UNDERSTANDING MARKETS, ENTERPRISES AND COMMUNITY ENTERPRISES?

(Note written by Mr.S.Ananthanarayana Sharma, rural management consultant and

trainer, Ranjit Gupta Centre for Action Research (RGCEDAR),Madurai in 2009 February)

Understanding how the market economy works

Let us imagine we are working with a remote tribal community, in a remote island, say in
the Andaman islands. The tribe is entirely self sufficient in its needs, lives off nature, and
has no need for any external contact. The community operates as a social group, with no
individual property rights – living as a commune, sharing food, clothing, shelter, providing
mutual help during times of crisis, etc. In such a situation, there is no need for any
mechanism, for exchange with the external world.

Into this idyllic world, let us introduce a weekly trader – who travels to these islands by
boat, exchanging whatever the tribe collects or harvests for say salt, or cloth, or trinkets,
or a service like a haircut,. We then see the emergence of a mechanism for exchanging
possessions, so that both parties of the transaction walk away with something, against
something which they gave up. This is economic terms is usually called a barter
economy.

Suppose we introduce cash into these transactions. The tribals are paid in money by the
itinerant trader. Who in turn, expects them to choose from the trinkets or food or salt or
cloth or haircut he sells, using money to make the choice. To make this more
complicated, suppose there are many traders, all of whom are willing to pay cash for the
tribals produce, and are all willing to sell some goods or services, for the same cash. This
we can term, the money economy. Thus money expands the choice for the tribals, in
the weekly market. The market economy starts ticking.!

Let us further complicate the process, by introducing the concept of savings. Say the
tribals keep some of the cash with them, to wait for some better product or service from
the next weekly market. Or they realise that say two weeks of collection gets them more
cash – with which they can buy more expensive food, or salt or cloth or trinkets or a better
quality haircut. Then there is a calculation involving “opportunity” costs – postponing
immediate gratification for a future need. The market mechanism then has started to
integrate more complicated .decision processes.

Still adding to the complexity, let there be a “time value of money”. Let us say, that the
weekly trader, needs the cash to pay off the supplier – and he is willing to give the tribals
a small interest rate, for keeping the spare cash with him.. Or the other way around, the
tribals need something badly, for which they don’t have ready cash. The trader agrees to
collect the payment later. He effectively lends the goods or services on credit, and
charges an interest rate, for the delay in payment. The market mechanism now has now
started to integrate such time values of money.

Let us find an enterprising tribal who decides to collect all the produce of say a particular
species of plant, which is available only in that island. Instead, of selling it at the next
market, s/he decided to store the produce.. The tribal being a bit smart, realises that the
weekly traders can buy the stuff only from him/her. S/he becomes aware of the laws of
demand and supply – diminishing supplies increases the price. S/he starts waiting for a
higher price, and effectively hoards the commodity for a few weeks. When the traders
raise the price, the tribal unloads all that has been stored, and makes a killing . Now the
tribal has started playing in the “commodity” market – betting that prices will increase –
and weighing the opportunity cost of cash lost, by investing in inventory, against the future
profit to be gained by a higher price.

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 1
 Modern markets

As the market mechanism evolves, even pieces of paper representing, commodities can
get traded. For example say a warehouse receipt for a tonne of corn, or a tonne of steel,
starts getting traded. This is the commodity market.. Various countries print their own
currencies, which value gets determined by foreign trade. The trading of these currencies
is the international money market. There is also an internal money market -, where the
regulatory central bank which prints currencies (like Bank of England) large commercial
banks, companies with a lot of spare cash, or need for spare cash, and sometimes even
the Government start to selling and buying cash. This is the money market. Insurance
makes an appearance – where for a premium paid, the insurer agrees to cover the risk of
an unexpected event – maybe a death or destruction of property due to natural
calamities, etc. The risks are then sliced into tiny pieces and sold in the reinsurance
market – thus spreading the risk of payment across many players. And when the money
market, the commodity market, and other sundry markets start integrating internationally -
through the medium of a currency say an American dollar, or the European euro, or the
English pound, the modern market emerges – as an entity of its own.- comprising the
action of millions of players, all of them contributing a tiny bit to the whole edifice. As
information on prices, demand and supplies get communicated over the internet or over
the mobile phone, the markets become more efficient in processing the information. The
market mechanism work strictly on the notion of profit for all the billions of individual
players – so both losses and gains can be spectacular. For example over the last decade
tiny start-ups in pharmaceuticals, information technology and biotechnology have become
overnight billionaires. And correspondingly old well known business houses and banks,
which had plodded along for sometimes a hundred years, have crashed overnight!
(witness the British Barings Bank or the American Lehmann Brothers or the Indian
Government sponsored Unit Trust of India!)

