Cooperative Societies, Globalization, and Business Ethics

Posted on Nov 17, 2024 in Economy

Cooperative Society

It is an association of individuals or legal entities with common interests and needs. They develop a specific business, and economic performance is attributed to members once community funds are served, depending on the cooperative activity performed. These societies create a common heritage with limited transferability and are non-profit.

Features

  • The cooperative can be first, second, or further degree. In the first degree, the minimum number of members is 5, usually individuals. In the second degree, this number is 2 and is composed of cooperatives, which are usually legal persons. Membership incorporation is voluntary and free. Cooperatives can also be associated.
  • The liability of partners for the debts of the cooperative is limited to the nominal amount of their capital contributions, actually disbursed or committed.
  • The minimum capital for each cooperative is set in the statutes and varies depending on the number of members who join or leave.
  • The name must include the term “cooperative society” or the abbreviation “S. Coop.”
  • 30% of the profits obtained by the cooperative must be allocated to the Mandatory Reserve Fund and the Fund for Education and Promotion.

Constitution

To acquire legal personality, the cooperative must meet the following formal requirements: drafting of articles of incorporation and bylaws, notarized writing, and recording in the Register of Cooperatives.

Organs of Society

  • General Assembly: Meeting of members and partners to discuss and adopt resolutions as the supreme decision. The Assembly reviews management, approves annual accounts, authorizes surplus allocation, and sets general policy.
  • Governing Council: The governing body for management and representation. Must have at least three members who are members and can appoint a director.
  • Resources Committee: Exists only in primary cooperatives as foreseen by statute. Processes and determines appeals against penalties of partners.
  • Speakers: Function is censorship of annual accounts. Should be between one and three partners.

Partners

Some rights of members are:

  • Participate in cooperative activities.
  • Receive necessary information for exercising rights and fulfilling obligations.
  • Collaborative environment, sharing the surplus.

Among their duties are:

  • Attend meetings of the General Assembly and other bodies.
  • Meet the agreed quorum at bodies.
  • Participate in training activities.

Globalization

Globalization includes free international trade, capital flows, foreign direct investment, migration, development of communication technologies, and their cultural impact.

We define globalization as the extension of economic relations between countries, creating a global economy in which each participating economy depends on the other.

Internationalization can be defined as openness to international markets, i.e., operations that link a company to these markets.

Companies, as they begin their internationalization process, may find:

  • Lack of market information.
  • Lack of qualified staff.
  • Resistance to change by the human group.
  • Cultural-psychological distance.
  • Consumer tastes differing from those where they operate.
  • Need to adapt to new legislation.

Ethics in Business

The company must apply ethics in all its activities: in its management, the quality of its products, and above all, honesty.

If the company applies ethical principles, they will generate benefits:

  • Increased prestige, acceptance, and preference over competitors.
  • Loyalty of customers and suppliers.
  • Motivation and improvement in staff work.
  • Possibility of more financial support.

Defining business ethics can be somewhat subjective, but generally, there are widely accepted performance standards based on what is considered morally right.

Management Concept

Companies use factors of production to obtain a final product. These combined resources are not spontaneous; a fourth function that integrates all the others is necessary. This function is management, which translates into business administration.

Company management is the process by which managers create the right environment, coordinate the actions of people and other resources, and perform activities to efficiently achieve business goals.

The directors of a company must be efficient and effective. The key element is the people management function.