JAGANNATH UNIVERSITY

Assignment 01

Course Title: Introduction to Business

Course Code: MGT-1102
Date: 25.05.2023

Submitted By: Team Pinnacles

✓ Rurda Barua
ID: B210202117
✓ Sk Istiak Uddin Ahmed
ID: B210202121 Submitted To
✓ Jubaer Hossain Rifat Ms. Farnaz Parveen
ID: B210202127 Assistant Professor
✓ Sumaiya Akter Department of Management Studies
ID: B210202130
✓ Urbana Binte Alam
ID: B210202133
✓ Adiba Nasrin Liha
ID: B210202151

Dept. of Management Studies

Batch: 17th
Section: B
Bachelor of Business Administration
Table of Contents

Cooperative Society ........................................................................................................................... 1

Advantages of Cooperative Society ......................................................................................... 1

Disadvantages of Cooperative Society .............................................................................2

State-Owned Enterprise .................................................................................................................. 3

Advantages of State-Owned Enterprise…………………..……………………………3

Disadvantages of State-Owned Enterprise….………………………...………………4

How Can Government Overcome the Problem of State-Owned Business…..5-6

 1

Cooperative Society

Cooperative society is an autonomous association of persons united voluntarily to meet

their common economic, social and cultural needs and aspirations through a jointly
owned and democratically controlled enterprise. It is also known as co-operative, co-
op or coop. The philosophy of cooperative society is to serve the common man and to
liberate him from the oppression of the economically strong people and organizations.

However, there are also several advantages and disadvantages to cooperative

society.

● Advantages of Cooperative Society are discussed below:

1. Collective Strength
Members of a cooperative society can pool their resources together to achieve
economies of scale and negotiate better deals. By working together, they can
also spread risks and increase their bargaining power.
2. Democratic Control
Cooperative societies are democratically controlled, with each member having
an equal say in the decision-making process. This ensures that all members have
a voice and that decisions are made in the best interest of the group.
3. Shared Benefits
The profits generated by a cooperative society are distributed among the
members based on their contributions. This means that everyone benefits from
the success of the society, not just a select few.
4. Education and Training
Cooperative societies provide education and training to their members, helping
them to develop new skills and improve their knowledge. This can lead to
increased productivity and better decision making.
5. Social Benefits
Cooperative societies often have a strong sense of community and social
responsibility. They can provide support to members in times of need and help to
promote sustainable development in their local communities.
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● Disadvantages of cooperative society are discussed below:

1. Limited growth potential

Cooperative societies are often limited in terms of their growth potential. This is
because they are owned and managed by their members, and there may be
limits to the number of members or the amount of capital they can contribute.
2. Slow decision-making process
Since cooperative societies are democratically run, decision-making can be
slow and cumbersome. All members have a say in the decision-making process,
which can lead to lengthy discussions and disagreements.
3. Limited access to capital
Cooperative societies may find it difficult to raise capital from outside sources,
such as banks or investors. This is because they are often seen as risky
investments, and may not have the collateral or credit history needed to secure
loans.
4. Potential for conflict
Cooperative societies are run by their members, and disagreements can arise
over issues such as the allocation of profits or the direction of the society. If these
conflicts are not resolved, they can threaten the stability of the society.
5. Dependency on members
Cooperative societies rely on their members for both capital and labor. If
members leave or are unable to contribute, the society may struggle to continue
operating.

Overall, while cooperative societies offer many benefits, they may not be suitable for all
types of businesses or organizations. It is important to carefully consider the advantages
and disadvantages before deciding whether a cooperative society is the right choice.
 3

State-Owned Enterprise

A state-owned enterprise (SOE) is a legal entity that is created by a government in

order to partake in commercial activities on the government’s behalf.it can be either
wholly or partially owned by a government and is typically earmarked to participate in
specific commercial activities.

However, state-owned enterprise has several advantages, such as stability and the
ability to pursue long-term goals and there are also several disadvantages to state-
owned enterprises.