Thus, the inexorable logic of economic growth so far, appears to be from complete self
reliance to barter to cash economy to the modern global marketplace. The final word on
the market, could be perhaps from the modern economic philosopher, Adam Smith -
whose Wealth of Nations (1776) renewed interest in economics as a knowledge
discipline by itself.

“Every individual endeavours to employ his capital so that it produce may be of greatest
value. He generally neither intends to promote the public interest, nor knows how much
he is promoting it. He intends only his own security, only his own gain. And he is in this
led by an invisible hand to promote an end which was no part of his intention. By pursuing
his own interest he frequently promotes that of society more effectively than when he
really intends to promote it. (as quoted in Paul Samuelson’s Economics (2005 edition)
page 25).

The business firm .

Till four hundred years ago, business was conducted on personal liability. If a
businessperson could not pay back an amount s/he owned, his or her personal property
was seized and used to make good the difference. To spread the risks and raise capital,
businessmen started partnerships – but here again if one of the partners could not pay
back an amount s/he had taken as a loan, all the partners personal property were liable to
be seized and sold for repayment. We can find such business firms even now in the
traditional markets of small towns like Madurai and in the agricultural shandies.

England and the Netherlands are credited with evolving the concept of a “limited liability
joint stock company”.- and USA for expanding the concept to a powerful business force
multiplier.. A joint stock company has a legal identity of its own – it can sue and be sued,
can buy and sell, raise and divest capital, etc. Individuals buy “shares” in the limited
company. If the “liability is limited” – in the event of liquidation, only the company’s legal

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 2
 assets can be possessed for repayment. Thus individual investors personal property gets
protected. Companies start selling their “shares” to raise capital – against which they pay
dividends. Such shares start acquiring a life of their own - in what is called the share
market.

The invention of the joint stock and the limited liability company coincided with the
industrial revolution, and was responsible for much of the wealth creation over the last
two hundred years. The most spectacular success, was the East India Company – listed
in the London stock exchange with a charter to trade with then, one of the world’s richest
economy, India. Using only profit as a yardstick, the company came to own much of the
subcontinent in a hundred odd years. It took a mutiny of its paid sepoys, for the British
crown to realise that there is a “limit” – to the abilities of joint stock companies.! The
technical explanation for the reasons for production in business firms, rather then in the
traditional households (the Gandhian model), is explained by Paul Samuelson as under
(chapter six – Production and the business organisation, pgs 118 – 121) ) –

i) Exploiting the advantages of mass production. For example, a small car like the
Maruti or the Tata Nano, would require a production of atleast two hundred thousand cars
a year, to be viable, in the present market. Ratan Tata’s promose of a car at Rs. 100,000
(one lakh rupees) would not be possible in the friendly neighbourhood mechanic’s
garage, with his/her technology and tools ?
Mobile phones, computers, two wheelers, pharmaceutical drugs, are other examples of
commodities whose prices have crashed due to business firms taking advantage of mass
production. The management of large assembly lines, huge procurement orders, supply
chains, and the attendant management of information, finance and people, all demand
the existence of the modern firm?

ii) Raising resources. Research in the technology – and the setting up the factories
for manufacturing low cost cars or two wheelers or laptops or mobile phones requires
hundreds of millions of dollars. A few billion dollars are blown in the development of
every subsequent generation of the computer chip – which is the heart of the computer. It
would be beyond the capacity of individual businessmen operating as a sole owner or as
partners, to raise this magnitude of resources.

iii) Managing the production process. Running a production unit which produces two
hundred thousand small cars per year – or a few million tonnes of petroleum products,,
requires the professional manager and the professional technologist. It is difficult to design
such huge production units with its complex technologies, working in competitive markets,
as a self organising unit?

Thus the definition of Paul Samuelson of the business firm as specialised organisations
devoted to managing the process of production. (pg. 118). The business firm which is
“incorporated” as a limited company – and raises capital through issues of shares in the
market, is also called the corporate enterprise. We shall hereafter refer to this business
firm, by this term.

