It is a well-known fact that the entrepreneurs take away a major share of the profit. They neglect the interest of both, the consumers and the employee. To have a perfect solution to these limitations and as a competitive alternative, the co-operative form of organization came into existence during early 19th century. The movement was, however, firmly established only in 1880. It is based on democratic principles and is utilized for the welfare of the general public. It protects the interest of consumers as well as that of small producers. There are two types of co-operative organizations – consumers co-operatives and producers co-operatives.


Consumers co-operative society

In such organization, a particular group of consumers come together and contribute to start a store of their own. They buy their goods from whole-salers and sell them to their members, generally on ‘no profit, no loss’ basis. Any profit obtained is distributed among the members in proportion to their share capital. Generally, the share capital is subscribed by all the members, in equal proportion.


producers co-operatives

In this form of business organization people from a particular type of trade or business come together to form an association. The aim of such producers co-operatives societies is to produce goods at a low cost and to sell them at moderate prices, without making large profits. This form of organization works on democratic principles. It is not, however, very useful when large amounts of capital are required but it is useful particularly in Agriculture and other allied industries. In the beginning, it was experimented in Germany and Denmark and then spread all over the world. In india, such co-operative department are at present function in almost every state.


Salient Features of Co-operative Societies

  • They are voluntary organizations.
  • Members are free to leave the organization if and when they so desire.
  • Generally, the minimum members required for forming a Co-operative society is eleven.
  • There is no upper limit on the number of members.
  • Each member has to contribute his share to become a part of the organization.
  • The Management of the organization works on the basis of equality i.e. one member one vote.
  • The main object of the organization is to render service and not to make profit.



Type of Co-operative Societies

·        Producers Co-operative Society

·        Consumers Co-operative Society

·        Housing Co-operative Society

·        Co-operative Farming Society

·        Co-operative Credit Society


Advantages of Co-operative Organizations

  • It is useful to the common man.
  • Loans can be taken from Government to fulfill the required objectives.
  • Societies can get Government loans, upto eight time of the subscribed capital.
  • It helps in the equitable distribution of wealth.
  • Profits are equally shared.
  •  It is particularly helpful in the agricultural industry.
  • Middlemen can be eliminated if producers co-operative societies come together.
  • Due to honorary services of members, the expenses on the management can be reduced.
  • It reduces the cost of production.



Disadvantages

  • This form of organization is not suitable for industries where a huge capital investment is required.
  • Utilization of highly qualified persons is not possible due to the limited capital.
  • Sometimes, inexperienced management may lead to losses.
  • Persons holding positions of power may take undue advantage.
  • There are always conflicts among members as they have equal rights and equal investments.