Introduction
A cooperative form of organisation is a voluntary association of individuals who come together to achieve common economic, social, and cultural goals. These organisations are formed to protect the interests of the weaker sections of society and to provide services rather than to earn profit. Cooperatives operate on the principles of self-help and mutual help. This type of business organisation is quite popular in both rural and urban areas, especially where people need to work together for mutual benefit.
Objectives of a Cooperative Organisation
The main objectives of a cooperative form of organisation include:
- Mutual Benefit: The core objective is to provide services and benefits to its members rather than earning profits.
- Eliminating Middlemen: Cooperatives aim to remove middlemen who exploit consumers and producers by allowing direct dealings.
- Economic Development: Cooperatives promote economic growth among the members by providing employment and fair opportunities.
- Democratic Management: Every member has equal voting rights regardless of the number of shares owned. This ensures democratic functioning.
- Supply of Quality Goods: Cooperative societies often supply good quality products at reasonable prices to protect consumers from adulteration and overpricing.
- Promoting Savings: Many cooperatives like credit societies encourage the habit of saving among members and provide loans at low interest rates.
Merits of Cooperative Organisation
- Easy to Form: A cooperative society can be formed with a minimum of 10 members. The legal formalities are simple.
- Limited Liability: The liability of the members is limited to the extent of their capital contribution.
- Democratic Control: Each member has one vote irrespective of the number of shares, promoting equality and fairness.
- Service Motive: Unlike other forms of business that work on profit motive, cooperatives aim to provide service to members.
- Continuity: A cooperative society enjoys a continuous existence and is not affected by the death or insolvency of a member.
- Government Support: The government supports cooperative societies through subsidies, loans, and grants to help them grow.
Limitations of Cooperative Organisation
- Lack of Capital: Since cooperatives are formed by people with limited means, they often face financial constraints.
- Inefficient Management: They are managed by elected members who may not have the required expertise or experience in business operations.
- Political Interference: Many cooperatives are affected by political influences which hamper their smooth functioning.
- Low Motivation: Since the profit motive is missing, members and managers may lack the motivation to improve performance.
- Disputes among Members: Differences in opinion and personal conflicts can cause inefficiency and mismanagement.
- Limited Scope: Cooperative societies usually operate on a small scale and may not be able to compete with large businesses.
Conclusion
In conclusion, a cooperative form of organisation plays a significant role in improving the economic condition of its members and promoting self-reliance. It is especially useful in rural areas and among people with limited resources. Despite facing challenges like lack of capital and professional management, cooperatives continue to be relevant due to their democratic structure and service-oriented approach. With proper support and training, cooperative societies can become powerful tools for inclusive growth and social welfare.