Understanding the nature of capital markets

We see that it is the impersonal movement of resources across markets, seeking the most
efficient returns, that runs the market mechanism. The controls of the corporate enterprise
rest in those who purchase the shares. The shares gives them a right to a portion of the
profit, and limits their losses, to the value of their shares. The shareholders elect their
representatives on the Board of Directors – which oversees the production process, and
makes policy decisions. The Board of Directors appoints a chief executive and other
managers to implement their policies, and make sufficient profits, to pay the dividends.

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 3
The financial resources, which are introduced to purchase the shares, have alternative uses.
Even if the individual purchaser of the shares is only interested in profit maximisation, s/he
can purchase shares of other companies –or invest in commodities, or speculate in real
estate, or just put the cash in a bank deposit. And as specialised investment firms are set
up, decisions on share purchases can mean billions of dollars are at stake – which too
sometimes is raised from the global financial markets.

As the global marketplace becomes more integrated through information technologies like
the internet and mobile telephones, financial transfers amounting to trillions of dollars can be
accomplished within seconds. And the ubiquity of market information, can amplify the
smallest of whispers – spelling a boom or a bust overnight. Who would have thought that
Barings bank, a two hundred year old British bank, or Lehmann brothers, a one hundred and
fifty years old American bank, would become insolvent, literally over the weekend? Or in the
Indian context, that the Unit Trust of India (which took savings from small investors for
investing in the markets) would become insolvent twice in ten years, before the Central
Government decided to drastically restructure it? Or that a council member of the Institute
of Chartered Accountants of India, be put in jail, along with founder promoters – after the
fourth largest Information Technology firm of India, Satyam Computers, had its financial
mess unveiled due to stock exchange price pressure in the American and Indian stock
exchanges?

We thus see a global economy - of production firms using the latest technology and mass
scale production, employing the best talent, to manage the production of goods and services
for an increasing global marketplace. And we realise it is the capital market, which controls
the price of the shares of the enterprise – which is the throbbing heart of this imposing
edifice?

The notion of a community enterprise

We can perhaps agree that the corporate enterprise is the “uber efficient” agent of
production. It exploits the financial markets to raise, capital, acquiring the right technology to
produce goods or services required by a competitive market – in a volume, which requires
division of labour, and economies of scale, So what is the problem with this super efficient
engine of technical and economic change?

The problem resides with a social concept called “equity”.. The marketplace is a Darwinian
world, where the strong and the rich trample over the weak and the poor – who are expected
to put up with poverty and misery – as in the long run, the market will correct such problems.
When the economy hits an annual growth rate of eight to ten percent per year, the market
solution works, because even the poor get some job and make a bit of money (called the
trickle down effect). But during times of economic depression, when economic growth slows,
and sometimes becomes negative, the problems surface? Market speculators continue to
make huge killings betting correctly that the market is going down - and honest and
responsible skilled workers and technicians are laid off/ left jobless, as production units are
closed down, or “rightsized” or shifted to cheaper locations elsewhere. Sometimes it is a
combination of stupidity and greed, with perhaps some criminal behaviour, on the part of the
top management and their financial backers in the market, which leads to these problems
(Enron and Satyam is a good example for the twenty first century globalised corporate
enterprises? In Indian stock markets, we have the example of the state owned Unit Trust of
India? Apart from the various textile mills which when sick were taken over by the State
Textile Corporation. And agro commodity plantations like tea, could be another example?)
There is a history of many efficient production units being bled to death, because of
irresponsible and wrong decisions by the people who control the capital of the corporate
enterprise (hence the derogatory sense of the term capitalist!). In such a situation, for the
larger number of people who are directly affected, it is difficult to accept the market version
of a “short term correction”. . The traditional fascist/communist alternative , of the state led
by a visionary leader (Hitler/Stalin/Mao) taking over the production process, requires a lot of

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 4
violence, has to be anti democratic – and has historically led to death and war. The other
alternative is perhaps of a paternalistic, benevolent democratic state taking over enterprise
management. But the Indian state owned (public sector) enterprise experience has been
that politicians and the bureaucratic/IAS lobby can be as venal, corrupt, stupid and greedy
as the private profit maximising capitalist? So what is the way out?

