Reference no: EM132866157

Read the article below and answer the questions that follow.

Cooperatives operate according to the core values adopted by the International Cooperative Alliance (ICA) in 1995. ICA is an organization of cooperatives worldwide. The principles can be traced from the first established cooperative in 1844 in England. To better appreciate the issues, here are the seven international principles that guide cooperatives.

Principle 1: Voluntary and Open Membership. Cooperatives are open to all kinds of people who wish to be members. Membership is voluntary and does not discriminate against anyone.

Principle 2. Democratic Member Control. Members contribute resources in the form of goods, services, financial contribution, and can avail of services offered by the cooperatives. They also actively participate in decision-making.

Principle 3. Member's Economic Participation. Members contribute and control the capital invested in the cooperative.

Principle 4. Autonomy and Independence. Cooperatives are independent organizations which are controlled by their members. They are free to transact with other organizations.

Principle 5. Education, Training, and Information. Members receive education and training from cooperatives to be more effective in the management of their cooperatives.

Principle 6. Cooperation among cooperatives. Cooperatives assist each other for a more effective delivery of services to their members.

Principle 7. Concern for Community. Cooperatives also ensure sustainable development through policies that benefit the communities they serve.

Under the second principle, members control the organization and participate in decision making. One of the issues confronting cooperatives is its flat organizational structure. There is lack of check and balance since all members can participate in decision making. Those who will be appointed as board members may lack the expertise in managing the financial aspects of the organization. Board members are sometimes appointed on the basis of popularity and not because of skills and experience.

Agri-based cooperatives face the problem of low productivity because of mismanagement. This is because of the lack of leadership skills of those who should provide a sense of direction and purpose to the members.

Under Principle 4, cooperatives can exercise autonomy in transacting with other organizations. The lack of expertise of the board members may affect transactions with other organizations. However, these transactions are very limited.

Under Principles 1, 2, and 3, cooperatives cater only to members. Cooperatives still need to open their doors to potential non-members to get additional income. On the other hand, some cooperatives still rely heavily on subsidies from the government to sustain their operations and serve their members well. Examples are irrigation, water, and transport cooperatives.

These are issues cooperatives face as they strive to fulfill their mission as a social enterprise. Currently, the seven principles are still in place. ICA considers these issues to improve the operations of cooperatives as a social enterprise.

Questions:

1.Is there a need to revise the principles to resolve these issues? Justify your answer.

2.What are the seven principles of cooperatives? Briefly discuss each.

3 What are the issues related to these principles?