Disadvantages of Consumers’ Cooperative Society
Whenever the consumers of a particular area collectively establish a cooperative society with a view to purchasing daily necessary commodities at the optimum price this cooperative society is called Consumers’ Cooperative Society. A consumer cooperative is a cooperative business owned by its customers for their mutual benefit. It is a form of free enterprise that is oriented toward service rather than pecuniary profit.
Consumers’ cooperative society has huge advantages. Side by side it has some disadvantages which are as follows:
Shortage of managerial skill: Managing director is not highly educated and not highly experienced. That’s why they create various problems in operating the business. Workers are inactive in the business which is harmful to the organization.
Insufficient capital: As the poor people the members can’t manage required capital to operate the business. The consumers’ cooperative can’t forward greatly due to lack of capital.
Reduce inspiration: Directors have not enough mentality to operative the activity seriously. Because of their salary is low, they are not so careful about their responsibility rather it creates the frustration in the organization.
Minimum variety of products: This consumers’ cooperative society can’t store necessary goods due to lack of adequate capital. So the business formally fails to supply the taste and demandable goods.
The disadvantage of maintaining account: Dividends are distributed on the total purchase ratio instead of the ratio of the number of shares. It creates hustle as well.
Nepotism: Nepotism is the great problem to conduct such kind of business. Director’s relatives get huge advantages than others in the cooperative business.
Above all, though it has few disadvantages, advantages are great. So consumers’ cooperative society must tackle these disadvantages for the betterment of the business. Otherwise, it may fail to achieve the objective of the business.