We hence introduce the concept of a community owned enterprise. Let us assume that the
capital is provided by the main stakeholders who benefit from the existence of the enterprise
– and hence are in control of its destiny, and hence of their own. For example, if the workers
of a production unit hold all the shares, would there not be more responsibility in taking
decisions which can affect the existence of the factory ? If the middle class retail market
buyers own the shares of the shopping mall or department store, would they not be more
conscious of the products they stock? Then a speculator who buys the shares, in the
market, to sell at a price, which is makes a killing for him/her? In an agricultural context,
suppose it is the sugarcane farmers who contribute to the capital of the sugar mill, and their
elected representatives sitting on the Board, appoint the managers, is there not a greater
chance that the sugar factory would be more responsible? In say ensuring payment to the
farmers for their cane? (From a Tamilnadu perspective, even enlightened corporate
philanthropists like Mr.Mahalingam of Pollachi Shakti mills, has known to default on
sugarcane dues, when the sugar markets go into a downward slide. This can be compared
with the sugar cooperatives of Western Maharastra, former Bombay Karnataka and South
Guarat, which successfully mobilises even Government resources to pay off cane arrears?).
The recent example of the tea estates shutting down all over South India due to competition
from tea estates in other countries is another example. In contrast, Tata Tea handed over its
estate in Munnar, Kanan Devan Tea, to the workers, who seem to have shown in three
years, that it is possible to make some profit from its operations?. (see Down to Earth Article
in 2008 Aug and news cutting from Business Line ) In the modern context, when the
fundamental producers of wealth, the software programmers, are given legal shares and
profit sharing agreements,, as in the case of Infosys, and some Silicon Valley start ups,
there is a semblance of a producer controlled “community enterprise”..

Obviously putting the control of the corporate enterprise in the hands of the primary
producers, or the primary users, creates more equity, then if left to the forces of the market?.
Sometimes it even creates more efficiencies, than the impersonal market investor model.

So we can define a “community owned enterprise” as opposed to a “individual investor

owned enterprise” – in terms of the eligibility to own the shares which forms the ownership of
the enterprise. In a community enterprise, it is the primary producers or users who alone can
exercise this right, to own these shares.. They can be plantation tea workers, or the primary
producers of raw material like milk for a dairy enterprise, or the software programmers of an
Information Technology enterprise. They can be the primary users – like the retail buyers, in
a cooperative supermarket, or purchasers of fertilisers, like in the case of Indian Farmers
Fertiliser Cooperative Limited (IFFCO). (IFFCO as of 2009 is the largest fertiliser enterprise
in India, and the largest cooperative fertiliser enterprise in the world – see IFFCO website for
the numbers).. These producer or user share owners, control the destiny of the enterprise –
through electing their representatives on the Board of Directors.

To integrate such “social concerns” as equity, traditional economists use the term “political
economy” – to describe the functioning of the economic systems. This term has the utility of
encompassing questions such as who controls the enterprise, who contributed the capital,
who benefits, and who gets affected adversely. Henceforth, instead of the market
mechanism, let us allow society to have its say – and use the word, political economy, from
now on?

Why do rural political economies require community enterprises?

Consider the following news item which Times of India published on 13th Sept. 08

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 5
Spat between snackmaker, union may prove costly for potato farmers
13 Sep 2008, 0312 hrs IST,TNN

SANGRUR: Politics and potatoes aren't mixing well in this region of Punjab anymore,
creating an unsavoury broth that now has both farmers and their buyers worried sick.

Festering labour problems have already forced Pepsico India, which produces some of its
popular snacks brands from here, to shut its plant in Sangrur since August 20, shifting
production to Pune and Kolkata. But in the impasse between the corporate house's
management and its labour union, it's the farmers who grow potato used in the chips that
Pepsico makes and those involved in ancillary units who are getting sandwiched.

Potato grower Rajinder Singh said that in Amloh alone more than 1,000 acres of land are
under potato cultivation with Pepsico being the major purchaser. "People may not be
realizing this now, but the livelihood of innumerable farmers and labourers will be at stake if
the company decides to shift base," he said, worried. "Already production stand stopped.
Who will buy the sugar-free variety that we cultivate especially for the chips and snacks
brands? We may have to sell them in the market at throwaway prices."

Of the 100,000 tonne special-variety potato produced in Punjab, Pepsico lifts more than
50,000 tonnes, providing more than double the rate prevailing in the market, said Pepsico
assistant manager (commercial) Jasdeep Ahuja.

Depending on the quality Pepsi gives anything from Rs 7,000 to Rs 15,000 per tonne
whereas the table variety available in market fetches much less. "Because of the present
situation, we have shifted production from here and it had adversely affected potato-growing
farmers," he said.

