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Co-operatives

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Types of business organisationBusiness

Organisations

Private Public

Unincorporated

Incorporated

Sole trader

Partnership

Private Limited

Company

Public Limited

Company

PublicCorporations

Local and Central

Government

Co-operative

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Co-operatives

Co-operative: A group of people who organise themselves to work for the group’s shared benefit

Cooperatives can be found in all sectors of the UK economy

Cooperatives have a particularly important role in the developing world

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Principles of cooperatives Anyone may become a member by buying a

share (but cannot sell the shares to others) Each member has one vote at the AGM Members have limited liability Profits are distributed to members in a fair

way Provide training to employees and members

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Co-operatives

Types of cooperative

www.cooperatives-uk.coop

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Types of co-operative1. consumer co-operative A retail business which is owned and

controlled jointly by some of its customers Dividend stamps were introduced in 1965

Shoppers collected them and exchanged them for goods

Forerunner of today’s storecards E.g. Co-op supermarkets

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Types of co-operative2. worker co-operativeBusiness is jointly owned by its

employeesE.g. Tower Colliery in South Wales –

bought in 1994 by the employees when it was threatened with closure

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Types of co-operative3. producer (marketing) co-operative A central organisation buys and sells products for its

members as well as purchasing shared resources Profits are shared out fairly to all members Cafédirect’s coffee growers are required, under

fairtrade rules, to organise themselves as producer cooperatives

Coocafe is a Coffee Cooperative in Costa Rica, representing more than 3,500 small coffee producers throughout the country

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Producer co-operativestask 1 Read the stories from some of the coffee growers on

the fairtrade.org.uk website Why do you think they form themselves into

cooperatives? Give examples from the growers’ stories In what ways would their lives be harder if they were not in

cooperatives? What benefits does the Fairtrade movement give the

farmers on top of those gained by being in a cooperative?

You take a year out after leaving school and decide to travel to a remote part of Costa Rica to encourage more farmers to form into cooperatives Make a poster or a leaflet (in English!) highlighting some

benefits to the local farmers

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Producer co-operativestask 2Read the Coope El Dos web page

coocafe.com/coopeldos.htmQuestion:

What benefits does the cooperative give its members?

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Mutual societies

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Mutual societies

Mutual society: Where members group together to provide each other with a mutual benefit

A form of co-operativeEach member has a single vote at AGMBuilding societies: Mutual societies

where some members deposit funds in the form of savings, others borrow in the form of loans

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Demutualisation

Comparison of mutual societies v demutualisation

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Demutualisation

A number of building societies have demutualised - become banks and converted to PLCs E.g. Abbey National, Alliance & Leicester,

Cheltenham & Gloucester, the Halifax, Northern Rock and Woolwich

In order to demutualise, their members (owners) must agree in a vote

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DemutualisationadvantagesProvides capital to finance

expansion/wider range of servicesMembers receive ownership of the new

PLC in the form of shares. These can be sold on the stock market for windfall gains

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DemutualisationdisadvantagesThe loss of equity (fairness)

Less favourable products offered to customers (e.g. lower interest rates for savers)

Inefficient branches may close down

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Demutualisationtask Compare the basic bank account offered by a

building society (e.g. Nationwide) with those of three High Street banks (e.g. HSBC)

Make a grid to compare features such as: Interest rate Overdraft rate Charges for going

overdrawn Charges for using

your debit card abroad

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Nationwide HSBC LloydsInterest rate

Overdraft rate

Overdraft charge

etc.

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Ownership and control of businessPublic Sector