This document has been made available in electronic format by the International Co-operative Alliance (ICA) 

The Strategy for Success of the Co-operative Business (1998)

Dec., 1998
(Source: Co-op Dialogue, Vol. 8, No. 3, Oct.-Dec., 1998, pp. 36-38)

Co-operatives, as organisations comprising individuals having similar aspirations in a field of activity owned collectively, should consider effective strategies if they want to remain competitive in a very competitive world. Each and every activity developed on the co-operative principles should be able to withstand and overcome the competition from the management methods of other businesses run along lines such as capitalism.

Therefore, a co-operative-based enterprise should be able to adapt itself in a continuously changing world.

Today, there is confusion in our developing country that co-operatives only help the poor and that they are for the poor. The assumption that co-operatives are established on a voluntary basis, that they open small shops and that they are incapable of competing with individual companies, that they are incapable of development and competing with private companies and so on is a picture of digression.

There are also views that if a co-operative has progressed and become large it should change into a private company or become a corporate entity.

A business operated by a co-operative and one by a private company are two entities that have varied objectives. Both can be developed in their own ways and can operate side by side without affecting one anther's objectives on condition both understand their limitations. A co-operative is actually an organisation that can balance the shortcomings that exist in a business activity of a capitalist nature with pressure on workers.

When we consider the characteristics in a co-operative organisation based on responsibility, collective ownership, openness and social awareness, it is evident that the co-operative institution has elements that can be developed effectively. It can avert worldly greed, malpractice and distrust. A co-operative cannot only overcome social issues, it can also provide monetary benefits to all its members.

Unlike voluntary organisations such as the Red Crescent associations or welfare associations which depend solely on donations and volunteers, a co-operative stresses on meaningful returns to its members. This is the advantage of the co-operative.

Therefore with the inner strength in co-operatives, it is necessary for co-operative members to establish entrepreneurial activities built on ambitious strategies. A co-operative can avoid itself from capitalist exploitation. A co-operative should have as its objective a vision to compete with all other sectors. For that, a co-operative should open new windows in formulating, building and implementing every planned activity.

The Co-operative, the World and National Development
Owing to the excessive emphasis by the media of this country on the successes of individual entrepreneurs, the private sector and the corporate sector, a situation has been created whereby co-operatives are seen as peripheral institutions which only play minor roles. We are often shown the success of individuals who head private companies based on capitalist principles that give preference to achievement of absolute business profits.

Such a picture can give rise to lack of confidence in the co-op movement. Perhaps it is the mistake of the co-operative in maintaining a low profile as stated by ANGKASA President and KKUM Chairman Royal Prof. Ungku A. Aziz to me when discussing co-operatives where he wished to see the actual substance and capability of the co-operative movement and not merely the seeking of publicity. He placed greater emphasis on results than slogans, and believes in deeds rather than words.

If we look at the progress of the co-operative movement since the idea was mooted by founders of the movement in Rochdale, though it was established owing to exploitation of consumers by capitalist entrepreneurs and individual traders, the co-operative is an institution that is respected in many countries including developed nations.

In the United Kingdom, in European countries such as Denmark, Sweden, France, Germany and Switzerland, in Japan, in the United States and in Latin America, co-operative-based organisations thrive alongside large trading companies. Business activities in various fields including banking, supermarket sales, agriculture, goods manufacturing and poultry are able to compete openly with other sectors.

In fact, the co-operative businesses are more matured and well known than individual businesses. This success comes, among other things, from the champions of the co-operative movement who have self-confidence and are able to defend the co-operative principles and adapt themselves to changes. Goods produced by co-operatives are guaranteed in quality, quality control is always at a high level and the relationship with consumers and customers is always assured.

As the co-operatives are collectively owned and each member is aware of his or her overall responsibilities, the co-operatives are able to operate in a competitive manner.

Strategy to Establish Co-operative Business
A scrutiny of the seven principles of the co-operative movement will show clearly that the movement has a perfect management strategy. The understanding of these principles should be translated into activities that can be emulated and practised for the benefit of co-operative members and the public. Co-operative members must be able to show the advantages that can be illustrated to the people compared with other systems. If, as co-operative members, we are not able to illustrate the advantages of the co-operative movement then we may not be able to compete with other sectors.

For example, if a co-operative indulges in the business of consumer goods, members of the co-operative heading that sector must be able to illustrate the following qualities :

Furthermore, a co-operative indulging in the business of consumer goods must have a network of links with co-operatives engaged in the production of consumer goods, such as a co-operative business producing agricultural, poultry and other related goods. A consumer goods co-operative can serve as a one-stop centre without the need for middlemen.

The link with suppliers of essential goods channelled directly to consumer co-operatives will save on intermediate costs. In this way, there can be control over the sale prices of goods meant for co-operative members, and it will provide for competition with the other sectors. If co-operative members are able to institutionalise such a structure, it will help ease the burden of consumers. To implement such an effort successfully, it is necessary to ensure that the following steps are in place :

To ensure that a co-operative's products are of quality, there must be a continuous quality evaluation in the co-operative so that co-op members and the public have confidence in co-operative goods.