B D SHARMA
SENIOR CONSULTANT
ICA DOMUS TRUST
NEW DELHI
CONTEXTUAL ISSUES FACING COOPERATIVES
- GLOBALISATION OF NATIONAL ECONOMY
- DEREGULATION OF FINANCIAL MARKETS
- GROWING COMPETITION AT MARKET PLACE: BALANCING MEMBERS’ NEEDS AND MARKET NEEDS
- EMERGENCE OF NEW PRODUCTS, SERVICES, PROCESSES
- DECLINING INTEREST AND SUPPORT OF THE GOVERNMENT
- PARADIGM SHIFT IN AGRICULTURE: NEED TO EXPAND INVESTMENT IN AGRICULTURE
- INCREASED USE OF INFORMATION TECHNOLOGY
POSITIVE AND NEGATIVE ASPECTS OF GLOBALISATION
POSITIVE:
-
INCREASED OPPORTUNITIES DUE TO OPENING OF OVERSEA MARKET
- • INCREASED FDIs
- HIGHER ECONOMIC GROWTH
- INCREASED PROFESSIONALISM AND INFORMATION TECHNOLOGY
- CROSS CULTURAL INTERACTIONS
NEGATIVE:
- BREAK-UP OF TRADITIONAL VALUES
- DOMINANCE OF FOREIGN CAPITAL IN CAPITAL MARKETS
- LOSS OF JOBS
- ADVERSE IMPACT ON AGRICULTURE
- LESS CONCERN FOR SOCIAL JUSTICE: ALIENATION OF THE POOR
COOPERATIVES AND GLOBALISATION CHALLENGES:
- HOW TO MODERNISE MANAGEMENT SYSTEMS
- HOW TO MARKET “COOP-ADVANTAGE”
- HOW TO BE COMPETITIVE AND SIMULTANEOUSLY MAINTAIN COOPERATIVE IDENTITY: HOW TO BALANCE MEMBERS’ EXPECTATIONS AND MARKET NEEDS
- HOW TO HARNESS TECHNOLOGY AND RESOURCES, BOTH HUMAN AS WELL AS FINANCIAL
- HOW TO SAFEGUARD AGAINST ONSLAUGHTS OF CORPORATISATION
COOPERATIVES AND GLOBALISATION
OPPORTUNITIES:
-
NEW MARKETS: ACCESS TO OVERSEA MARKET
- NEW STRATEGIC ALLIANCES
- ACCESS TO TECHNOLOGY AND RESOURCES
- DECLINING DEPENDENCE ON GOVERNMENT
- INNOVATION- ENTRY INTO SOCIAL SECTOR; DEVELOPMENT OF NEW GENERATION COOPERATIVES
TO MEET THESE CHALLENGES AND TAKE ADVANTAGE OF THESE EMERGING OPPORTUNITIES, COOPS HAVE TO IMPROVE THEIR GOVERNANCE TO BECOME EFFICIENT BUSINESS ENTERPRISES; CHANGE THEIR PERCEPTIONS; THINK OUT OF THE BOX AND GEAR UP THEIR MANAGEMENT SYSTEMS AND PRACTICES
CORPORATE GOVERNANCE
- VARIOUS DEFINITIONS: OECD, CADBURY COMMITTEE OF UK; CII COMMITTEE; KUMAR MANGLAM BIRLA COMMITTEE; NARAYAN MURTHY COMMITTEE
- INSTITUTE OF COMPANY SECRETARIES GIVES APPROPRIATE DEFINITION: “CORPORATE GOVERNANCE IS THE APPLICATION OF BEST MANAGEMENT PRACTICES, COMPLIANCE OF LAW IN TRUE LETTER AND SPIRIT AND ADHERENCE TO ETHICAL STANDARDS FOR EFFECTIVE MANAGEMENT AND DISTRIBUTION OF WEALTH AND DISCHARGE OF SOCIAL RESPONSIBILITY FOR SUSTAINABLE DEVELOPMENT OF ALL STAKE HOLDERS”
PRINCIPLES OF CORPORATE GOVERNANCE
- TRANSPARENCY IN BOARD PROCESSES AND INDEPENDENCE IN BOARD FUNCTIONING
- EFFECTIVE LEADERSHIP OF BOARD TO THE MANAGEMENT UNIT
- ACCOUNTABILITY TO STAKEHOLDERS
- FAIRNESS TO ALL STAKE HOLDERS
- SOCIAL, REGULATORY AND ENVIRONMENTAL CONCERN
IMPORTANT FACTORS INFLUENCING GOOD GOVERNANCE
- INTEGRITY AND COMMITMENT OF THE BOARD AND MANAGEMENT
- ABILITY OF THE BOARD
- EFFECTIVENESS OF THE PROCESSES
- QUALITY OF REPORTING
- PARTICIPATION OF STAKEHOLDERS IN MANAGEMENT DECISIONS
IMPORTANCE OF GOOD GOVERNANCE
- FOR STABILITY AND GROWTH
- FOR BUILDING CONFIDENCE AMONG STAKE HOLDERS
- FOR MINIMISATION OF RISKS
- FOR ACHIEVING “EXCELLENCE IN BUSINESS”
- FOR IMAGE BUILDING
- FOR BUILDING LONG TERM RELATIONSHIP WITH STAKE HOLDERS
- FOR ATTRACTING POTENTIAL STAKE HOLDERS
IMPORTANCE OF GOOD GOVERNANCE IN COOPERATIVES
SOME IMPORTANT PROBLEMS:
-
GROWING SIZE OF COOPERATIVES
- POOR MEMBER PARTICIPATION
- MANAGEMENT MAY BECOME TOO SELF CENTERED
- RISK OF BEING “CLOSED” TOWARDS EXTERNAL WORLD
- POLITICISATION AND BUREAUCRATISATION
VIEWED IN THE BACKDROP OF SUCH PROBLEMS GOOD GOVERNANCE IN COOPS BECOMES IMPORTANT TO:
- STRENGTHEN SELF REGULATION
- PROJECT “COOPERATIVE DIFFERENCE AT MARKET PLACE”
- ENSURE TRANSPARENT AND ACCOUNTABLE DEMOCRATIC MANAGEMENT OF COOPS
BUSINESS EFFICIENCY OF COOPERATIVES
VIS-À-VIS
GOOD CORPORATE GOVERNANCE
- INDICATORS OF BUSINESS EFFICIENCY IN COOPS:
- ADDING VALUE TO MEMBERS
- RETURN ON CAPITAL
- CAPITAL FORMATION
- SAFEGUARDING INTERESTS OF ALL STAKE HOLDERS
- LEAD TO INCREASED MEMBER ECONOMIC PARTICIPATION
2. TO ACHIEVE BUSINESS EFFICIENCY GOVERNANCE SHOULD BE CONSISTENT WITH COOPERATIVE VALUES; PRICIPLES AND MISSION OF THE ORGANISATION |
