Unit 2: Co-operatives Reading

Question 1

Cooperative is a…

Answer 1

• Business firm owned equally by its various members.
• Members must have a common goal or economic purpose.

Question 2

Retail cooperatives

Answer 2

are formed to provide goods to members at reduced prices.

Question 3

Marketing cooperatives

Answer 3

are created to sell the produce of members at the best price possible

Question 4

Financial cooperatives

Answer 4

are formed to arrange savings and loans for members at better rates than those available at local banks.

Question 5

Service cooperatives exist to provide

Answer 5

special services such as housing, medical insurance, and equipment rentals.

Question 6

Many co-ops incorporate themselves under their

Answer 6

Provincial corporations act
- This permits limited liability for members while maintaining membership privileges

Question 7

Regardless of amount invested…

Answer 7

Each member is entitled to a single vote– majority vote is required to carry any decision

Question 8

To help day-to-day function of co-op; board of directors is..

Answer 8

Elected annually, and officers assume roles on a voluntary basis

Question 9

Credits unions are;

Answer 9

Financial co-ops whose members obtain many of same services (savings/loans) available for banks, but for lower interest rates

Question 10

Advantages:

Answer 10

• Many cooperatives incorporate themselves under their provincial cooperatives act. Permits them to secure limited personal liability for their members, while maintaining all other privileges of membership.
• Each member is entitled to a single vote and has equal say in decisions. More democratic.
• Co-ops aren’t affected by death or solvency, or incapacity of members.
• Members can obtain better prices for products and services and sell them for better prices too.
• Any profits not re-invested into the business are paid out to the members as patronage returns. These payments are based on the amount of business transacted by each individual member. Not affected by death or loss of an owner.

Question 10

Disadvantages;

Answer 10

• Linked to management, capital, and transaction issues. Decisions can be difficult if members have radically different ideas.
• Voluntary/unpaid nature of officers’ positions may discourage capable people from offering management expertise to a group.
• Cooperatives can only raise investment funds from existing members, they have a limited ability to raise capital when needed.
• Co-ops are restricted to conducting business with existing members. This limits customer numbers and ultimately business transactions.
• Co-ops are designed to primarily serve members rather than generate profits.

Question 11

(From co-op articles)

Answer 11

Worker co-ops focus on community issues.