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Introduction to Business

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Introduction to Business ­MGT 211
VU
LESSON 12
COOPERATIVE SOCIETY
COOPERATIVE SOCIETY
A cooperative society is formed by the people of limited means for self help through mutual
help. It is set up to protect economically the poor sections of the society. It is set up for
cooperation, not for competition. The motto of a society is self help, without dependence on
other business units.
DEFINITION
1.
According to Herrik,
"Cooperation is an action of persons voluntarily united for utilizing reciprocally their own
forces, resources or both under mutual management for their common profit or loss."
2.
According to Mr. Plunket,
"The cooperation is self help made effective by organization."
Cooperative Society
Diagram
Welfare
Number of persons
Business
Pool Resources
ADVANTAGES OF COOPERATIVE SOCIETY
Following are the important advantages or merits of cooperative society:
1. Advantage for Farmers
Farmers can get fertilizers and seeds at low prices from such cooperative societies. Farmers
can also self their production at high rate or prices through cooperative societies.
2. Easy Formation
the formation of cooperative society is very easy. the formalities for registration are simple
and formation expenses are also normal. The registration of a society is not compulsory but it
is desirable to have its registration.
3. Equal Rights
All members of cooperative society enjoy equal right of vote and ownership.
Each
shareholder has only one vote in the management of cooperative societies.
4. Equal Distribution of Wealth
The profit of middlemen is also distributed among the workers. These societies remove the
unequal distribution of wealth.
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Introduction to Business ­MGT 211
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5. Economic Democracy
Cooperative society is a domestic form of organization.  Every member is allowed to
participate in the management of the business. Each member has the right to cast vote. The
decision of majority is honored.
6. Elimination of Middlemen
Cooperative society eliminates the profit of middlemen. These societies purchases goods
directly from the producers for members and provide them on wholesale rate to society
members.
7. Financial Assistance
These societies also provide financial assistance to its members. In case of house building
cooperatives housing society provides loan for the purchase of inputs.
8. Friendly Relations
A cooperative society is a mean of developing friendly relations among the members. A
society provides a platform for the introduction of members with each other.
9. Improve the Standard of Living
Such societies provide the goods and services to the members of the society at low prices.
Due to this, the purchasing power of the people increases and their standard of living
improves.
10. Increase in Employment
The cooperative societies also increase the employment opportunities for people. Thousands
of people are engaged in different types of cooperative societies.
11. Limited Liability
The liability of each member in cooperative society is limited to the share capital, which he
invested. His remain safe.
12. Mutual Cooperation
It is worthwhile to mention here that cooperative society is very useful for creating the spirit of
friendship and brotherhood among the members. Cooperative society is the basic need of
human being in modern era.
13. No Monopoly
A start of the society is the end of monopoly. The monopoly eliminates the competition and
controls the market and prices.  The society tries to restore competition and to eliminate
control over market and prices.
14. Open Membership
The membership of a cooperative society is open for all people living in the same area. It is a
voluntary association of persons of any caste, colour and creed.
15. Protection of Mutual Interest
In cooperative societies its members take an advantage of mutual interest and cooperate with
each other achieve the common interest.
16. Responsibility
A society is a training centre for the members to feel their responsibility. A cooperative society
is an ideal place for building up the moral character and development of personal qualities of
the members.
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Introduction to Business ­MGT 211
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17. Supply according to Demand
Such societies purchase the goods according to the demand of members. The question of
surplus does not arise.
18. Stable Life
The cooperative societies, as compared to other business organization like sole-proprietorship
or partnership, exists for a longer period. It has a fairly stable life.
19. Saving in Expenditure
In cooperative societies, most of offices bearers work voluntarily. So, there are no heavy
expenditures on management. It also reduces the cost of production.
20. Tax Concession
Government provides certain concessions to cooperative societies, i.e. exemption from stamp
duty, super tax, income tax and registration fee etc.
DISADVANTAGES OF COOPERATIVE SOCIETY
Following are the disadvantages of cooperative societies:
1. Lack of Capital
Generally the members of cooperative societies are related to poor group and they cannot
provide the capital on large scale.  External financial resources are also limited.  So,
cooperative society faces the shortage of capital, which is a handicap to their development.
2. Untrained Supervision
The government has sufficient control over the movement of these societies. These societies
cannot prosper because the staff appointed for supervision is mostly untrained.
3. Defective Organization
The organizations of cooperative societies are defective and these cannot operate efficiently to
fulfill their objectives.
4. Illiterate and Ignorant
In our country, the villagers are generally illiterate and ignorant. So, they are not familiar with
the basic concept of the cooperative societies.
5. Lack of Experience
The members of societies have less experience of business. Due to lack of capital, they
cannot hire the services of experts.
6. Lack of Discipline
Every member of the cooperative society considers himself as the owner of the business. Due
to lack of discipline, business suffers a loss.
7. Lack of Sincere Management
It is our common observation that the management of society remains in the hands of selfish
and dishonest persons or members who obtains undue advantage form their powers. So,
business suffers a loss.
8. Lack of Profit Incentive
It is not a profit earning institution.
Due to absence of profit incentive, the progress of
cooperative society is very poor.
9. Lack of Secrecy
There is no secrecy in the business of cooperative societies.
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Introduction to Business ­MGT 211
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10. Lack of Knowledge
The members of cooperative society do not know the principles and rules of society. So, they
create great problem for society.
11. Lack of Unity
In the absence of proper education and training, it is useless to think about unity. The lack of
unity leads towards the destruction of the business.
12. No use of New Technology
The cooperative societies cannot use the latest technology in production. As a result of this,
demand and profit remains low.
13. No Public Confidence
A cooperative society is not bound to publish annual financial statements for the information of
general public. Due to this public shows less confidence in them.
14. Delay in Decision
The main cause of failure of cooperative societies is delayed in decisions.
15. Government Control
The cooperative department of the provincial government supervises the work of all
cooperative societies. The business of a society is not free like other forms of business, so it
cannot earn maximum profit.
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Table of Contents:
  1. INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
  2. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
  3. BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
  4. SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
  5. PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
  6. PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
  7. PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
  8. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
  9. JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
  10. LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
  11. WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
  12. COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
  13. WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
  14. HUMAN RESOURCE MANAGEMENT:Human Resource Planning
  15. STAFFING:STAFFING THE ORGANIZATION
  16. STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
  17. BUSINESS MANAGERíS RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
  18. COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
  19. COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
  20. STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
  21. MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
  22. MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
  23. THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
  24. MARKET RESEARCH:Market information, Market Segmentation, Market Trends
  25. MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
  26. MARKETING RESEARCH:Data Warehousing and Data Mining
  27. LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
  28. UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
  29. THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
  30. PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
  31. PROMOTION:Information and Exchange Values, Promotional Strategies
  32. ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
  33. PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
  34. SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
  35. THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
  36. THE PLANNING PROCESS:Strengths, Weaknesses, Threats
  37. TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
  38. TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
  39. TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
  40. BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
  41. NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
  42. BUSINESS ORGANIZATIONS:Organization as a System
  43. ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
  44. TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
  45. FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures