Thought Orientation Note


Co-operative Advantage in the Economy of Asia & the Pacific:

ICA already has a list of 300 world’s major cooperatives and mutual business. These global 300 give us the confidence that cooperative institutions can be successful and reach high level of performance. In the list are enterprises established way back in 1820 (in Germany) and those established recently in 2003. This shows the strength of cooperative movement and it’s resilience under varied times, political systems, and market conditions.

Time has come when we need to reassess the application and importance of co-operative ideology in shaping the economy of country in right proportion by serving the interests of millions of off stream target communities in various parts of the world.

The co-operatives can do wonders in an enabling policy environment that encourages development of co-operative enterprises under an effective legislation regulating the functioning and operations of co-operatives.

While in the present global scenario, the cooperatives on one side have many comparative advantages to compete and grow but they also suffer from the problem of limited resources both in terms of monetary and physical. The net result is skewed business acumen and management of operations restricting them to earn the best mileage out of cost and quality advantages with the cooperatives.

For quite number of years our thinking was limited to poverty alleviation. Mere focus on poverty reduction has not been found sufficient and therefore time has come when we must have focus on bringing prosperity through cooperatives. It would only be possible by striving to improve economy as well as quality of life of the poor. Keeping a poor man’s standard of living at the same level year after year is not development. It is mere survival exercise.

Cooperatives, in the era of globalization, ought to broaden their scope by venturing in non-conventional sectors together with the conventional ones so that the confidence could be built to handle both poverty and prosperity.

For the success and growth of cooperative enterprises they should have:

1. Socially oriented leaders imbibed with cooperative spirit and business acumen, and

2. Professional managers, who perfectly understand the traits of business and have the patience and courage to transform the dreams of members of the cooperative into reality by dint of their knowledge and understanding about the market.

Sub – Theme 1:

Co-operative Advantages in Ensuring Inclusive Growth of Economy

In the Asia Pacific region, co-operatives are seen as an alternative model for the delivery of services vital to its members who are normally the excluded lots. In the present global context, co-operatives must be visibly seen indulging in value-based services to their members in non-conventional sectors like cleanliness, waste disposal, climate protection, disaster protection, youth education, women empowerment, tourism development, micro enterprise development, public infrastructure maintenance, consumer protection so and so forth.

Co-operatives need to show that they care for the individual client, customer, patron and what ever they deal with professionally.

No co-op could survive if it was not economically viable but no co-op would be worthy of the name if it did not also fulfill the needs of their members.

Basic question is why co-ops are so invisible in our public discourse and in the public perception? Another parallel question is, what do we do about it, and why it makes good economic sense for co-operatives to pay serious attention to their core advantages.

In today’s world economy, where big business players rule and small-scale producers are left out of the bargaining process, the co-operative fundamentals provide institutional mechanism to protect the interests of smaller businesses.

Co-operatives world over function to sustain the livelihoods and well being of producers by rendering services in the sectors that are normally not covered by the corporate world. The sustainability of cooperatives depends on how cooperatives build their image, position them in the market, improve market access, leverage development opportunities, protect women & children from exploitation, raise awareness among consumers so that they exercise their purchasing power positively and protect human rights by promoting social justice, sound environmental practices and economic security.

Cooperatives being idealistic form of business enterprises are supposed to ensure healthy and ethical working conditions and business practices.

The growing consciousness among consumers about the value realization and safety standards may be seen as the blessing in disguise for the co-operatives who have the surest chance of competing by providing more definite answers to the questions of the enlightened consumers and setting more beneficial terms to the customers and business partners.






Sub – Theme 2:

Enhancing Management Capacity of Cooperatives:

Research by the World Bank in 1993 had concluded that cooperatives have remained "the preferred form of organization and perhaps the only form of organization with which rural people are familiar and friendly with" (Hussi et al 1993).

Despite the growing consensus that co-operatives are part of the private sector, that they need a level playing field with other forms of enterprise, and despite their very substantial presence in civil society, the majority of governance regimes in place for co-operatives give too much control to governments and subordinate coops to Ministries or Registrars. The management guidance flows in from the managers who themselves are not qualified and competent to handle the business of the cooperatives leave aside the capacity and ability to deal cooperatively with the members.

There is plethora of evidences to show and prove the ways in which co-operatives distinguish themselves from other business models, particularly investor owned corporations. Unfortunately, the marketing has been redefined as corporate image selling by concealing the core values amidst the glowing mist of the corporate image building rather than creating demand.

There is thus a dire need to deliberate on the kind of interventions required to disseminate right knowledge and exposure and bring in desired attitudinal changes among the leaders, managers, members of the cooperatives to build their capacity to deliver desired services to members and aspired value to the customers.

Co-operatives are created out of a specific and direct response to poverty, exploitation, discrimination and other material deficiencies. Co-operatives could be most effective in market provided the roles were played very carefully by respective players (members, leaders, managers and opinion makers). The role clarity could only be perceived well if we design our training and conferencing modules in a manner that the cooperative business management and governance essentials are often integral to the deliberations.

Sub – Theme 3:

Business Networking to position Co-operatives as a Preferred Brand

Cooperatives have the greatest strength of solidarity among fraternity. The people with homogeneity and strong affinity create the cooperatives. This character is also reflected in the inter-cooperative relationship. Federal institutional structure of cooperatives has a great advantage in establishing business and policy alliances to better serve the interests of the members of cooperatives. The business networking among the inter-sectors of cooperatives has competitive advantages owing to the discounts on account of cost and quality controls in a cooperative. The cooperative advantage could well be leveraged at sub-regional and inter-regional levels of ICA.

Study after study is showing that the public trusts co-operatives but due to negative publicity and hyperactive media the general opinion about cooperatives is negative. Hence, the time demands a positive image building about cooperatives by publicizing well through the network of cooperatives and their upper tiers about the good things done by the cooperatives and its relevance in open market economy.

Corporate sector is now spending millions to fabricate the values core to co-operative ideology but the difference is fundamental and co-operatives have to lay claims and adhere strictly to theses values as an integral part of their identity for the following reasons:

• The seller market has turned to buyers markets.
• Purchaser becoming more knowledgeable and matured about the source of origin and the modus operandi.

The market research carried out by Indian Institute of Management, Ahmedabad, India clearly concludes that:

• Almost 70% of the customers who stop patronizing a product do so, not so much because of the product quality, but because they feel they were not confident of future availability.
• 30 % of profit is spent to correct something that should have been right first time.
• It is five times cheaper to retain a customer than getting a new one.

In the above context, the cooperatives have to plan their marketing strategy in such a manner that consumers prefer to opt for a cooperative product. Here the most important factor is “Customer”. The challenge is to attract the customers, retain the customers and delight the customers. In today’s context, the mission of the cooperatives should be to deliver exceptionally high value to the customers and members and earn their delight.

Co-ops need to increase their market access through increased inter-cooperative trade using ICT, brand positioning through word of mouth publicity by legendary brand ambassadors who have promoted the co-op ideology and have been ardent supporters of co-operatives and by proving better quality at competitive price.


September, 2,2008