There are many advantages and disadvantages associated with co-operative societies. ADVERTISEMENTS: After reading this article you will learn about the advantages and disadvantages of partnership form of organisation. A Non Profit Organization is an institution that conducts its events to assist other individuals, groups or causes rather than gaining profits for themselves. 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". Its registration is very simple and can be done without much legal formalities. Various forms of business organizations from which one can choose the right one include: Sole proprietorship, Joint Hindu family business, Partnership, Cooperative societies, and; Joint stock company. Limited capital: A cooperative society is formed usually by people with limited means. Many cooperatives exist in the retail, service, production and housing industries. It cannot afford to pay higher salaries to them the members who manage the affairs find the work interesting for a short duration but later on they begin to lose interest. Disadvantages of co-operatives are: 1. Limited profit distribution There is usually a limited distribution of surplus (profits) to members/shareholders, and some co-operatives may prohibit the distribution of any surplus to members/shareholders. State Co-Operative Bank:-These are the main co-operative banks in an every states and provide finance to the all central co-operative societies of a district. Easy achievement of organizational goals. The membership of a cooperative society is opentoall. 1. The first advantage in a cooperative business is that the price of products and services will get reduced while the products and services would get improved. When a company receives its exempt status, then the nonprofit must keep detailed records that the public can access in some way. 3. Voluntary organization. List of the Disadvantages of Non-Profit Organizations. Advantages of Partnership: The partnership form of organisation is most suitable when the size of business is medium and, thus the capital can be contributed to meet its needs by the partners themselves. Summary: 1.A corporation exists as a legal entity where it can sue or get sued while a cooperative does not. The strategic alliance is the first cooperative strategy. The following are some of the important advantages of co-operative societies. 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. Organizations such as museums, the Red Cross, and churches that promote a benefit to society: Nonprofit organization. Therefore, a cooperative society often faces shortage of funds. Cooperative proponents acknowledge, specifically, two investment disadvantages in cooperatives. Its important features are service instead of profit, mutual help in place of competition, self-help […] It is a non-equity cooperation agreement between two or more firms for promoting their joint competitive advantage. If the consumption goods of day-to-day necessity are purchased through a cooperative society they can be obtained at cheaper prices and the profits of the society can also be distributed among the members. Cooperative business has the advantage of bringing many stakeholders to the table, but they face the disadvantage of potential disagreement among these stakeholders. Learning Objectives. Cooperative societies suffer from the following drawbacks: 1. The principle of ‘one man one vote’ discourages members to invest large amounts in the society. Also known as non-business entities, these organizations could operate in diverse settings including poverty, religion, science, research, and education. Advantages and Disadvantages of co-operative societies . The most appropriate form is determined by weighing the advantages and disadvantages of each type of organization against one’s own requirements. XII COMMERCE lesson 7 Advantages @ disadvantages of co -operative organisation. 3. The following are the […] Primary Co-Operative Agriculture And Rural Development Bank:-Provide the long term loans on mortgaging immovable property as a … Unlike a private business that can be sold after it has grown big and profitable, a nonprofit organization belongs to the public at large. Cooperative organizations basically work to provide self-help and mutual help. Anypersonwithcommoninterest can become a member. After completing this chapter, you should be able to: (1) know the different forms of business organizations; (2) compare the advantages and disadvantages of alternative types of business organizations; and (3) identify how alternative forms of business organizations can influence a firm’s ability to achieve its financial goals and objectives. Number of members There must be a minimum of five members. XII COMMERCE lesson 7 Advantages @ disadvantages of co -operative organisation. Depending on the type of corporation, it may pay taxes on its income, after which shareholders pay taxes on any dividends received, so income can be taxed twice. These advantages, which tend to tie the patrons to the organization by making them full partners, help build an assured volume of business. Cooperative organisation is also very appropriate for retail stores. 2. Failing to meet the administrative requirements can result in a forfeiture of this status. The members also generally, belong to the poor class and the face value of the share is very much nominal generally up to Rs.10 & so on. The strategic alliance is formed to help each other in organizational or business functions for mutual benefits. The principle of one-man-one-vote and limited dividends also reduce the enthusiasm of members. Cooperatives are democratically owned by their members, with each member having one vote in electing the board of directors. List of the Disadvantages of a Collaborative Structure 1. It doesn’t entail creating a new organizational entity. The primary objective of any cooperative organization is to provide service to its members. Disadvantages Of Stakeholder Theory 1830 Words 8 Pages The stakeholder theory has become an established foundation which identifies and examines the effect of corporations on its stakeholders, stakeholder “is any group or individual who can affect, or is affected by the achievement of the organisation’s objectives (Sternberg .E 1997: 3). Advantages. The members of these cooperatives are not capitalist. A co-operative society is an association and a business organization that is formed by people who have the same interests with the sole aim of promoting their welfare. With many cooperatives, the members cannot transfer their share of the organization, and the death of one partner can even lead to the dissolution of the partnership. Lack of accountability: Cooperatives are more relaxed in terms of structure, so members who don't fully participate or contribute to the business leave others at a disadvantage and risk turning other members away. 2.A corporation has limited liability while a cooperative does not. The cooperative firm ultimately fails due to ineffective organization and management. The paperwork requirements for nonprofit organizations is extensive. 4. Cooperatives may suffer from slower cash flow since a member’s incentive to contribute depends on how much they use the cooperative’s services and products. Uncertainty: MNCs often scale down their production facilities and close the operations in situation … As co-operatives are formed to provide a service to their members rather than a return on investment, it may be difficult to attract potential mem… Membership in a co-operative organisation is open to all having a common interest. When collaborative structures are in the workplace, there are more employees who may feel that they’ve been given a leadership position on a project. It’s high time that all managers start to realize that it is … Disadvantages of a Cooperative Obtaining Capital through Investors. The disadvantages of a corporation are as follows: Double taxation. Excessive tax filings. Advantages and Disadvantages of a Co-operative Business Like all businesses a cooperative business has both advantages and disadvantages. Open Membership. i. A cooperative firm is mostly unable to attract specialized skills to run it affairs. It encourages some workers to assume they have a leadership role. These disadvantages are mentioned elaborately below: Lack of capital is the irresistible problem in the case of producers’ cooperative society. This is totally different from the other forms of organization because others work to gain profits. Limited liability: The liability of individual members is limited to the extent of shares purchased … First, there is the tendency of experiencing intra-firm financing or underinvestment, which occurs with the problem of disparity between a member’s expected profit share and the amount he could earn from investing outside the firm. The disadvantages of cooperative organizations are as follows:-(1) Limitation of Capital: In co-operative organization there is a limitation on capital because the membership of the society is indirectly limited only up to local people. What are the advantages and disadvantages of a co-operative society? Disadvantages of Nonprofit Status One of the most important things to know about a nonprofit organization is that it is not owned by its founders. A co – operative society is a voluntary association and may be formed with a minimum of ten adult members. 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