A cooperative is an association of persons who join together to carry on an economic activity of mutual benefit.

Owned and controlled by their members (the people who produce, buy their goods or use their services

Members (shareholders) have one vote each
All the members help in the running of the business
A board of directors and a manager might be appointed to run the day to day matters of the business
The profits are shared equally among the members
Shares are not sold on the stock exchange market
If a member wants to quit the cooperative shares have to be sold back to the cooperative society
A cooperative combines the equal control characteristics of many partnerships with the legal personality conferred on joint stock companies

Consumer cooperatives are owned by the people who buy the goods or use the services of the cooperative
+Advantages: Members have limited liability, there are competitive prices because profit is not the main aim, and money can be used for social objectives such as educational grants
-Disadvantages: they are not motivated solely by profit making which could lead to inefficiency and is a less vigorous approach to business because they do not aim to make profits
Producer cooperatives are when producers join together to produce, package or market a commodity and they are profit motivated
Worker cooperatives are owned and governed by the employees
+Advantages: workers should have a strong incentive to work hard because they are the owners and are more able to negotiate better working conditions
-Disadvantages: its difficult to raise enough money to set up and expand, they lack managment experience, and may lead to inefficiency since profit is not a key aim

	Created by albetix over 10 years ago

grade 10 ECONOMICS (CHAPTER 11: PRIVATE SECTOR BUSINESS ORGANISATION) Note on CHAPTER 11 NOTES, created by albetix on 05/03/2014.