Pepsi is a global giant in food processing. It introduced scientific potato farming to the
Punjab, and revolutionised the Indian retail market, with its innovative products. However, as
the above example shows, honest Punjabi farmers, who did everything right, are made to
pay for the personnel management problems of the production unit?

If an enlightened corporate multinational like Pepsi and the enlightened Punjabi farmer
cannot work together, obviously the lesser mortals and corporate enterprises are in for
trouble? Consider the spate of problems in the medicinal plant sector – where the farmers
complain that the production units did not purchase the committed “contracted” quantities –
and the corporate enterprises accusing the farmers of selling their produce to their
competitors? Or the case of Jatropha, where many farmers switched to this wonder bio
energy plant, to be left high and dry, as the processing plant never came on stream? And
this inspite of the ever increasing oil prices, which makes bio fuels an increasingly economic
proposition?

There is no doubt that there is emerging a “world political economy” created by the forces, of
globalisation and liberalisation – and catalysed by the advances of “information and
communication technology”.

But India historically divided into an “urban India” and a “rural Bharath” seem to have had
mixed experiences. Urban India can showcase the Bangalore information technology
experience to attest to of the wonders of the international market mechanism. Led by an
information technologist, Mr.Narayana Murthy, Bangalore has emerged as a world rival to
Silicon valley for the international information technology market. And the surprising thing is
that all this was done without any government sponsored subsidies or grants or information
technology parks? As Mr. Vittal, an eminent IAS officer who writes often in the public press
put it, “the only contribution of the Government was not to interfere?” The expansion of
Indian pharma firms to the first world markets of Germany and USA, the takeover of

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 6
European steel giants by Indian corporate houses, the rise of the huge Indian middle class,
are all pointers to the advantages of the market mechanism”?

But what about the “rural Bharath”? Cotton farming in Vidharba could be a spectacular
example? Monsanto, a leading multinational agriculture corporate business, introduced a
new cotton seed technology, called Bt cotton. (It funded the Indian Institute of Science,
Bangalore for the product development, before irate farmers tore down the laboratory?). This
seems to have completely changed the existing individual agricultural economics of cotton
cultivation and the larger political economy of Vidharba,- leading to the suicides of
thousands of farmers. And this in the land which hosted Mahatma Gandhi’s Wardha ashram,
and Acharya Bhave’s Paunar ashram.
The Tamilnadu agriculture growth rates have been negative during the tenth five year plan
(2002-07) period.(see eleventh five year state plan approach paper) The growing
pauperisation of the small Indian farmer and tribals, seems to be leading to anarchic social
movements (terms Maoism or Naxalism), in the belt from Nepal to Tirupathi?. One third of
the rural districts were termed “affected” by this problem by the Central Government’s home
ministry, during the tenth plan period ? What has the eight to ten percent growth rate, done
to “rural Bharat”? Obviously there is some problem with the “equity” part in the design of the
five year plan’s market friendly policies? In terms of the political economy of agrarian
“Bharat”?

And so the imperative of community enterprises? If the small farmer can work with other
small primary producers – s/he can create scale to match the global giants – and hence can
survive to see another day? Obviously pitting these tiny producers, in a global marketplace
against global corporate enterprises, is not a “right contest” (even if termed corporate social
responsibility?), But as AMUL has shown, millions of small milk producers, mobilising and
forming the Gujarat Cooperative Milk Marketing Federation, can outperform Hindustan Lever
in ice cream and Nestles in butter? The Indian Farmers Fertilisers Cooperative (IFFCO) a
federation of thirty eight thousand village cooperative societies, is the largest chemical
fertiliser enterprise in India? Now expanding to overseas locations like Oman and Egypt, and
taking over sick fertiliser units like Paradeep Phosphates? Southern Indian Federation of
Fishermen Societies (SIFFs), is a Trivandrum based community enterprise of small marine
fishermen. It runs a one billion rupee business, in auction of fish, boat yards, engine repair
shops, etc – becoming one of the leading market players in the competitive marine fish
market of Kerala? Micro finance is another example where small self help groups of twenty
women are able to transact with rural bank branches – getting cheaper credit than what the
usurious private moneylender offers – as also giving the rural branches business
opportunities to survive and grow?

