Co-operatives Aim l Identify the characteristics of a

Co-operatives Aim: l Identify the characteristics of a Co-operative Objectives: l Define a Co-operative l Give examples of types of Co-operative l Explain 3 advantages of a Co-operative l Explain 3 disadvantages of a Co-operative

• Co-operatives are businesses that are owned by members. • Members are usually employees within the business. • Each member has a share in the business.

There a 2 types of co-operatives

A worker co-operative is business which is owned by its workers The workers are the owners in the business so they get to decide how it is run. In a worker co-operative: q Membership is open to all workers q Each member has one vote q Any profit is distributed to members in a fair way q Members are in control – not outside shareholders

• There is less likely to be a conflict of interest between the owners and the workers because the profits made by the business go to the workers or are invested in the business to ensure its long-term success • Co-operatives have a separate legal existence and so have Limited Liability

• It is difficult to persuade workers to from a worker co-operative because it is much easier to set up a partnership • New workers usually have to become owners of the business but may find it difficult to raise money to buy a share in the business • Very successful worker co-operatives often end up being sold to other limited companies, with workers/owners only too happy to pocket the money gained from selling shares.

• If the worker co-operative needs extra money to expand the business it can’t look to new members ~ has to rely on bank overdrafts and bank loans • At worker co-operatives all workers are roughly paid the same (top manager only get about 3 times the amount of ordinary workers) and so it is difficult to recruit workers like managers who would otherwise be able to get a high salary

• On Sunday 29 July 2007, The Co-operative Group and United Co-operatives amalgamated. The new Society is the world’s largest consumer co-operative with a turnover of more than £ 9 billion, 4. 5 million members and 87, 500 employees. • The new organisation operates over 4, 500 trading outlets throughout the UK, including food stores, pharmacies, travel branches and funeral homes, which will adopt the uniformed brand - The Co-operative to be rolled out across the estate.

• The Co-operative Insurance Society and the Co-operative Bank are both very successful in the UK • The travel division of United Norwest, the co-operative society based in the NW of England, is the 7 th largest tour operator in the UK

• However they have seen their market share fall slowly since 1945 • Problems have come from competitors such as Asda, Sainsburys and Tesco – The supermarket chains have grown so large that they can buy in bulk and sell at cheaper prices than the Coop – As chains like Tesco opened bigger and better stores, the co-op societies found it hard to open enough superstores to complete – They didn’t want to close their small local shops because they felt they had to continue to provide a service to the local people- this is their strategy in competing with Larger supermarkets!

A business organisation owner by customer shareholders and which aim to maximise benefits for its customers. • Co-operatives were founded to serve the needs of consumers. Profit was to be given back to customers who were members of the society as a dividend. It was paid out in proportion to how much money they had spent at the society. • Profit was less important than providing a high quality service.