Program

: MBA

Semester

:I

Subject Code

: MB0039

Subject Name

: Business Communication

Unit number

:3

Unit Title

: The Nature of Business Communication

Faculty

: Smita Choudhary

HOME

NEXT

Objectives
After studying this unit, you will be able to:
List the different stakeholders of an organization, or the publics with whom a
manager has to communicate.
Explain the primary reasons for communication with each stakeholder
Select the most effective channel for communication with each stakeholder
Describe how information flows within an organization
Discuss the advantages and limitations of formal and informal communication
networks

Types of Business
Communication

External Business Communication

Overall importance of
external business
communication
1.For Successful Marketing
2.To build a Favorable Corporate image
3.To Increase Shareholder Value
4. To Overcome a Crisis
5.To Enhance Credit Rating

Internal Business Communication

External Business Communication

Consumers
Intermediaries
Suppliers
Government
Society
Media

Bankers

The wheel of business communication illustrates that external business

communication involves interaction with the following stakeholders

Communication Network in Organizations

A communication network refers to how information flows within the organization.
Information within an organization generally flows through a system, rather than
being a free flow. In the words of Adler, Communication networks are regular
patterns of person-to-person relationships through which information flows in an
organization.

Media used in formal communication

I.
Downward communication
This may be defined as information that
flows from Superiors to Subordinates.

Bulletin boards
House journals information on company policies & products
Letters e.g., letters of appointment & termination
Booklets, pamphlets & handbooks e.g. for new employees
Annual reports - information about company & its policies
Meetings & conferences

Formal Communication Network

Media used in formal communication

II. Upward communication
This may be defined as information that
flows from Subordinates to Superiors.
Written complaints & grievances
Meetings
Exit interviews
Opinion survey questionnaires

Formal Communication Network

Media used in formal communication

III. Horizontal (lateral) communication
It may be defined as communication that takes place
between co-workers in the same department, or in
different departments.
Handbooks & manuals
Letters & memos
Meetings & conferences

Guidelines for Effective

Formal Communication

1.The number of organizational levels should be kept

minimum to avoid loss of information passed on from one
level to another.
2. Supervisors should gain the trust & confidence of
subordinates.
3. Superiors should encourage feedback from subordinates
4. Superiors should reward subordinates for their efforts.
5. Management should ensure common understanding of
organizational goals
6. As far as possible, face to face communication should be used.

Continued
7. Communication should flow from responsible authorities who
receive the recipients care
8. Superiors should avoid information overload
9. Management should promote coordination between different
departments
10.Superiors should be open minded and listen to their
employees
11.A grievance redressal system should be set up in the
organization for employees to air their differences
12.There should be open exchange of ideas among peers

Informal Communication Network

Advantages or Limitations?

1. Informal communication channels operate more quickly than

formal communication channels
2. Informal communication or grapevine may be used by
management as a testing tool to get feedback from employees
3. Informal communication helps employees to communicate
openly and freely
4. Informal communication leads to misunderstanding among
employees
5. Informal communication comes in the way of effective public
relations

Informal Communication Network

Advantages or Limitations?

6. Informal communication or grapevine should be used carefully

since it may spread rumors
7. Informal communication channels are not suitable for handling
some types of messages
8. Informal communication creates greater information overload
as compared to formal communication
9. Informal communication can distort information