What is a Co-op?
Source: Answers.com/topic/cooperative A cooperative (also referred to as a co-op)is a form of business ownership that consists of a group of people who have joined together to perform a business function more efficiently than each individual could do alone. The purpose of a cooperative is not to make a profit for itself, but to improve each member's situation. However, members of certain types of cooperatives do make a profit by selling their product and/or service to customers who are not co-op members. Cooperatives can take many forms. For example, a group of single parents may decide to band together to provide a child-care facility so they will have reliable day care for their children. Each parent contributes a certain amount of money and/or time, and in exchange they all have a safe place to leave their children. A credit union is also a type of cooperative. The purpose of a credit union is not to make a profit for itself, but to help each member be more financially secure. By creating their own financial institution, members can receive a higher interest rate on the money they have placed in savings and receive a lower interest rate on loans. Retailers have also started establishing co-ops. Ace Hardware, for example, is a co-op of independent hardware store owners. By banding together, the hardware owners can share advertising costs and receive discounts for bulk ordering of materials and supplies. Sharing costs and discounts allows small hardware stores to compete with large chain hardware stores. While cooperatives can be found in many different areas of the economy, they are most commonly found in the agricultural area. A group of farmers may band together to allow themselves to be more competitive and to achieve more economic power. Agricultural cooperatives allow members to save money on materials needed to produce and market their product, which means a larger profit margin for all members. Ocean Spray Cranberries, Inc., for example, is a cooperative of several hundred cranberry and citrus growers from all over the country. Other well known cooperatives include Blue Diamond, Sunkist, IGA (Independent Grocers Association), and Land-O-Lakes. Bibliography Boone, Louis E., and Kurtz, David L. (1999). Contemporary Business, 9th ed. Orlando, FL: Harcourt Brace College Publishers. Bounds, Gregory M., and Lamb, Charles W., Jr. (1998). Business. Cincinnati, OH: South-Western College Publishing. Madura, Jeff. (1998). Introduction to Business. Cincinnati, OH: South- Western College Publishing. National Cooperative Business Association. http://www.ncba.org/index.cfm. 1999. Nickels, William G., McHugh, James M., and McHugh, Susan M. (1999). Understanding Business, 5th ed. Boston Irwin-McGraw-Hill. Pride, William M., Hughes, Robert J., and Kapoor Jack R. (1999). Business, 6th ed. New York: Houghton Mifflin. [Article by: MARCY SATTERWHITE]