Co-operative Organization -Types and Characteristics

Co-operative Organization

The co-operative organization is a voluntary association of person having limited resources and common needs. The co-operative organization is formed to help their member to improve the economy standard. They provide different kinds of services product for their member. The co-operative organization is formed with the feeling of each for all and all for each. The main motive of the co-operative organization is to provide service to their member rather than to earn a profit.

The co-operative organization is formed to solve the problems which are arises from modern industrialization. The industrialization has created a gap between poor and rich. The poor people are helpless because they don't have economic resources but the development of co-operative organization provide people opportunities to collect a small amount from poor and this amount is used to address financial needs of their members. A co-operative organization is formed on the principal of self-help through mutual help.

According to H.M Kunzru, " Co-operative is self-help as well as mutual help."

According to Nepal co-operative act 2048,"A society is constituted in order to provide services and facilities for the economic and social development of its member”

According to Henry Calvert, "Co-operative is a form of organization wherein persons voluntarily associate together as human beings on the basis of equality for the promotion of the economic interests of themselves."

In conclusion,A Co-operative organization is a voluntary association of persons having limited economic resources and common seal need or characteristics company.Co- operative are formed by taking the similarities are formed by taking the similarities in the locality, needs etc. These organizations are formed to help and promote living standard of their member. There are different kinds of a co-operative creditor, co-operative producer, agriculture, marketing society etc.

Types of co-operative

In our society different co-operative are established to provide various facilities for their members. On the basis of activities involved, co-operatives are classified into different types and they are explained below:

  • Producer's co-operative Society
  • Industrial co-operative Society
  • Consumer's co-operative Society
  • Saving and credit co-operative society
  • Marketing co-operative society
  • Farming co-operative society
  • Housing co-operative society
  • Miscellaneous co-operative society

Producer's Co-operative Society:

It is an association of small members of producer’s .It has limited resources and they cannot expand their business individually. Producers co-operative help its member in the supply of raw materials, purchase of modern machine, provide skilled human resources. This co-operative also help in producing high-quality goods and services.

Industrial Co-operative Society:

They are the association of producers who are engaged in manufacturing. This co-operative helps the member to develop competitiveness in terms of product as small industries face difficulty to compete in a market because of industrialization. They are formed to help small manufacturer in purchasing raw materials, processing them to the finished product as well as marketing the product. This co-operative contact with a different government agencies for their promotion.

Consumer's Co-operative Society:

They are the association of final consumers. Consumers are the person who finally consumes the product. They are formed to get the product at minimum possible price. They directly purchase a product from the manufacture and provide to their members. The main objective of these co-operatives is to eliminate the role of the middleman (Wholesaler, and retailer) this co-operative organization consult about consumer health and price of a product. They provide quality product at reasonable price.

Co-operative Credit Society:

Generally, we understand co-operative as co-operative credit society. This co-operative collect small amount of saving (daily or monthly basis) from their members. This collection is further utilized to provide loan to their members at the time of difficulty. It helps to eliminate the problems of the high-interest rate charged by money lenders. They encourage saving habit of members. These co-operative also help the member to get loan facilities at the appropriate rate of interest.

Co-operative Marketing Society:

It is an association of small producer and manufacturer to sell their output at a fair price. They come together to promote their output in the market. The market co-operative performs a various activity related to market like marketing research, sampling, grading, processing, warehousing etc for the benefit of their members. The main objective of marketing co-operative includes

  • Providing the fair price to members product
  • Promoting members output in the market

Farming Co-operative Society:

They are the voluntary association of farmers to help each other in their problems. They unite together and form co-operatives. These organizations are established to eliminate difficulties in agriculture farming. Their objectives are to promote the living standard of a farmer by increasing agriculture productivity and by providing the real (actual) price for agriculture output of farmers. They help their members in getting improved seeds, regular fertilizers, technological assistance, modern tools and equipment etc. The co-operative farming society can be of many types on the basis of their objectives such as better farming society, tenant farming society, joint farming society etc.

Housing Co-operative Society:

This co-operative society is established with the objectives to provide housing facilities to their members. These co-operative collect small amount from the members and the collected amount is utilized either for the construction of house or purchase of land. They used to purchase big land area from the municipality or other bodies at a cheaper price and construct houses at very low cost. As a result, of these people having limited income and resources can afford housing facilities.

Miscellaneous co-operative Society:

Besides, above co-operative society, other cooperatives can be established to meet the need of the general public. These co-operatives may be wholesalers’ cooperatives, retailer’s co-operatives, poultry co-operatives, cold storage, fisheries, sugarcane producer’s co-operatives, marketing co-operatives society etc.

Features of Co-operative Organization

  • Voluntary Association
  • Open Membership
  • Mutual Relation
  • Service Motive
  • Cash Transaction
  • Democratic Management
  • Separate Legal Status
  • Distribution of Profit
  • Equality
  • Fulfillment of common needs/motive

Voluntary association:

Co-operative organization is established for the common purpose. All the members co-operate for each other’s benefit. There is no individual interest of the member in co-operation.

