Advantages Of Cooperative Organization

Business , Education
Main advantages or benefits of cooperative organization can be studied as follows:

1. Easy To Establish

Cooperatives can be easily established when compared to joint stock company. It requires ten members, simple registration process and few legal formalities to form cooperative organization.

2. Limited liability

Members are not personally liable for the debt and loss of the organization. Their liability is limited to the extent of their share contributed. So, members' personal property will not be used to pay the debt of the cooperative society.

3. Open Membership

Cooperatives are voluntary organizations where any person can become a member or leave the organization without any barrier. There is no discrimination among the members of the society.

4. Democratic

Cooperatives are operated in democratic management style. All the members have voting right and there is no restriction to express opinions and to give suggestions. 


5. Perpetual Life

Cooperative organizations are long-lasting and stable form of organization like a joint stock company. Single or few members cannot dissolve the organization as per their wish. Bankruptcy, death or insolvency of any member does not affect the continuity of the business.
advantages cooperative organization
6. Government Assistant

Cooperatives are fully supported by the government of the country. Government provides financial support and protection to this type of organization.

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7. Tax Benefit

Cooperative societies enjoy tax benefit because of tax concession and exemptions provided by the government.

8. Social Welfare

Cooperative societies are established with the aim to provide quality goods at low price to the members at low price. So, there is very low profit margin in this type of business. The profit of the society is used for social welfare.

9. Elimination Of Intermediaries 

Middlemen or business intermediaries are totally eliminated because products are supplied directly from producers to final customers.
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Disadvantages Of Joint Stock Company

Business , Marketing
Main disadvantages or demerits of joint stock company can be expressed as follows:

1. Difficult To Form

It is a complicated process to form and operate joint stock company. Lots of legal formalities, high set-up costs and much time is needed to establish this type of business.

2. Lack of Quick Decision

In joint stick company salaried manager cannot make any decision. Important decisions are taken after the approval of board of directors. Therefore, decision making process is lengthy and prompt action is not possible. 

3. No Secrecy

In joint stock company, it is not possible to maintain business secrecy and privacy like sole proprietorship and partnership firms.All the financial data and information become public through financial statements and all the matters are discussed in annual general meeting with the shareholders and other parties.

Ownership and management are different in joint stock company. All the organizational activities are performed by salaried managers. A company do not provide extra incentive for their work which may lack motivation and personal interest for the growth of the business.

5. High Tax

Joint stock company suffers from higher tax rate than sole trading concern and partnership firm. It has to pay more tax than other types of business.
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Advantages Of Joint Stock Company

Business , Marketing
Merits or advantages of joint stock company can be studied as follows:

1. Limited Liability

In joint stock company shareholders' liability is limited to the amount of share they invest in the business. So,  their personal property will not be used to pay the debt and other liabilities of the business in case of loss.

2. Perpetual Existence

Joint stock company is stable and long lasting form of business (as compared to sole proprietorship and partnership firm). The death, lunacy, or insolvency of the shareholder does not affect the existence of the company.

3. Easy Transfer of Share

A shareholder of joint stock company can easily sell or transfer the right of share to any one without any restriction. 
advantages joint stock company
4. Large Capital

It can raise large amount of capital by issuing equity share and by taking long-term loan from banks and other financial institutions. So, the company does not suffer from the limitations of inadequate capital.


5. Scope Of Expansion

Because of huge capital resources and better management, large scale production is possible. So there is a scope of future growth and expansion.

6. Efficient Management

Joint stock company is run by experienced, skilled and talented professionals. It helps to increase the efficiency of management.

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7. Economic Development

A joint stock company collects and mobilizes scattered savings, promotes industrialization, and creates employment opportunities in the society. So, it plays significant role in the economic development of the country.

8. Flexibility

A company has the ability to cope with both internal and external business environment. Changes or modification in working pattern can be made as per the situation. So, joint stock company is a flexible type of business organization. 
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Disadvantages Of Partnership Firm

Business , Marketing
Main drawbacks or disadvantages of partnership firm can be highlighted as follows:

1. Uncertain Future

The future of partnership firm is always uncertain. It may be shut down in case of lunacy or death of a partner.So, there is instability in this form of business.

2. Unlimited Liability

All the partners are liable for the losses of business. They have to sell their personal property in order to pay debts and other liabilities of the business.
disadvantages partnership firm
3. Disagreement

There is a chance of disagreement between partners in partnership business. Misunderstanding and mistrust may create dispute among the partners.

4. No Prompt Decision And Action

In partnership firm, there should be interaction, consultation and approval of all partners to make a decision. It delays decision making process. Prompt action is not possible because of delayed decision.

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5. Limited Capital

Partnership firms have more capital than sole proprietorship business but they have very limited amount of capital while comparing to joint stock companies and multinational companies.

6. No Public Faith

Partnership firm lacks legal status because no legal procedures are followed to start the business. It will be hard for the public to believe such business. So, it lacks public faith.
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Advantages Of Partnership Firm

Business , Marketing
Advantages or merits of partnership firm partnership firm can be highlighted as follows:

1. Easy To Commence

Partnership firm can be established and operated easily. It does not require legal process and formalities to start partnership business. Registration is not compulsory.

2. Low Set-up Cost

It can be commenced with low set-up costs. It does not require large capital to operate partnership firm. Partners may increase capital to expand their business as per the requirement.

3. High Borrowing Capacity

In partnership firm, large amount of capital can be raised because there are more partners to provide fund. Banks and other financial institution also provide loans easily to the partnership firms as compared to sole trading concern. 

4. Better Management

Better management is possible because of the sense of ownership, combined talent and coordination among the partners.

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5. Division Of Risk

In partnership firm, all the business losses are borne by all partners as per the partnership deed. Debts and other liabilities are not borne by a single partner like in sole proprietorship.


6. Privacy

It is not compulsory to publish financial statements of partnership firm. So, it helps to maintain privacy and secrecy of the business.
advantages partnership firm
7. Flexibility

The size and working pattern of the business can be modified or changed as per the need and the environment. So, it is a flexible form of business organization.

8. Equal Rights

It ensures equal rights to all the partners. They have equal right to express their feelings, opinions and to take part in decision making process of the firm.

9. Easy To Wind Up

It can be dissolved or wind up easily at any time by making agreement between the partners. It does not require legal formalities to shut down the business.
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Disadvantages Of Sole Proprietorship

Business , Marketing
Main drawbacks or disadvantages of sole proprietorship / sole trading concern can be expressed as follows:

1. Limited Amount Of Capital

In sole proprietorship, it is difficult to raise capital to fund in business. So, future expansion and large scale production is not possible due to the lack of adequate capital.

2. Personal Liability

Sole trader is solely liable for the debts and liabilities of the business because there is no separate legal entity between the owner and the business. So, proprietor's assets are always at risk.

3. Uncertainty

Life of sole trading concern is uncertain and limited. Business will end in case of death or disability of trader.
disadvantages sole proprietorship
4. Lacks Division Of Labor

Due to small size and limited area of operation sole proprietorship lacks division of labor both in operating level and managerial level.
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5. Unsuitable For Large Scale Operation

Sole trading concern suffers from inadequate capital and limited managerial skills. So, it is not suitable for large scale operation.  
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