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Transcript of Cooperatives
*They work together to promote their mutual interest.
*They make the decisions together (through democracy), they work together and share the profit. Main Disadvantages *Consumer cooperatives may be forced out of business by larger firms.
*Cooperatives may be inefficiently run if the members lack business skills.
*May find it difficult to find new members.
*It's difficult to raise capital. Aims of Organisation *The aim of a cooperative organisation is to earn profit or become a non-profit-making organisation.
*To control the market in a beneficial way to the business.
*To provide goods or services to members.
*Improve the community. Structure of
Cooperative Organisations This shows the structure inside the firm and how it's run and controlled. This shows what the money will be used for. Advantages Key features of the structure is that its controlled by democracy and the money stays within the organisation. *Through democracy all members get a say in how the organisation is run.
*Profits stay in the community and are reinvested into other parts of the business.
*A democratic structure encourages people to work together.
*Control is kept in the hands of members. Disadvantages *There is a possibility of conflict between members.
*Longer decision-making processes.
*All member must participate in order to have success.
How cooperatives are different from other forms of ownerships? *Unlike a sole proprietorship or partnership, the business doesn't close with the retirement or death of an owner or partner.
*They are controlled by the workers or by the consumers unlike other forms ownerships.
*Decisions are made through democracy unlike other forms of ownership, where the head of the hierarchy makes the decisions.
*Don't only aim for a profit but try to improve the community.
*Voting is not in proportion to the money they invest in the business. Two types of Cooperatives Worker Cooperatives are owned and controlled by employees, they take business decisions and share profits.
Consumer Cooperatives are retail businesses, which are owned by the costumers. They receive lower prices. Farming Cooperatives *The individual farmers want to sell their goods at the best possible price.
* If farmers selling the same goods join together then they control the market and can charge a better price.
*Onion farmers in the Cevennes, France have formed a farming cooperatives. They sell the onions at regular intervals during the year.
*They get a share of the profit according to the number of onions they supplied. Producer's Cooperatives *This is the same as a worker's cooperative.
*The business heirs most or all of its members.
*Shares are held by the work force.
*The advantage is that the members work together and share the benefits and losses between them.
*An example is a carpentry cooperative. Retail Cooperative *The same as a consumer cooperative.
*The owners pay a minimum subscription, which gives them the right to vote.
*The get a say in how its run and what goods are sold there.
*Retail cooperatives have strong believes in what should be fair.
*An example is Mitre 10. Responsibilities of the Members *Attend meetings at the cooperative.
*Assist in amending laws.
*Finance and invest in the cooperative.
*Come up with suggestion for the board.
*Use the service or purchase the good provided by the cooperative. By Bram and Isabel Legal Formalities *Starting a cooperative is fairly easy.
*No legal Formalities.
*However, the firm need a record of all meetings held by the members and the board. Limited Liability *Members have limited liability.
*This means that the greatest amount a member would have to pay if the organisation would meet debt would be the amount, which they invested in the business.
*Because they have limited liability, there is very little risk involved because they cant loose any more money than the money they invested in the beginning and their homes, cars and valubles cant be taken away from them. Sources of Finance *Members pay a certain amount of money to join the organisation New members can borrow from the cooperative in order to be able to pay the amount.
*Investment by Members Members may invest up to €20,000. They can invest long term or short term.
*Retained profits Obtaining capital by saving the profits earned in previous years.
*Sale of loan stock Another type of income is the selling of loan stock. Unlike a more usual loan, there are typically no regular payments. Just the date at which the loan has to be repaid in full is given. It comes from the members of the cooperative.
*General loans from a commercial bank, which may be a mortgage or an overdraft. What happens to
profits? *Profit may be shared between members.
*Profit may also be given as a dividend to consumers. (in a consumer cooperative)
*It may also be given as bonuses to employees.
*Some cooperative reinvest the profit into the organisation or it is saved, in order to be used later. What happens to
losses? Main Advantages Thank you for your attention! *Just like profits losses are also shared between the members.
*The Members will loose money when the cooperative suffers a loss.
*However the members are protected by limited liability. *Its easy to start a cooperative.
*Anyone is allowed to become a member.
*More ideas because of multiple owners.
*Members have limited liability.
*Workers in worker cooperatives are involved in decision-making and get a share of profits.
*Members of consumer cooperatives receive a profit dividend or lower prices. Example of Cooperatives *Enercoop: french electricity supplier.
*Arla foods: Scandinavian diary supplier.
*Phone co-op: is a consumer cooperative in UK, supplying phones. e