Page 80 - Biorefinery 2030 Future Prospects for the Bioeconomy (2015)

48 2 An Original Business Model: The Integrated Biorefinery

Fig. 2.14 Challenges and CHALLENGES:
opportunities generated by
the singularity of the
- Ownership structure limits access
cooperative business model
to share capital,
(After the Deloitte Report,
2012, Financer l’avenir: - Fragile balance between funding
needs and stakeholder interests,
E ´ volution des strate ´gies de
financement et de - need for strong governance.
capitalisation des
coope ´ratives)

OPPORTUNITIES:

- Lower capital costs
- Principles governing cooperatives
facilitate access to funding,
- Principle of cooperation between
cooperatives.

– The balance between funding needs and stakeholder interests is a fragile one.
Whilst the concentration of stakeholders 38 can facilitate decision making when
their interests converge, this is often much more difficult when they diverge.
Indeed, it is sometimes difficult to align the strategic priorities of the
cooperative’s management with those of the members. For example, the former
may want to give priority to external growth to improve competitiveness, whilst
the latter might consider any external growth as risky and so oppose it.
– Strong governance is necessary, because the employment of new funding
sources requiring complex financing arrangements demands supplementary
control and management capacities. 39

The same study notes that all of these drawbacks linked to the cooperative
business model are counterbalanced by advantages. For example:

– Cooperatives benefit from lower capital costs since they often fund most of their
activities by the contributions of their members. The members are required to
contribute financially to the cooperative when they join. This contribution by
each of the members makes it possible to make cooperative governance
democratic. 40 Further, the members do not expect to obtain a return on this
investment; they receive limited payments based on the capital they contribute
when they join.

38
The members are not only owners but also customers, suppliers and even, sometimes, employees.
39
This point will be developed in the next section.
40
“One Man One Vote”.