Forms of Business Organisation-2 — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMForms of Business Organisation-23 Marks
Question
State the advantages of Co-operative Society ?
✓
Answer
Meaning of Co-operative Society :
Co-operative Society is established for the purpose of each for all and all for each.
According to General Concept, "A Co-operative Society is a group of people who have gathered with the same objectives, voluntarily and by internal agreement to work for the welfare of one another."
As per Simple Definition, "Co-operative Society is a form of business organization in which individual get associated for the upliftment of their economic interest on equal basis. They join voluntarily on the basis of equality to preserve their own economic interest.
" Co-operative Society is an institution runs on the basis of 'no profit'.
Its objective is to create mutual Co-operation among members and to satisfy their needs through proper ways.
Advantages of Co-operative Society
Simple Establishment :
Any $10$ person voluntarily together, get the society registered before the registar of co-operatives society. The procedure is less complicated and less expensive compare to that of company.
Perpetual Existence :
Co-operative Society has its own independent existence. It is not dissolved due to death, insanity, insolvency of any member. Member can leave society at any moment but society exists forever.
Open Membership :
Anybody can become a voluntary member of co-operative society without any discrimination of caste, creed, religion. Thus, membership is open for all.
Separate Entity :
According to law, Co-operative Society holds separate entity from its members.
It can purchase assets, incur debts and file suit for recovery under its name.
Government Subsidy :
Government holds the society keeping in view its objective of welfare, upliftment, betterment, social activities.
The government gives subsidy, loan and grant to society.
Democratic Administration :
Compare to the management of company, administration of society is carried out through democratic management, because it is based on the principle of one vote one member, one vote per head.
In the company the management is on the basis of number of shares.
Those who are having more shares dominate the company.
Importance is given to an individual so its administration is considered democratic.
Economical Administrative expense :
Many members of society give honorary service to society.
It does not have to incur advertisement expense as goods are sold and purchased with mutual co-operation of members. Beside this, employee performs more than one function at a time.
The society is run through less number of employees. Thus its administration ministration is economic.
Fixed Customers :
Mostly the members of co-operative society are its customeis. Products are sold to members only. No advertisement is required.
Strong competitor against Traders :
Functions of Co-operative society is not for profit but for service and betterment of its members. The question of adulation of deceit does not arise. It is proved a strong competitor of traders.
Social Welfare :
It is not that the society functions for its members only. It performs many social activities such as running subsidized dispensary, school, training centers, gardens, parks, health centers, adult education etc.
Training School for Democracy :
In Co-operative Society importance and weightage is not on capital but humanity. It runs on the basis of vote per head so one can contest election and join management. That is why co-operative society is called an ideal training school for democratic principles.
Economics uplift of Members :
Co-operative Society provides consumer items to its members at reasonable price and of good quality. It prevents exploitation of members and leads to quality life.
Encouragement to Small Scale Manufacture :
Co-operative that they can manufacture Societies supply raw material, instruments etc. at reasonable price to small m easily. The development of dairy, sugar, leather , cotton sectors is the outcome of the co-operative society.
Limitations of Co-operative Society : They are as below :
Laminated of Capital :
In the society, voting right is per head so members are not inclined to purchase more number of shares.
For facility of weaker members the price of share is kept quite low. Maximum limit of purchasing share is decided. so higher share capital cannot be collected.
Lack of Efficient Management :
The administration in Co-operative Society is poor due to low wages of employees and less competent services by honorary persons. Due to groupism and personal interest mismanagement arises.
Political Interference :
State government helps co-operative societies.
Society has to follow the rules and regulations of government and gradually it becomes dependent.
Day by day government interference increases and values of democracy experiences danger.
Difference of Opinion among Members :
Groupism, disunity, selfishness etc. arise and the objective of co-operative is marginalized. Party politics appears in election.
Lack of Financial Encouragement :
People who give honorary service to society do not get money.
Hence, activities remain slow.
Law does not permit to distribute more than certain fixed divided because profit earning is not the purpose of co-operative society.
Share holders also are not interested in the activities of society as there is no financial encouragement.
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