Open membership:

The membership of co-operative is open to all who have similar interests .Minimum amount is required for membership, There is no restriction on membership on the basis of gender, race, caste, religion, nationality etc.

Mutual relation:

Co-operatives are formed on the belief of unity is strength. The relationship between members is mutually beneficial. They are closely related and help each other in their problem.

Service motive:

The activities of co-operatives are carried on with the motive of service, not for profit.Co-operative organization purchase goods and product and provide to their members by adding the minimum amount of profit which is needed for management of an organization.

Cash transaction:

The co-operative organization gives importance to the cash transaction. They do not provide their product and service in credit. The transaction is carried in cash to avoid the problems of bad debt, a difficulty of collection and other expenses.

Democratic management:

In a co-operative organization, all the member have equal chance to get involved in the management of the business. The board of directors are elected at the general meeting of shareholders. All the member can represent themselves in the board of director’s election if they meet the minimum criteria.

Separate legal status:

The co-operative organization is a separate legal entity. It will have separate existence after registration. It can purchase and sell asset in its own name. The shareholders and co-operative organization are two different component.

Distribution of profit:

All the co-operative organization will distribute their profit to shareholders in the form of dividend. A co-operative organization is required to create a reserve fund from 1/4 of its profit. After the end of each financial year, they distribute their profit to their member.


All the co-operative organization provide equal respect to their members. They do not discriminate any member on the basis of gender, caste, religion, richness and poorness etc. Membership is open to all. Each member has equal (single) voting rights.

Fulfillment of common needs:

Co-operative are formed to solve the common problem or needs of the members. Its main objective is to help the member in difficulty. E.g: Agriculture co-operative help to solve common needs of farmers like quality seeds, fertilizers equipment, technological needs of the farmer.


Khanal, Soma Raj, Surendra Thapa Aslami and Sitaram Dhakal. Business Studies. Kathmandu: Taleju Prakashan, 2067.

Pant, Prem R., et al. Business Studies. Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd., 2010.

  1. The co-operative organization is a voluntary association of person having limited resources and common needs.
  2. There is no restriction on membership on the basis of gender, race, caste, religion, nationality etc.
  3. This co-operative society which is established with the objectives to provide housing facilities to their members is called housing co-operative society.
  • The autonomous organizions established,owned,managed and controlled by governmant for public welfare is called_________.

    Multinational Company
    Joint stock company
    Partnership Firm
    Public Enterprises
  • The aims of__________are to provide public utilies like drinking water,communication,fuel,electricity etc

    partnership Firm
    Joint Stock Company
    Public Enterprises
    Multinational company
  • ________are the charactersitics of public Enterprises.

    Service Motive
    Government ownership
    Financial autonomy
  • In public Enterprises,the investment of governement is at least____of the share capital of public enterprises.

  • Which one is a characteristics of public Enterpries.

    Management and control
    Government ownership
    Productive organization
    Large scale business
  • ____are the importance of public Enterprises.

    Transferability of shares
    Develop International relations
    Economic development
    Earning foreign currency
  • Which isnot a chracteristics of public Enterprises ?

    Financial autonomy
    Earning foreign currency
    Service motive
    Government ownership
  • _________is established,organized,financed and controlled by a particular ministry of government as one of its department.

    Depatmental Undertaking
    Government Companies
    Multinational company
    Public Corporation
  • _______is the examples of Depatmental Undertaking.

    Kumari Bank Limited
    Cottage industry department
    Agriculture development bank
    Nepal Airlines corporation
  • __________is the features of Depatmental Undertaking.

    Rules and regulation
    Management and control
  • _________are established under the special Act passed by the parliamentor national legislature.

    Government Companies
    Depatmental Undertaking
    Multinational company
    Public Corporation
  • _____are the features of public corportion.

    Service Motive
    Separate legal entity
  • _________is the examples of public enterprises.

    central jail karkhana
    Nepal Airlines Corporation
    Multinational Company
    Cottage industry department
  • _________is incorporated under the company act of the country.

    Multinational Company
    Government companies
    Public corporation
    Departmental undertaking
  • The government owns at least _____shares out of total shares of the company.

    44 percent
    51 percent
    12 percent
  • In Nepal,a government company is incorporated and run in accordaance with the provision of the Computer Act______.

    2054 B.S
    2047 B.S
    2002 B.S
    2063 B.S
  • __________are the examples of government companies in Nepal.

    Janakpur cigaratte factory
    Nepal Airlines Corporation
    Cottage industry department
    central jail karkhana
  • _______are the features of Government companies .

    Board of directors
    Government ownership
    Incorporated under the company act
  • According to ___________"Public enterprises are autonomous or semi-autonomous corporations or companies established,owned and controlled by the state"

    A.H Hansen
    A.N Agrawal
    Keith Davis
    M.N Mallya
  • According to ________""Public enterprises mean state ownership and operation of industrial agricultural ,financial and commercial undertakings"

    M.N. Mallya
    A.H ansen
    R.N ownes
    World Bank
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