Business communication is diverse and involves both “internal stakeholders” within the organization, as well as “external stakeholders” outside the organization. A manager has to constantly communicate with and maintain
good relations with each of these stakeholders or publics, so as to achieve the overall goals of the organization and to project a favorable image.
The wheel of business communication reinforces what we discussed in the very first unit – communication is like breathing, it never stops and is a constant process. A manager has to stay in continuous touch with his internal stakeholders on the one hand – superiors, peers, subordinates, shareholders, employees and their unions; at the same time, he has to communicate with external stakeholders such as customers, intermediaries (distributors and retailers), suppliers of materials and components, government, bankers, society at large and the media. Effective business communication therefore involves both internal as well as external communication. We will now look at some of the reasons for communication with internal and external stakeholders, as well as the appropriate channels to be used in each case.
good relations with each of these stakeholders or publics, so as to achieve the overall goals of the organization and to project a favorable image.
The wheel of business communication reinforces what we discussed in the very first unit – communication is like breathing, it never stops and is a constant process. A manager has to stay in continuous touch with his internal stakeholders on the one hand – superiors, peers, subordinates, shareholders, employees and their unions; at the same time, he has to communicate with external stakeholders such as customers, intermediaries (distributors and retailers), suppliers of materials and components, government, bankers, society at large and the media. Effective business communication therefore involves both internal as well as external communication. We will now look at some of the reasons for communication with internal and external stakeholders, as well as the appropriate channels to be used in each case.
Internal Business Communication
As illustrated in the diagram, this involves interaction with the following – Superiors – Every organization has a formal reporting system. Superiors are the higher ups in the organization to whom you report. The frequency of interaction with them will vary, depending on your position and responsibilities, as well as their need for information. As a salesperson, you may have to submit daily or weekly reports of sales progress. As a marketing manager, you may be required to make periodic presentations on marketing strategy for new product launches to the Vice President, Marketing. Occasionally, you may also approach your superiors to communicate your feelings about your job, unsolved problems with co-workers and your suggestions for improvement of the organization.
Communication with superiors could be through written channels, such as reports, or through oral face-to-face channels, such as presentations and one-to-one meetings. When trying to solve problems or improve relationships, oral face-to-face channels are most effective, as explained in the previous unit.
Peers – Peers are your co-workers, or people at the same level within an organization. For example, a marketing manager and an HR manager are peers, since they work at the same level within different departments. Communication between peers is essential for functional coordination. An Advertising Manager for example, will need to communicate with the Finance Manager regarding approval of the advertising budget for a new product launch. Information sharing is another reason for communication between peers.
The Advertising Manager and the Sales Manager in the Marketing department may need to communicate regarding the special features of a product to be highlighted in an advertising campaign. Regular communication between co-workers in different departments is also essential to ensure that they work together as a team to achieve the common goals of the organization.
The most appropriate channel of communication between peers is the oral face-to-face channel, since it helps to build good rapport and improves work relationships.
Subordinates – These are people in the organization who work below you or report directly to you. For example, as the Marketing Manager, you may have Assistant Managers reporting to you, who in turn may have Marketing Executives reporting to them. The most common reasons for communication with subordinates are on disciplinary matters, such as organizational procedures and policies. Other reasons include performance appraisal and feedback, reward and recognition aspects, subject to good performance.
Appropriate channels of communication with subordinates may be both oral and written, depending on the situation. Communicating about organizational procedures is best done through written communication; on the other hand, performance appraisal and feedback should be done through an oral one-to-one meeting and discussion.
Employees/Unions – Employees unions can be quite powerful, therefore communication with them is essential. The reasons for communication include welfare aspects, disciplinary aspects and terms of employment. All these should be clearly spelt out and kept on record. Hence written channels such as written contracts are the most appropriate channels.
Shareholders – Shareholders are very important internal stakeholders, since they are the owners of the company. Therefore, it is essential to be completely transparent with shareholders and to keep them informed of both positive and negative developments regarding the company. The reasons for communication with shareholders include keeping them informed about the Company’s progress on different fronts, development programs and new projects undertaken by the company and new capital issues. At the same time, any major problems faced by the company and the steps being taken to tackle these problems should also be communicated. This is part of public relations, through which the company projects a positive image of itself in the eyes of shareholders.
The appropriate channels of communication with shareholders include oral and written channels – shareholder meetings and conferences, letters, brochures and advertisements.
Before we move on to external business communication, let us sum up our discussion on internal communication. The table given below highlights the appropriate channel(s) to be used and the primary objective of communication with each of the internal publics.
As illustrated in the diagram, this involves interaction with the following – Superiors – Every organization has a formal reporting system. Superiors are the higher ups in the organization to whom you report. The frequency of interaction with them will vary, depending on your position and responsibilities, as well as their need for information. As a salesperson, you may have to submit daily or weekly reports of sales progress. As a marketing manager, you may be required to make periodic presentations on marketing strategy for new product launches to the Vice President, Marketing. Occasionally, you may also approach your superiors to communicate your feelings about your job, unsolved problems with co-workers and your suggestions for improvement of the organization.
Communication with superiors could be through written channels, such as reports, or through oral face-to-face channels, such as presentations and one-to-one meetings. When trying to solve problems or improve relationships, oral face-to-face channels are most effective, as explained in the previous unit.
Peers – Peers are your co-workers, or people at the same level within an organization. For example, a marketing manager and an HR manager are peers, since they work at the same level within different departments. Communication between peers is essential for functional coordination. An Advertising Manager for example, will need to communicate with the Finance Manager regarding approval of the advertising budget for a new product launch. Information sharing is another reason for communication between peers.
