Cooperatives have long been no stranger to cooperatives, especially to a developing country with an agricultural economy like today. However, many people still do not really understand the concept of cooperative as well as the characteristics and advantages and disadvantages of cooperatives. Let’s just find out about these issues through the following article.
Viewing: What is a cooperative?
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1. What is the concept of cooperatives
A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit. Cooperatives are defined by the International Union of Cooperatives as “an autonomous association of persons united voluntarily to meet common economic, social and cultural needs and aspirations through business democratic co-ownership and control”.
A cooperative can also be defined as a business owned and controlled by the people who use the services provided by the cooperative or by the people who work there. Various aspects related to cooperatives are the focus of research in the field of cooperative economics.
2. Characteristics of Cooperatives
Cooperatives are both economic and social organizations
As an economic organization, a cooperative is an enterprise established in order to develop production and business effectively, ensuring the interests of the employees of the collective and of the society. Associations and cooperatives are places where workers rely on and help each other in production as well as in material and spiritual life.
Cooperatives organize and operate according to principles
Voluntarily joining and leaving the cooperative.Self-responsibility and mutual benefit.Democratic and equal management.Distributing to ensure the benefits of cooperative members and development of the cooperative.Co-operation and community development copper
First, from an economic perspective, a cooperative is a social economic organization. The social character of cooperatives is reflected in:
Principle of profit sharing
A part of the profits in the cooperative is used to set up funds, which is distributed to meet the needs of education, training and information for members, and to meet the common needs of the community for cultural and social activities. local community…
Another part of profits needs to be redistributed to members according to service usage. Therefore, even members who contribute little capital still have the opportunity to earn more profits than those who contribute more.
Management organization: members of the cooperative have equal voting rights. Cooperatives are established to conduct production, business and service activities in order to create jobs for members and promote development. and contribute to reducing unemployment in the society.
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Second, have a minimum membership of 7.
Third, from a legal perspective Cooperatives have legal status and limited liability within the scope of their capital.
Fourthly, cooperative members contribute capital and commit to using products and services of the cooperative or employees in the cooperative. If you do not use products or services for 3 years or more or do not work in the cooperative for more than 2 years, you will lose your membership.
3. Advantages and disadvantages of cooperatives
3.1. Advantages of cooperatives
It is possible to attract a large number of employees to participate; The management of the cooperative is carried out on the principle of democracy and equality, so all members are equal in participating in deciding issues related to the operation. of the cooperative, regardless of capital or low capital; Cooperative members participating in the cooperative are only responsible for the cooperative’s activities within the scope of capital contributed to the cooperative.
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3.2. Disadvantages of cooperative type
Business activities in the form of cooperatives also have certain limitations such as:
People with a lot of capital are not encouraged to join cooperatives with many management and business experiences due to the principle of profit sharing, combining the interests of cooperative members with the development of the cooperative; The management of cooperatives is complicated due to The number of cooperative members is large; The cooperative members’ fragmented ownership of their assets limits the cooperative’s decisions.
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