And hence the proposition – if rural small producers are to survive in the world of the
globalized market, they have no alternative but to band together. And this has to be done
through a legal form of a business enterprise to compete on equal terms with the global
corporate enterprises.

Designing a community Enterprise

S.Ananthanarayana Sharma facilitated iterative workshops with community enterprise

practitioners in Madurai in 1997-98, to understand the “nuts and bolts of building a
community enterprises”. (See Sharma (1998) – Study of community enterprises in South
Tamilnadu).

The consensus was that community enterprises had to start with its own skills and
resources. External facilitating agents, be they NGOs, or Business Development Units, or
Government departments, or University extension services, must perform the vital “linkage”
function – of designing suitable products and services- and bringing in better technology – to
compete in the open market. This could be conceptualised as under -.

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 7
 COMMUNITY

SKILLS RESOURCES

COMMUNITY ENTERPRISES

EXTERNAL
SUPPORT FOR
TECHNOLOGY
AND PRODUCT
MARKET DESIGN

These workshops explored the principle and practice of community enterprises in detail.
The concept was stated to be derived from economic / business theory. It envisaged control
over physical production process and ownership by the local primary producers. External
support could be at best as a facilitator.

Some market changes in the “underlying values of management action” – was stated to be
needed for moving from management of conventional investor owned enterprise units, to
community owned enterprises. The shift could be understood as under –

Point of reference Conventional Investor Community Enterprise

owned Enterprise Development
Development
Market focus Only Market Oriented Market one variable
Social Orientation Customer centric Community Centric
Logic of production Product or service for the Adding value to the skills and
design market resources of the community
Management Orientation As in conventional business Integrating concerns of equity
management as taught in and community development to
MBA programs the core business
Approach Fixed package, plan and A process of building community
control wealth
Objectives Profit maximization, return Sustainable livelihood for the
on investment to the investor primary producers

The relationship between the external facilitator and the community enterprise depends on
the locus of control of the legal ownership of the enterprise. If the external facilitator has all
the legal controls, then the relationship can deteriorate to that seen in conventional business
firms between management and labour.

Further design issues for community enterprises

Some of the enterprise design issues which need to be thought through are

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 8
The issue of Ownership
o Who provided the capital? On what terms? How is it accounted for formally in the
balance sheet?
o What are the legal rights of the primary producers in the enterprise?
o How are surpluses from business operations accounted for and shared?
o What are the mechanisms for aggregating the needs of adding value to the primary
produce of the many small producers, to a coherent governance structure? Which can
provide policy direction and monitor the production operations?
o How to create awareness amongst the many small primary producers of their legal
rights? And of their responsibilities?
o Governance related orientation to the elected representatives of the small producers,
who will formally sit on the Board?

Legal form
• How long should the primary producers/users be left unregistered?
• What are the legal mechanisms of federating the individuals and groups?
• What form/s should the community enterprise take?
o If trust or society, how long can the business operations be undertaken, while
following the commercial and production related laws ?
o Can the company law options – of Section 25 not for profit company, private
companies and section 581 producer company, be used?
o What are the possibilities of the cooperative act? How friendly is it in the
state? What about the Multi state Cooperative Act (2002)?
o Is it possible to run a community enterprise under the Producer company Act
(2002)?
o In the long term is it possible for the community enterprise to venture into the
capital market, through debentures, bonds, non voting equity shares,etc?

Marketing
‰ Product or service design
‰ Production technology
‰ Sales collection
‰ Facing market Competition
‰ Building up a brand equity
‰ Issue of product quality

Technology
‰ Access to more efficient / higher end technology
‰ Human resources for running the technical operations
‰ Supply chain – from the primary producer site to the final consumer
‰ Making the governance system understand the importance of technology and
exercising the right mix of control over policy and leaving operational problems to
the technically skilled staff.

Other issues such as selection of staff, and of accounting and information systems,
would follow – after the fundamental frame of the community enterprise in terms of
the members, the governance structure, and the production operations, are stabilised.

References –
i) Samuelson Paul and Nordhaus – “Economics”, eighteenth edition, Tata McGraw
Hill, New Delhi
ii) Tamilnadu state planning commission – Approach paper for eleventh five year
plan.Madras.2006
iii) Sharma, Ananthanarayana S. Study of community enterprises in South
Tamilnadu. Madurai 1998

Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 9
Orientation on cooperative community enterprises for fisherwomen cooperative groceries, PULICAT 13 Feb 09 10