Cooperatives

• A cooperative is defined as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.
• A cooperative may also be defined as a business owned and controlled equally by the people who use its services or who work at it.
• They are governed by the Cooperatives Societies Act of Zimbabwe.
• They have open membership.
• They offer services to members.
• Members enjoy limited liability.
• Sells goods and services to its members at cost or nominal profit.
• Surplus is shared among the members
• Governments often assists cooperatives achieve their goals, assistance often comes in the form of grants.
• Labour is principally provided by the members
• Every member has one vote (primary societies)
• Education and training facilities provided by members.

Advantages

• Easy to form since there are not that many legal requirements
• No obstruction to membership.
• Offer valuable services to members such as the provision of good and services at a reasonable prices.
• Enjoy economies of scale.
• Are democratically managed since members have equal voting powers.
• There is continuity after the death of each partner.
• Enjoy limited liability

Disadvantages

• Limited resources since capital is provided by members only.
• Inefficient management.
• Lack of secrecy since all the financial information is known to all members.
• Disputes can be difficult to solve given the structure of cooperatives.
• Excessive government and political intervention.
• Lack of motivation since there is no profit motive.

To access more topics go to the O Level Business Notes page.