Business Studies

co-operative societies

A cooperative society exists when groups of workers, individuals, organizations, farmers or communities pull their resources together towards a common goal. Unlike the partnership form of business organisation, there is no maximum number of persons that can form a co-operative society. The main purpose of the cooperative society is to sell goods and services to members at a cheap rate, and do business together for profit purpose and share the profits among the members.

Types of Cooperative Societies

The common types of cooperative societies are:

(a) Producers Cooperative

(b) Consumers Cooperative

(a) Producers Cooperative

Producers form a common association in order to sell their products in a uniform price instead of selling individually, e.g. producers of yam, garri, cocoa etc may form a cooperative society for the selling of their products.

(b) Consumers Cooperative

In consumers’ cooperative, the members are consumers who contribute funds and buy goods in large quantities from the producers and sell in retail prices to members at a reduced and cheaper rate.

Advantages of Cooperative Societies

  1. Members have equal rights and votes.
  2. Prices are lower as they buy in bulk.
  3. Benefits of repayment of capital to any member who withdraws.
  4. Profits are shared in proportion to contribution.
  5. Members are allowed to pay back debts in installments.

Disadvantages of Cooperative Societies

  1. Election of unqualified committee members may lead to poor management of society’s fund.
  2. Calculation of dividends to members is always a problem.
  3. Non-members may be reluctant to engage in marketing activities with the cooperative.
  4. Decision making process is longer compared to sole proprietorship.
  5. Lack of proper planning and ignorance may affect the success of the cooperative society.

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