Co-operatives
From WikiTextbook
The aim is to gain shared (mutual) benefit for the members of the co-operative. Maximising the level of profit may not be the main aim of the co-operative. It might be to buy goods at a lower price or to benefit from sharing in other ways such as being able to take advantage of discounts for bulk buying.
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Types of co-operative
There are four main types of co-operative:
- a producer co-operative - a group of producers who have joined together to sell their goods or services;
- a worker co-operative - a group of workers pooling their labour and sharing the profits;
- a consumer co-operative - a group of consumers who have joined together so they can get lower prices by bulk buying;
- a mutual organisation - a group of people who have joined together to provide financial or similar benefits for themselves.
Producer co-operatives
Often in agricultural markets producers who join together to share resources, expertise, and marketing form these co-operatives. You will often see adverts on the television for milk, beef or lamb; these are funded by producer co-operatives. The farmers who produce that particular product will all contribute towards the marketing campaign in the hope of increasing their sales. The farmers may also decide that it is more economical to share expensive machinery that they would only use once or twice a year.
A problem of joining a worker's co-operative is that you may end up paying for things that you do not want or wish to take part in, such as contributing towards an advertising campaign that you do not think will benefit your business.
Worker co-operatives
In a worker co-operative the workers will own the business, for example, the factory and machines, themselves. Some co-operatives were set up when workers bought out a business that would have otherwise closed down as they believed that it could make a profit. All of the members put in an equal amount of money, have an equal say in the decisions and take an equal share of the profit. This means that there is an incentive to make the factory a success, as each member will take a share of the profits. To help maximise the amount of profit the co-operative makes the workers may take on tasks in which they have an expertise.
It can be difficult to set up a producers co-operative as finding the money to start up the business can be difficult. Once the business is operating it can often be difficult to manage as all of the workers may want to have a say in how the business should be run as they own part of it.
Consumer co-operatives
The consumer co-operative movement in the UK was started by a group of people known as the Rochdale Pioneers. In 1844 a group of workers each contributed £1 and opened their own grocery shop in Rochdale, Lancashire. They called the co-operative the Rochdale Society of Equitable Pioneers. The aim of the business was to sell groceries at fair prices to its members. Any profits were divided up and given to its members.
Modern Co-ops, such as co-operative retail society (CRS), work on the same principles laid down by the Rochdale Pioneers despite being a very large business with a turnover in excess of £8,000 million and 5,000 retail outlets nationwide.
Mutual societies
A mutual society is similar to a co-operative as they were set up for the benefit of their members. The most common mutual societies are insurance companies and building societies. As mutual societies are owned by the members use them (for example the people who have an insurance policy, mortgage or building society account with the mutual society), there are no shareholders to make a profit for. This often allows mutual societies to offer lower insurance premiums and cheaper mortgages.
Liability
Co-operatives usually operate as limited companies and their members are therefore protected from financial risk as they have limited liability.
