Advantages of cooperative business

Answer 1

The advantageous factors of the cooperative type of organization are given below: -

1. Elimination of middlemen. The management of the consumer cooperative society directly purchases the finished goods from the manufacturer and producer. Producer cooperative society procures the raw material from the producer. Thus they try to free themselves from the grip of the middlemen and make the goods available to consumers at lower prices.

2. Saving in management expenses. Cooperative society enjoys some economies in the field of management due to voluntary services performed by the members themselves. Thus, it is possible to minimize the expenses of management and supervision.

3. Minimum stock. Society purchases the same goods which are actually demanded by its members. Thus there is need to have minimum stock at hand due to constant and regular demands.

4. Economy in distribution and production expenditure. Society is saved from any distribution and production expenses. It has got its regular customers; therefore society has not to face any trouble for marketing its goods. Thus is has not to incur any expenditure for publicity and advertisement, which is a big item in the budget of the capitalist producer.

5. Integration. Under this type of organization, complete integration between producers, wholesalers and retailers is always possible. This is thus a clear advantage over capitalist economy.