2.0 OBJECTIVES At the end of this unit, you should be able to: • list the essential factors necessary for the growth and development of a cooperative society • explain these factors, clearly.
COP211 MODULE 1 39 3.0 MAIN CONTENT 3.1 Factors that can enhance the Success of a Cooperative Enterprise For any cooperative enterprise to perform effectively, there are certain conditions that should be met. These factors are discussed in this section. (a) The relationship between members and the cooperative society As indicated earlier, the cooperative has the dual nature of being a group of persons who own private individual business enterprises jointly established and owned by members of the group and charged with solving members’ economic problems. There is, therefore, a relationship existing between the members and the cooperative, which is both personal and economic. (b) Minimise over-emphasis on the interest of the cooperative enterprises This means overemphasising the activities which lead to high profits; emphasising more on what the market can pay as against what members really need. The transactions with non-members should be greatly emphasised. The small members being neglected in favour of the usually fewer, but financially big members, simply to increase sales and expand business should be discouraged. The manager regards the business as his personal estate and often influencing those members that will be elected to offices of the society. The cumulative effect of all these anomalies is the emergence of a cooperative that is regarded as efficient, as far as final accounts are concerned, but which is, by all means, not efficient in the real sense because it has deviated from its primary goal of meeting members’ needs. This results in members looking elsewhere to satisfy these needs on their own or terminating their membership. Indeed, the occurrence of internal frictions cannot be ruled out. Placing too much emphasis on the interest of the cooperative enterprise should, therefore, be minimised.
COP211 COOPERATIVE ECONOMICS I 40 (c) Complete neglect of the interest of the cooperative business enterprise should be discouraged This can take any of the following forms. 1) Lack of interest in raising reserve funds and obtaining reasonable share capital for the cooperative. 2) Lack of maintenance of installations. 3) Sale of poor quality products to the cooperative by members, while selling high quality ones through other channels. 4) Members not using the cooperative, at all, to sell their products, but preferring middlemen. The above happens, in most cases, to those cooperatives that have weak management. This will, no doubt, endanger the existence of the cooperative. SELF-ASSESSMENT EXERCISE 1 1. You are going to carry out another interview exercise. Select another cooperative organisation and choose 5 members. Ask them about their attitude towards their cooperative.
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- Spring '17
- Economics, ........., Cooperative, Cooperative Economics