Short answer: co-operatives are businesses owned and controlled by their members, and each member usually has one vote however many shares they hold. For A-Level Business 7138 you need three types: worker, consumer and producer co-operatives. You must compare them with sole traders, Ltd, plc and social enterprises.
What the 7138 specification asks
Section 3.1.2 covers forms of business, and it is examined on Paper 1. It lists sole traders, private limited companies (Ltd), public limited companies (plc), co-operatives and social enterprises [1]. You compare them on five issues: control, objectives, sources of finance, how profits are shared, and limited or unlimited liability [1].
Co-operatives and the three named types are new. They do not appear in the old 7132 course. Social enterprises were already in 7132, so this topic links an old idea with a new one. For the wider changes, read AQA A-Level Business is changing.
What is a co-operative?
A co-operative (co-op) is a business owned by the people who use it, work in it or supply it. These owners are called members. In a co-operative society, a member has one vote, even if they hold more shares than others [9]. That is the key difference from a company, where votes usually follow shares.
A co-op can share its profit with members, often in proportion to how much they buy, work or supply, not how many shares they own [9]. Many UK co-ops register as a co-operative society with the FCA (the Financial Conduct Authority, a UK regulator). Registration makes the society a legal body with limited liability [10].
The sector is large. Co-operatives UK, the sector's trade body, counted 7,391 co-operatives in its 2025 report. Together they had income of £42.7bn, 16.6 million members and almost 240,000 employees [3]. Its figures also show 82% of co-ops survive five years, against 39% of companies more broadly [2].
The three types, with real UK examples
Consumer co-operative: owned by its customers. The Co-operative Group is the UK's largest co-op by income [3]. Anyone can join for £1, which buys a share and makes them an owner [5]. Members vote at the AGM and elect a 100-member Members' Council [5]. In 2025 active members rose 17% to 7.2 million [4]. The same year shows the limits of the model. A cyber attack cut profit by an estimated £107m. On revenue of £11.0bn, the Group made an underlying operating loss of £35m (unaudited, 26 March 2026) [4].
Producer co-operative: owned by the suppliers. Arla Foods is owned by dairy farmers who supply its milk. After merging with Germany's DMK Group on 1 June 2026, it has about 11,200 farmer owners across seven countries, including the UK [7]. In February 2026 its farmer representatives approved a record €296m supplementary payment for 2025, worth 2.2 euro cents per kg of milk supplied [6]. So profit is shared by volume supplied, not by shares held. Arla also kept 0.87 euro cents per kg as capital for investment [6].
Worker co-operative: owned by its staff. Suma Wholefoods is a food wholesaler owned and run by nearly 200 workers. All of them are paid the same wage, and it has worked this way for over 40 years [8]. In its own words, "We don't have any bosses or shareholders" [8]. Worker co-ops are a small group: Co-operatives UK counted 372 in 2025, with income of £239.8m [3].
John Lewis: employee-owned, not a co-operative
Many students call John Lewis a worker co-operative. That is not accurate. In 1950, its founder transferred his remaining shares to a trust company, John Lewis Partnership Trust Limited [11]. The trust holds the business for its employees, called Partners. The business itself is a company, John Lewis Partnership plc [11].
So Partners do not own shares directly, and they do not each hold one vote as owners of a co-op society. Co-operatives UK still lists John Lewis in its figures, with 69,000 members, but marks it as employee-owned [3]. In an exam, call it an employee-owned business, then explain the trust.
How co-operatives compare with other business forms in A-Level Business
| Form | Control | Main objective | Finance | Profits go to | Liability |
|---|---|---|---|---|---|
| Sole trader | One owner | Profit, independence | Savings, bank loans | Owner keeps all after tax [12] | Unlimited [12] |
| Ltd | Shareholders, votes by shares | Profit, growth | Shares sold privately, loans | Shareholders, per share | Limited |
| plc | Shareholders, shares sold to the public | Profit, share value | Public share issues, loans | Shareholders, per share | Limited |
| Co-operative | Members, one member one vote [9] | Meet members' needs | Member shares, loans, retained surplus [9] | Members, by trade, work or supply [9] | Limited if registered [10] |
| Social enterprise | Depends on legal form | Social or environmental aim | Trading income, grants, social investment | Mostly reinvested; some forms cap dividends [9] | Usually limited |
The finance column matters most for evaluation. A plc can sell shares to anyone. A co-op cannot easily sell control to outsiders, because control follows membership, not money. That protects its purpose, but it can slow growth.
Exam application
Practice question, in our own words: A group of dairy farmers plans to process and sell its own milk. Assess whether a producer co-operative is a better choice than a private limited company. (9 marks)
Analysis: In a producer co-op, each farmer has one vote, so a large farm cannot take control of the business. Because profit is shared by milk supplied, every farmer gains more by supplying more. So the business keeps a steady milk supply, which lowers its costs. Arla shows this, paying out profit per kg of milk [6].
Evaluation: However, a co-op finds it harder to raise large sums, because outside investors cannot buy control. A Ltd could sell shares to an investor and fund a new plant faster. The better choice depends on the farmers' aim. If they want a fair price and shared control, the co-op fits. If they need fast growth funded by outsiders, a Ltd may suit them better.
Notice the structure. The analysis is one chain joined by "because" and "so". The evaluation names the condition, "it depends on the aim", and says which way the answer goes.
Practise forms of business with real firms
Our free Business starter pack covers the core of the course with real UK businesses and practice questions.
Get the free packFor timed practice on this topic, the CC Business platform, Year 12 track has a set on social enterprises and co-operatives. Most tutors teach the subject. We teach the criterion.
Sources
- AQA (2025). AS and A-level Business 7137/7138 specification, version 1.0, October 2025.
- Co-operatives UK (2025). Record-breaking year for co-operatives and mutuals, 23 September 2025.
- Co-operatives UK (2025). The Co-operative and Mutual Economy 2025 (report PDF, hosted by Community Energy England).
- Co-operative Group (2026). Co-op Group 2025 trading update (RNS), 26 March 2026.
- Co-op (2026). Membership FAQs.
- Arla Foods (2026). Board of Representatives approves highest-ever supplementary payment of EUR 296 million, 26 February 2026.
- Arla Foods (2026). Arla Foods and DMK Group officially unite, 1 June 2026.
- Suma Wholefoods (2026). Our co-op.
- Co-operatives UK (2026). Choosing your legal form.
- UK Parliament (2014). Co-operative and Community Benefit Societies Act 2014, section 3.
- John Lewis Partnership (2025). 75 years of the Partnership's Second Trust Settlement, 30 April 2025.
- GOV.UK (2026). Set up as a sole trader.