Cooperative Organizations in India: Definition, Characteristics & Types

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Would you go into business if you knew you wouldn't make money? Some people do, as members of a cooperative organization. In this lesson, you'll learn more about cooperatives, what they do, and their advantages and disadvantages.

What are Cooperative Organizations?

Do you know what it means to be cooperative? Maybe you've had to work together on a school project or perhaps you spend time volunteering on the weekends. Very likely, you've exhibited cooperative behavior in both these scenarios. To be cooperative means to work together toward a common goal, like earning an A on a group assignment or collecting food and supplies for a homeless shelter.

In India, the idea of cooperation is taken a step further with the existence of cooperative organizations. These are groups of people who join together voluntarily in a shared and democratically-controlled enterprise to achieve some type of goal: economic, social, or cultural. These types of groups come in all sizes and cover a wide range of industries from farming and banking to buying clothing and household goods.

Cooperatives are all about people. They aren't as focused on making profit, rather they seek to meet the needs of those who are a part of the community. These types of groups exist through a value system that includes:

  • Voluntary membership to anyone who wants to be a part.
  • Leadership that comes from the membership.
  • Equal rights and votes for each member.
  • Education for members and the general public.
  • Community-minded operations.

Cooperatives are a registered group, much like a regular company, and have many of the same rights; they can negotiate contracts with other groups and they can sue and be sued in court.

So, you may be thinking, ''A cooperative organization sounds pretty good!'' Let's take a closer look at the advantages and potential disadvantages of engaging in a cooperative organization.

Advantages and Disadvantages

Just like any type of business structure, a cooperative organization presents its own benefits and drawbacks. Here are a few:

Advantages

  • Because there is no middleman between a manufacturer and the consumer (like a retail store seeking to make a profit), prices are considerably lower.
  • The members of the cooperative control all aspects of the organization, from management to making individual purchases. Each member has one vote in decision-making, and no one member is more powerful than another.
  • Cooperatives provide job opportunities to its members since they can sell, as well as buy, goods.
  • The organization creates a giving, community-minded spirit among its members and across the country. It's not about making money, rather helping your brother or sister.
  • Members of a cooperative share equally in the profits earned by the cooperative.

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