The following are the advantages of the Co-operative Society:
1. Ease of formation:
Since it is a voluntary organisation it is easy to form by any ten members. Its registration is also easy.
2. Unlimited membership:
There is no restriction with respect of maximum number of members.
3. Democratic management:
It is a democracy of men with each member being entitled to only one vote irrespective of the number of shares held by him.
4. Limited liability:
The liability of the members of a society is limited to the nominal value of shares held by him.
5. Continuous existence:
The society will not be affected by the death or insolvency of a member. It will have continuous existence.
6. Economic operations:
Since middlemen are avoided, a cooperative society will have economy in their operations. They need not pile up huge stocks and thereby block capital.
7. Cheaper service:
It offers better service at cheaper costs.
8. Tax concessions:
Co-operative societies enjoy the benefit of certain preferences being shown towards them by tax authorities.
9. Social benefit:
It helps in social welfare as it caters to the needs of the poor and middle sections of the society. It promotes saving habit, self-help and other moral values in the society.
It however suffers from the following limitations.
1. Limited resources:
Societies cannot raise huge amounts as capital because the members may not be able to invest more.
2. Limited scope:
As the resources are limited the chance of expansion is limited.
3. Inefficient management:
It is usually managed by members and the members may lack experience and managerial capacity.
4. No secrecy:
Secrets cannot be maintained by business.
5. Lack of co-operation:
Sometimes the members may not have unity among themselves which might affect the business of co-operatives.
6. No credit facility:
Since credit facilities are not offered to members usually, the members may not be interested in buying goods for cash.
7. Political interference:
Interference by political parties may come in the way of proper functioning of co-operative societies.