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Unit #2 Co-operatives As a Business Model

Unit #2 Co-operatives As a Business Model. Co-op Structure: Roles & Responsibilities. Members Are the owner/investors and have ultimate control of the co-op Participate in decision making relating to; Policy development Appointment of auditor & annual financial reports

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Unit #2 Co-operatives As a Business Model

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  1. Unit #2Co-operativesAs a Business Model

  2. Co-op Structure: Roles & Responsibilities Members • Are the owner/investors and have ultimate control of the co-op • Participate in decision making relating to; • Policy development • Appointment of auditor & annual financial reports • Distribution of profits • Election of the board of directors • Members participate through the co-op’s AGM & other membership meetings • Member shares are the basis for the co-op’s long term financial stability • Member use of services is the co-op’s primary source of revenue

  3. Co-op Structure: Roles & Responsibilities Board of Directors • Elected by & take direction from the members • Pro-actively directs co-op operations based on co-op principles, legislation, by-laws & policies • Selects, supervises & provides direction to management • Manages & protects the assets of the co-op • Provide membership with full accounting of co-operative activities and directions

  4. Co-op Structure: Roles & Responsibilities Committees • Appointed by members and/or board • Delegated authority for specific tasks or projects • Reporting relationships outlined in by-laws & terms of reference • Standing Committees: Finance & Audit, Member Communications, and Staff Relations • May be appointed for short terms, to address specific issues as they arise

  5. Co-op Structure: Roles & Responsibilities Management • Hired by and reports directly to the Board • Responsibilities & powers similar to those of private sector manager • Hires, directs and evaluates all other staff • Responsible for successful management of the co-op business • Understands co-op business structures & governance processes • Provides operational reports at board & membership meetings

  6. Smaller Co-operatives • Smaller co-ops may rely on part-time/seasonal staff or none at all • Member responsibilities remain the same as larger structures • Board and committee members may be more involved in day-to-day operations • Rely more on volunteer member and/or other community resource support

  7. Comparison with Other Sectors Public Sector: federal, provincial & municipal governments that provide public services, paid for by tax revenues Private Sector: businesses & organizations that provide services for the public to maximize profits for individual gain Social Economy Sector: non-profit organizations & businesses that respond to socio-economic needsof communities. Co-ops are part of this sector

  8. Co-ops are Unique Different Purpose • Private Sector:seeksto maximize profitability for investors • Co-operatives: seeks to provide members with needed services at the lowest possible cost Different Control Structure • Private Sector: amount of invested capital dictates the level of voting control • Co-operatives: each member has one vote, irrespective of amount of capital invested

  9. Co-ops are Unique Allocation of Profits • Private Sector: profits distributed as dividends on invested capital, regardless of use of products or services • Co-operatives: profits allocated to members as rebates on proportional use of products and services, not on the amount of capital invested

  10. Member Benefits & Obligations Benefits • Access to quality services at reasonable cost • Control of a business that places priority on their needs • Sharing of surplus profits that remain in the community • Stable service delivery & and longer business life • Priority on local employment Obligations • Use their co-op’s services • Buy shares & maintain their equity investment • Attend AGMs and other membership meetings • Be informed and engage in the decision making process

  11. Co-op Facts • Operate in a wide variety of business sector • Not just grocery stores or credit unions • They are subject to co-op legislation • But not controlled by government • Have a higher survival rate than other businesses • Not “last resort” enterprises operating in marginal business situations • Make profits, employ local people and contribute to local economies • Not charities or non-profit organizations

  12. Essential Conditions for Success • A co-op must: • Meet the needs of its members • Be economically viable with secure financing • Have strong member patronage & participation • Deliver top quality services at reasonable cost • Make board/staff/member education a priority • Hire competent & committed management/staff • Have strong leadership and a succession plan. • Have a positive relationship with the community • Buy & hire local as much as possible • Be adaptable to changing business environments

  13. Preview of Other Co-op Modules • Unit 3: Co-operative Principles, Legislation & Governance • Unit 4: The Existing Co-operative System • Unit 5: Developing a Co-operative

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