| Abstract: | This paper examines the functioning and performance of a large cooperative federation in Nicaragua, concerned mainly with retailing. Set up in late 1985, in response to undersupply to smallholders, especially those in the mountainous interior, it has followed a strategy of rapid expansion. By using a federal structure which has allowed middle and junior management freedom to take the initiative, and by adopting mostly simple, appropriate, and non-bureaucratic procedures, the federation has succeeded in mounting an impressively large operation, with over 190 shops selling a wide variety of goods. On the other hand, at the centre, sales have grown sluggishly since 1988, costs have risen, and liquidity has become a problem. Moreover, the organization has lost capital, largely through its pricing policy. These can be blamed partly on the federated structure, the lack of a medium-term strategy, and dependency upon external donors; and partly on the trading environment of recession and uncertainty. The case study illustrates the difficulties in establishing large-scale cooperative enterprise, and the need in the long run to realise comparative advantage. |
