What are the objectives of a cooperative form of organisation? Explain its merits and limitations

Objectives of Cooperative Form of Organization:

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1. Voluntary Formation: The primary objective is to encourage individuals with common needs or interests to voluntarily come together and form a cooperative.
2. Service to Members: Co-operatives aim to provide services to their members rather than focusing solely on profit maximization. This could include obtaining goods and services at reasonable prices or improving the economic well-being of the members.
3. Democratic Control: Cooperatives follow the principle of democratic control, where each member has an equal say in the decision-making process, regardless of the number of shares they hold.
4. Economic Participation: Members participate economically in the cooperative by contributing capital, utilizing services, and sharing in the profits or surpluses generated.
5. Education and Training: Cooperatives often emphasize educating and training their members to enhance their understanding of the cooperative principles and improve their skills.

Merits of Cooperative Form of Organization:

1. Democratic Management: Members have an equal say in decision-making, fostering a sense of equality and democratic governance.
2. Economic Benefits: Members benefit from the cooperative’s services at reasonable costs and may receive dividends based on their participation.
3. Social Responsibility: Cooperatives often have a strong social orientation, promoting community development and addressing members’ common needs.
4. Stability: Cooperatives may be more stable as members are typically more committed and have a long-term interest in the success of the cooperative.

Limitations of Cooperative Form of Organization:

1. Limited Capital: Raising capital can be challenging as members’ contributions may be limited. This can restrict the scale of operations.
2. Potential for Conflict: Democratic decision-making may lead to conflicts among members, slowing down the decision-making process.
3. Lack of Professional Management: Cooperative societies may lack professional management, affecting efficiency and competitiveness.
4. Limited Scope: Some cooperatives may find it challenging to expand their activities beyond a local or regional level due to organizational constraints.

In summary, the cooperative form of organization has merits such as democratic control and economic benefits for members, but it also has limitations like limited capital and potential for conflicts among members. The success of a cooperative often depends on effective management, commitment from members, and adaptation to changing economic conditions.