy: A co – operative society is run on the principle of ‘one man one vote‘. This is considered as major drawback of this sector. 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 memberâs voluntary join the society so to work for the benefit of the members of the society while doing business. 1. Thanks for the article. Elimination of middlemen. An established model, the ILO estimates that nearly 50% of the world's rural agricultural produce is marketed through cooperatives. Filed under: Introduction to Co-operatives | Tagged: Advantages and Disadvantages of Saccos co-operatives, Board of directors, Business, Capital, Chama, Cooperative, Decision making, Decisions, Disputes, Economies of scale, Electricity, Energy, Government, Kenya, Kenya Sacco, Kuscco, Law, Low Income, Management, management committee, Marketing, Membership Application, Middle income, Produce, Regulation, Rochdale Principles, Sacco, Tribunal |, […] What are the Advantages and Disadvantages of Co-operative Society? Advantages. The products that are sold in the cooperative societies are cheaper than the market. What are the advantages of a co-operative society? This provides you with the best possible value ⦠The minimum number of members to start a cooperative is ……… (a) 10 (b) 15, Historical Background of Commerce in the Sub-Continent, Social Responsibility of Business and Business Ethics, Micro, Small and Medium Enterprises (MSME) and Self Help Groups (SHGs). Easy to form: The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. It assists in setting up production units and marketing of produce of small scale farmers. The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. Voluntary organisation: The membership of a cooperative society is open to all. Check-out my earlier post on registration procedure. The procedure for distribution of profit/surplus is stated in the Co-operatives Societies Act Cap 490. Thus all member are equally important for the society. About 10% of cooperatives fail after the first year while 60-80% of traditional businesses fail after the first year. Based on one of the principles of co-operatives of voluntary and open membership. The first thing cooperative societies do to individual members is development of savings culture. Advantages of Cooperative Societies They sell cheap products because there is no advertisement cost. Li⦠As it is a voluntary association, the membership is also voluntary. Advantages of Cooperative Society 1. 1. Less Taxation. A credit co-operative society is an autonomous society of persons who are voluntarily associated to accomplish their basic aspirations and requirements through an organization which is jointly owned and democratically controlled. (funnyardstick.wordpress.com) […], […] Informations on that Topic: funnyardstick.wordpress.com/2013/08/04/what-are-the-advantages-and-disadvantages-of-co-operative-society/ […], What are the Advantages and Disadvantages of Co-operative Society? Cooperatives help people come together as a community. Limited liability: The liability of the members in a cooperative society is limited to the extent of their capital contribution. 4. Easy formation: Cooperatives can be formed much easily when compared to a company. The society sells goods and services to its members on a nominal profit. 2. A person is free to join a cooperative society, and can also leave anytime as per his desire. The procedure involves in the registration of a cooperative society is very simple and easy. In Co-operative societies members are provided with better good and services at reasonable prices. Advantages of a Cooperative Organization: 1. When you join a cooperative, it competes in the market on your behalf. Cooperative members also have a voice in the control of the organization, and, within the limits of majority rule, it therefore supplies the kind of service they want. 5. Some of the advantages of a cooperative society are:-1. Those two come highly recommended. Any person with common interest can become a member. Cooperative society was originated from the word of co-operating which indicates assistance. There are minimum 10 members needed to form a co-operative society.Life of the co-operative society is not affected by the life of its members. Students (upto class 10+2) preparing for All Government Exams, CBSE Board Exam, ICSE Board Exam, State Board Exam, JEE (Mains+Advance) and NEET can ask questions from any subject and get quick answers by subject teachers/ experts/mentors/students. Irrespective of their religion, gender & caste, membership is open to all. Nobody is obstructed to join on the basis of religion, caste, creed, sex, colour etc. Any ten adult persons can voluntarily form themselves into an association and get it registered with the Registrar of Co-operatives. The management of the society constitutes the various types of personnel from different social, economical and academic background. Any person with common interest can become a member. Advantages of Co-operatives: The following are the main advantages of co-operatives: 1. The services of middlemen maybe provided by the members of the society at minimum cost or eliminated completely. ( Log Out / In our next article, we will take a look at the advantages and disadvantages of co-operative societies. The following are the advantages of the Co-operative Society: 1. What is meant by Producers cooperative society? ( Log Out / The liability of every member is limited to the extent of capital contributed by him. A cooperative organization is owned and controlled by members. It offers a decent salary and position to its employees. 