● Advantages of State-Owned Enterprise are discussed below:

1. Control and Stability

The government has direct control over SOEs, which can ensure stability in
the market and provide consistent services to the public.
2. Social Responsibility
SOEs can be used to deliver essential services to the public at a lower cost,
such as healthcare, education, and public utilities.
3. National Security
SOEs can be used to ensure national security, by providing critical services
like defense, energy, and transportation.
4. Economic Development
SOEs can be used to promote economic development by investing in
infrastructure projects, creating jobs, and supporting small businesses.
5. Long-term planning
SOEs can be less concerned with short-term profits, and focus on longer-term
planning, such as investing in research and development, or environmental
sustainability.
6. Job Security
SOEs may be able to provide more job security than private companies, as
they are less likely to be subject to the same market pressures to cut costs
and increase efficiency.
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● Disadvantages of State-Owned Enterprise are discussed below:

1. Lack of efficiency
SOEs are often less efficient than private enterprises because they do not
face the same competition as private enterprises. They may not have the
same incentives to be productive, and they may not be subject to the same
market pressures.
2. Political interference
SOEs can be subject to political interference, which can lead to decisions
that are not based on sound economic principles. This interference can also
result in the appointment of unqualified individuals to key positions, which
can negatively impact the performance of the enterprise.
3. Lack of innovation
Because SOEs may not face the same competition as private enterprises,
they may not be as innovative or responsive to changing market conditions.
They may be slow to adopt new technologies or business practices, which
can put them at a disadvantage.
4. Limited access to capital
SOEs may have limited access to capital because they may not be able to
raise funds through public markets. This can make it difficult for them to invest
in new projects or to expand their operations.
5. Inefficient resource allocation
SOEs may not allocate resources efficiently because their decisions may be
based on political considerations rather than economic ones. This can result
in misallocation of resources, which can negatively impact the economy as a
whole.

Overall, while state-owned enterprises can provide stability and security for employees
and can be used to pursue important national goals, there are significant
disadvantages associated with this form of ownership.
 5

How can a government overcome the problem of state owned

enterprise?

State-owned enterprises (SOEs) are often plagued by inefficiencies and bureaucratic

obstacles that can hinder their ability to compete in the market. Here are some ways
that a government can overcome the problems associated with state-owned
enterprises:

1. Privatization
One option is to privatize the SOE, transferring ownership to private sector
entities. This approach can lead to increased competition, improved
efficiency and reduced government expenditure on the enterprise.
2. Restructuring
Another option is to restructure the SOE by separating its regulatory and
operational functions. This can improve transparency and accountability,
as well as increase the efficiency of the enterprise.
3. Improved Governance
Improving governance structures and practices within the SOE can help
to mitigate the risk of corruption, mismanagement, and inefficiency. This
can be achieved through measures such as strengthening board
oversight, establishing clear lines of accountability, and increasing
transparency in decision-making processes.
4. Performance Monitoring
The government can also implement performance monitoring
mechanisms to track the performance of SOEs against specific targets
and objectives. This can help to identify areas of weakness and provide
incentives for improvement.
5. Encourage Competition
The government can also encourage competition by creating a level
playing field for all players in the market, including private sector
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companies. This can help to drive innovation, increase efficiency, and

reduce costs.
6. Strategic Partnerships
The government can also form strategic partnerships between SOEs and
private sector companies. This can help to leverage the strengths of both
parties and create synergies that can lead to improved efficiency and
competitiveness.
7. Rationalize SOE portfolios
Governments should regularly review their SOE portfolios to ensure that
they are focused on core areas of strategic importance. This can involve
divesting non-core assets or businesses, consolidating SOEs to improve
scale and efficiency, or privatizing SOEs that are not performing well.

Ultimately, the most effective approach will depend on the specific context and
circumstances of the SOE in question. A government will need to carefully assess the
risks and benefits of each option and choose the approach that is most likely to
achieve the desired outcomes.