Significance, characteristics and benefits of co-operative organization

Significance of co-operative organization:

Co-operation as an instrument for removing disparities in the distribution of wealth has proved very effective because profits earned by the societies are distributed among all the members, not on the basis of capital invested by them but on the basis of use they have made of the society. Co-operation plays a very crucial role in the social development of a nation. It improves the standard of living of the people by providing them proper education and training and inculcating among them a spirit for co-operation. Co-operatives can contribute to reduction of the disparities of wealth. Co-operatives can also help to reduce the chains of intermediaries between producers and consumers and can facilitate a broad-based ownership of means of production. Co-operation can coordinate the activities of producers and consumers. Co-operative societies can also be organised for people living in backward areas or belonging to the socially underprivileged sections in the society. People can get employment through various projects, planned and executed by these societies and hence the activities of labour, capital, organisation, and enterprise can properly be coordinated.

Characteristics ofCo-operative Enterprise

1. Co-operative enterprise is an association of persons not an impersonal grouping of capital like joint stock company. The co-operatives need capital but the emphasis is on persons involved and not on capital they contribute.
2. Undertaking is not a charitable association. It is run by members themselves of their own expense and at their own risk.
3. It is a Voluntary Organisation No one is coerced to join a society against his will.
4. It is a Democratic Organisation It is governed on the basis of democratic principles. Every member has only one vote and no more irrespective of the number of shares held by him.
5. The key note is service and not profit It is motivated by a spirit of service. Its whole business mechanism is geared towards to the provision of economical service.
6. The Basis is Equality Within its membership relations between person and person are governed by a rule of equality.
7. It is Based on Proportionality or Equity. The surplus is distributed not according to shareholders but according to proportion of business operation a member has effected with the society.
8. It is a Socio Economic-Movement. The co-operative movement aims at bringing about revolutionary changes in the social and economic structure by peaceful means.
9. At the Service of Both the Members and of the Community. The basic objective of co-operative undertaking is not only serve its members but also to serve the community as a whole.
10. It is a universal movement. It is found in all the countries of the world.
11. It is a movement whose watch word is action.
12. It is an autonomous body based on the principle of democracy.

Benefits of Co-operatives

The following are the advantages of co-operative organisation¹.

1. priority is given to the satisfaction of human needs instead of greed profits.
2. There exists a more equitable distribution of wealth.
3. Monopolies and trusts which operate at the expense of the consumer become null and void.
4. Adequate increase of workmen’s purchasing power and real wages are the real benefits. People can have better goods for their money.
5. There can be reduction in cost of distribution system.
6. Persons can experience the rejection of accounting in accuracies by encouraging frankness in business.
7. Employment can be stabilised.
8. People can be trained to spend wisely.
9. There can be fair treatment of all labour and general improvement in employer-employee relations.

For citing this article use:

• Sailaja, V. N. (2009). A study on working capital management in selected co-operative super bazaars in the state of Andhra Pradesh.

References:

1. Casselman. P.H., The co-operative movement and some of its problems 1953, P.153.