I choose this topic to know much about challenges the consumer cooperatives are facing which act as a barrier to the growth. This research will give me a clear overview of the evaluation of the prospects of consumer cooperative societies. Moreover, the subject as a cooperative is very new concept for me which makes it more interesting to research about.
Cooperatives are considered as economic associations, playing an important part in socio monetary growth of persons and public as an entire. It is a method of corporate institution, which targets at giving valued facilities to the public at least price and not for making profit. Consumer cooperatives tends to perform an important role to protect the buyers from the commission of mediators and to deliver superior items to buyers in the preferred amount and at rational rates. Research shows that governments have been taking several steps in relation to forming of consumer cooperatives, aiming at regulating price variation in the marketplace, establishing publicizing relation, monopoly protection, and supply of products and services at reasonable rate at maximum satisfaction of buyer.
As per my research, I have come up some of the challenges faced by the consumer cooperatives based on the countries. Most of the research till now is done on country Malaysia. Talking now about the challenges.
The cooperative store running mostly are small and medium scale with moderately less purchasing power. Looking at the scenario, consumer cooperative is not benefited by the rate discount which is attained by the bulk buying of the goods. Relatively, the offering rate of consumer cooperatives are generally higher than of advertised rate by the giant operators such as the supermarkets. It has been seen in the past, failure to the cooperatives is due to the shortage of knowledge about cooperatives and training in financial understanding. The segregation plays a vital role in building up the business network to contest into the competitive market which cooperative reside in. The capital strength and marketing creativity has shown the impact on loyalty of cooperative associate. The uneven flow of transactions among cooperative sector to private or corporate sector is also a critical factor. As there is much dependency on the external parties, causing much money outflow which makes difficult in generating wealth. Difficult to co-operate with increasing cost makes difficult to pay good wage to attract qualified and skilled employees. In context, Employees don’t stay for the long which increase the turnover for the firm.
From all the issue related to corporate governance the inefficiencies of administration planning and lack of market study, creates big blunders mainly related to choosing in right location of building up retail outlets. Based on the research, many of the consumer cooperatives in Malaysia had less competitive, experienced and skilled workers operating in a coop retail store. Strategy to diversify business income has also led to loss of business focus and resulting on the inability to meet the early purpose of its establishment. In order to promote better purchasing and repeat purchases from the customer and members, some cooperatives initiated the implementation of credit lending system. Finally, many customers and members started to count on cooperatives to shop. This system has recognized to be successful to appeal buyers as they couldn’t be able to do so when doing shopping at other stores as elsewhere would prefer the transactions to be done mainly on cash. However, giving undue credit lending without appropriate management and control system has made things to get worst whereby the gathering of debt converted more taxing. Due to this some cooperatives bearded the cost of the uncollected debt.
This factor of issue involves lack education about cooperative among buyer and members. This leads unproductiveness in taking decisions and responsibilities that focus in contribution to the cooperative. Members only join in the cooperative society mainly to get dividend and loans. According to Azmah et. al (1993), fewer than 50 % of the respondent’s actuality surveyed appeared in the annually held general meeting. Around 14.3 % never shown up for the meeting. It was seen that rural cooperative’s member was seen to be taking more actively participation in the annual general meeting comparing to urban cooperative members. In addition, the research shown that a big number of members were found who have not improved their investment of share capital meanwhile joining the cooperative.
Cooperative are mostly stayed quiet to be traditional, leading not much benefits to their members. The Goods retailed by the cooperative outlets frequently flop to offer competitive rates as comparing to their competitors. Overall effecting their quality of customers. On the other side, the connections among cooperatives and manufacturers are found to be decreased, causing the firms to buy directly from them and take advantage of discounted prices. Purchasing power is less among the coop which is also a factor contributing to high purchase cost and taking competitive advantage In regards, the manufacturers are no providing credit services as of less confident and unclose relationship links among each other.
Products at the retail shops were ought to be limited and of poor quality. In countries like Malaysia, it was found that retail shops were ineffective and lack of professional practices. For instance, most of the shops did not have the cash machines and transactions were still done manually. The accounting system was also ought to be less, ordering and delivery services were not effective. The stock counting was not given proper attention.
The consumer cooperatives also faced much competition from the similar operators with much more dynamic and well-fitted facilities. According to Stone (1988,1995 and 1998), if similar goods found in the supermarket compared with small businesses, the small retail shops will suffer more losses as lack of competiveness.
Based on the research, the most of the managers as well employees are not satisfied with work load compared to the salary they receive. Employees are less likely to work long operational hours in the coop retail stores as the cooperatives are not able to pay higher or reasonable wages as being offered in the market. The career development and incentives were less likely given to make a better position future.
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