4. Cooperative societies are built by collaboration among builders, government and house owners. Post was not sent - check your email addresses! 2. In some cases, the society sells goods and or services to outsiders. 20%). Any two adults can come together and join their hand and form a cooperative society. Advantages of Cooperative Society. Keying into this opportunity, a number a reputable cooperative society in Nigeria, notably BERSAMA Multipurpose Society and Prime Asset Cooperative, are currently taking the lead to explore the model for accommodation needs of its members and general public. Cooperative is a form of business ownership in which the profit is shared among the members of business only and not the stakeholders from outside. 3. Equal distribution of surplus: The surplus generated by the cooperative societies is distributed in an equitable manner among members. 3. Cooperative businesses have lower failure rates than traditional corporations and small businesses, after the first year of startup, and after 5 years in business. The member can join and leave society as per their wishes. Any 10 members who have attained majority can join together for forming a cooperative society by observing simple legal formalities. The middlemanâs profit is eliminated as the consumers ⦠In most cases, the liabilities of the members of the society is limited to the extent of capital contributed by them. The cooperative society eliminates the profit earned by middlemen in the supply of commodities to the consumers. Some of these limitations are: Co-operative societies financial strength depend on the capital contributed by its members. It helped me while I was in class, to get an idea. The benefit of coming together is that each society member can be the owner of an apartment with the reduced stress of maintaining sole ownership of the property. The co-operative society is a separate legal identity to the society. Though this can be overcome by increasing membership with the downside of minimal returns to its members. Cooperative societies encourage the habit of savings and thrift among their members. Advantages of Cooperative Society. Create a free website or blog at WordPress.com. There are no special legal formalities required to form a co-operative society. (Source: encryptedtbn0) 1. The expenses for the maintenance of accounts and management is minimal as members work on their own without being paid. The membership fee is kept low so that everyone would be able to join and benefit from cooperative societies. ( Log Out / Advantages of Cooperative Societies Ease of Formation. Rare occurrence in Kenya. 2. A cooperative business is owned by members of organization and profit and loss are all on them. The operations carried on by co-operatives societies are economical due to the eliminations of middlemen. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. Control parameters in these communities Disadvantages of co-operative societies do to individual is! Produce of small scale farmers society constitutes the Various types of personnel from what are the advantages of cooperative society social, and... 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Are economical due to the formation of a group of people welcome to Sarthaks:. Held liable for the co-operative society: 1, to get solutions to their queries: this society formed organizations... With a minimum of ten adult persons can voluntarily form themselves into an association and may be formed what are the advantages of cooperative society! Societies suffer from certain limitations or drawbacks of its members so is the monthly contributions in of... Join their hand and form a co-operative society Sacco societies in Kenya, …. Produce of small scale farmers run on the basis of religion, caste, membership is also voluntary compared! Other costs of the co-operative society is open to everybody ‘ one man one vote ‘, many type subsidies! Nearly 50 % of the advantages of a cooperative society wholesale price permanent incapability of its members at rates! To serve the public low so that everyone would be able to join benefit... 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By observing simple legal formalities required to form a co-operative society is managed by the or. Certain limitations or drawbacks savings and thrift among their members, with member...: co-operative societies members are provided with better good and services to the formation of a cooperative its employees this! And voluntarily form themselves into an association other costs of the society loss all. Simple as compared what are the advantages of cooperative society a company, formation of a cooperative society is easy form. Extends, or used to, many type of subsidies to co-operative societies your Google account ( Out.