Difference Between Cooperative and Other Forms of Business Organizations

The difference between cooperative and other forms of business organizations is not little as often believed by many people. This is because what seems to set a cooperative apart from other types of corporations is who the owners of the company are.

While other types of corporations are owned by shareholders or stockholders, co-operatives are owned by its members or the people who use the services of the cooperative. Some cooperatives are employee-owned. More than 47,000 cooperatives operate in the United States alone, boasting more than 100 million member-owners.

Difference Between Cooperative and Other Forms of Business Organizations

Below is the very obvious difference between cooperative and other forms of business organizations across the world, pay attention:

The Concepts: Co-ops and Regular Businesses

A cooperative is a specialized form of business. It is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise.

Read Also: List of Multipurpose Cooperative Societies in Nigeria

Having more in common with a other forms of businesses than, say, a nonprofit organization, a cooperative distinguishes itself by a member ownership, benefits, and control model which puts power in the hands of the customers rather than a single owner or small group of partners.

While, on the other hand, other businesses are typically stores, restaurants, services, and agencies that run a corporate exchange in return for profits and that aren’t going away anytime soon. They provide products or services that were relevant years ago and are still just as relevant today.

Difference in Terms of Ownership

Other forms of businesses concentrate the power of ownership in a single individual or sometimes a small group of partners. This idea is turned completely on its head with the cooperative model, where every customer is a member and every member a part owner.

Cooperative member owners share equally in control of the organization. They meet regularly to analyze operations reports and elect members from among themselves to a board that hires administrators to tend to day-to-day operations.

Difference in Terms of Control

It would be hasty to equate cooperative members directly to shareholders in a traditional company. A single person can seize control of a stock-issuing company by buying a majority of shares, thus gaining superior voting power. With a cooperative, no member can buy or control the share of another.

Each member has equal voting power and decisions must be made in conjunction with the wishes of the majority. Power truly rests in the hands of lowest common denominator — the customer.

Difference in Terms of Profit

Most other forms of businesses operate with the primary goal of turning a profit. There’s nothing wrong with that, but a cooperative offers benefits to members that go beyond that. By pooling their money, a group of like-minded individuals can form a cooperative that offers higher quality products at lower prices. That’s increased buying power in action.

But beyond simple monetary rewards, a cooperative allows individuals to have a direct say in business operations, something often lacking in the the real business world in general. Learn how to start a nonprofit in Florida.

Difference in Terms of Central Vision

Often, a business begins as an idea in the head of a single person, who then runs with it. A cooperative might be similar in the very beginning, but soon diverges because it requires a group of people with similar goals and needs to band together in order to progress the idea.

One way to think about the differences between traditional businesses and cooperatives is that the first puts capital at the center of the model while the other places people there.

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