Question

What are demerits of co-operative society?

Answer 1

Hey,

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Following are its demerits -

1. Lack of Capital :-

Generally the members of cooperative societies are poor and they can not provide the capital on large scale. The external resources of the society are also limited so it faces the shortage of capital problem.

2. Lack of Experience :-

There is a lack of business experience to the members of the society. Another problem is that a society can not hire the services of the experts due to its limited resources.

3. Absence of Discipline :-

Every member of the society considers him the owner of the business so inefficiency takes place and business suffers a loss.

4. Lack of Sincere Management :-

Generally the management of the society remains in the hands of the selfish and dishonest members and they take undue advantages of their powers, so it affects the business.

5. Lack of Profit Incentive :-

Basically cooperative society is not a profit earning institution. So the absence of profit incentive is an obstacle in the way of its progress.

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# Regards :-)

Answer 2

Answer: Some of the demerits of a cooperative society the following limitations and drawbacks of this organisation are:

1. Limited Capital:

Cooperatives by default are usually at a disadvantage in raising the capital because of there low rate of return on per capita invested by the society members.

2. Inefficient Management:

The management of a co-operative society is generally inefficient because the managing committee consists of part-time and inexperienced people. As qualified managers are not attracted towards a adequate pay remuneration.

3. Absence of Motivation:

A cooperative society is basically  formed on mutual benefit and the interest of an individual member is not fully satisfied. There is no direct link between effort and reward. Hence, members are not inclined to put their best efforts in a co­operative society.

4. Rigid Rules and Regulations:

Excessive Government regulation and control over co-operatives affect their functioning.

5. Cash Trading:

The members of the societies are generally from poor sections. These people need credit facilities. On the other hand, private traders extend credit facilities to the consumers.

6. Weightage to Personal Gains

Mutual co-operation erodes away over a period of time and the members start giving weightage to their personal gains.

7. Corruption- It is the worst demerit from which co-operative societies suffer, it is the biggest hindrance in the development and growth of the business.