A co-operative society is a business organization where a group of people who have common interest pool their resources together on the basis of mutual benefit.
CHARACTERISTICS OF CO-OPERATIVE SOCIETY
1) Voluntary: It is a voluntary society. A member joins a co-operative society willingly.
2) Equal Rights: All members have equal stake in the management of the society. Everyone have the right to vote in the election of its officers.
3) One for All and All for One: Co-operative society is formed to help their members. It mainly exists to help their members in need. The driving force is one for all and all for one.
4) Democratic Principle: The management of co-operative society is based on the tenet of democracy. It officers are elected in an election by all it members.
5) Mutual Benefit: All members benefit mutually from the society. A co-operative society may buy items in large quantity and share to it members on the basis of mutual benefit.
TYPES OF CO-OPERATIVE SOCIETY
1) Credit and Thrift Co-operative: This type of co-operative is formed for the purpose of collecting savings from members and give credit facilities at a lower discount rate to members. As a society, it may approach commercial banks, Bank of Industry and Agricultural Banks to obtain loan for its members.
2) Producer’s Co-operative: When a few people with small capital join to produce goods jointly or market their products, it is called producers co-operative society. When farmers jointly hire tractor to till their land or buy fertilizers in bulk. It is called producer’s co-operative society.
3) Consumer’s Co-operative: A consumer’s co-operative is an association of consumers. They buy goods in bulk at wholesale price and sell them at retail price to both members and non-members of the co-operative.
MERITS OF CO-OPERATIVE SOCIETY
1) Less Capital: A member with small capital can start business under co-operative society.
2) Reduction in Inequality: It helps in reducing inequalities because whatever profit made by the society is shared among its members.
3) Incentive for Hard Work: From experience, people who start business on co-operative basis and reap their profit have more incentive for hard work.
4) Savings: It encourages savings among members of the society; profit is made by investing savings in the business.
5) Use of Modern Technique: For example, when a group of farmers join resources to hire tractor for cultivation of their farmland. It encourages the use of modern method of farming. A single farmer most likely cannot afford to hire a tractor.
6) Habit of Thrift: It encourages habit of thrift, it members do not engage in superfluous expenditure, rather, they save more to invest in business.
7) Democratic: Co-operative society runs on democratic principles.
DEMERITS OF CO-OPERATIVE SOCIETY
1) Unnecessary Criticism: Every member has equal right and wants to have complete knowledge about it management. This mostly leads to heavy criticism of the directors which result in difficulty in management.
2) Lack of Qualified Managers: A co-operative society mostly cannot afford the resources to higher qualified managers.
3) Less Capital: Most co-operatives are composed of poor members with little or no capital. It faces challenges in raising capital.
4) Corruption: The directors of the society are involved in corrupt practices in the management of the society. They give favour only to their relatives and friends.