The Advertising Manager and the Sales Manager in the Marketing department may need to communicate regarding the special features of a product to be highlighted in an advertising campaign. Regular communication between co-workers in different departments is also essential to ensure that they work together as a team to achieve the common goals of the organization.
The most appropriate channel of communication between peers is the oral face-to-face channel, since it helps to build good rapport and improves work relationships.
Subordinates – These are people in the organization who work below you or report directly to you. For example, as the Marketing Manager, you may have Assistant Managers reporting to you, who in turn may have Marketing Executives reporting to them. The most common reasons for communication with subordinates are on disciplinary matters, such as organizational procedures and policies. Other reasons include performance appraisal and feedback, reward and recognition aspects, subject to good performance.
Appropriate channels of communication with subordinates may be both oral and written, depending on the situation. Communicating about organizational procedures is best done through written communication; on the other hand, performance appraisal and feedback should be done through an oral one-to-one meeting and discussion.
Employees/Unions – Employees unions can be quite powerful, therefore communication with them is essential. The reasons for communication include welfare aspects, disciplinary aspects and terms of employment. All these should be clearly spelt out and kept on record. Hence written channels such as written contracts are the most appropriate channels.
Shareholders – Shareholders are very important internal stakeholders, since they are the owners of the company. Therefore, it is essential to be completely transparent with shareholders and to keep them informed of both positive and negative developments regarding the company. The reasons for communication with shareholders include keeping them informed about the Company’s progress on different fronts, development programs and new projects undertaken by the company and new capital issues. At the same time, any major problems faced by the company and the steps being taken to tackle these problems should also be communicated. This is part of public relations, through which the company projects a positive image of itself in the eyes of shareholders.
The appropriate channels of communication with shareholders include oral and written channels – shareholder meetings and conferences, letters, brochures and advertisements.
Before we move on to external business communication, let us sum up our discussion on internal communication. The table given below highlights the appropriate channel(s) to be used and the primary objective of communication with each of the internal publics.
External Business Communication
Before we discuss the reasons for communication with external stakeholders, it is important that you understand the overall importance of external business communication. External business communication is essential for the following reasons
Before we discuss the reasons for communication with external stakeholders, it is important that you understand the overall importance of external business communication. External business communication is essential for the following reasons
For Successful Marketing – Organizations need to inform and create awareness among consumers about their existing and new products. This is largely done through advertising, which is a form of mass communication. This is very much a part of external business communication.
To build a Favorable Corporate Image – Today, organizations need to focus on projecting themselves as responsible corporate and social citizens. This is known as corporate social responsibility. For example, they need to communicate the fact that they are involved in social development or in environmental protection. This involves being in touch with various external stakeholders, especially consumers, media and the society at large.
To Increase Shareholder Value – If customers have a positive image of the company, the company’s share price will go up and shareholders’ wealth increases, thereby enhancing shareholder value. Shareholder confidence in the company also drives shareholder value. When shareholder value increases, they will participate in the company’s expansion and growth.
To Overcome a Crisis – Sometimes when a company is facing a crisis, a public relations campaign may be needed to manage the situation, put things in a proper perspective and restore the image of the company in the eyes of consumers, the media and society at large. Public relations require effective communication with various external stakeholders.
Examples – A few years ago, Reliance was prosecuted by the government for irregularities in the stock market. Shareholders lost confidence in the company. Reliance then mounted a counter campaign against the government, where they told the truth, gave the facts and figures and denied the allegations made against them. This helped them to regain lost confidence and salvage their image.
Similarly, when Coke and Pepsi were accused of pesticides in their soft drinks, they had to undertake a massive public relations exercise to set right their image in the eyes of the public.
* To Enhance Credit Rating – An organization’s credit rating will also go up if it maintains good external communication. This way its borrowing ability will increase and more money can be raised for expansion and growth.
Having emphasized the importance of external business communication, let us now go into the reasons for communicating with external stakeholders and the channels used to communicate with them, just as we did with internal communication.
The wheel of business communication illustrates that external business communication involves interaction with the following stakeholders –
Consumers – Organizations need to communicate with consumers to provide information about their products and services, special promotional offers and new product developments. They also need to redress consumer complaints, so as to maintain consumer preference and confidence in their brands.
The written channel is the most appropriate medium for communicating with consumers. This could take the form of letters, or mass media advertising.
Intermediaries – This refers to the trade – distributors, wholesalers, retailers, franchisees, etc. It is necessary to communicate with them to provide information about product availability, special offers, incentives and allowances, contractual aspects, order processing, delivery aspects and merchandising, or the visual display of products. Keeping intermediaries aware and informed and motivating them to meet targets through competitions, prizes and incentives is extremely important for the success of any product.
The appropriate channels of communication with intermediaries could be both oral and written channels. Written contracts, advertisements announcing special offers and incentives and dealer newsletters inviting dealers to share their experiences, are examples of written channels. Periodic review meetings and continuous communication through sales staff are examples of oral channels.
Suppliers – These are suppliers of raw material, components, power, water or other utilities. Communication with suppliers is essential to give technical specifications, ensure quality and timely delivery. Today, due to “outsourcing” or relying on outside sources for raw materials and components, there is need for more sophisticated and direct communication and a more continuous, on-going relationship with suppliers. The internet now plays an important role in communication with suppliers, through “Business to Business” (B2B) communication.
Many organizations today enter into a partnership with their suppliers, whereby there is total involvement on both sides. For example, a company engineer might train the shop floor technical staff of a supplier of automotive components, in order to improve the quality of the components. The supplier on his side, may suggest a change in the company’s specification process.
Direct, one-to-one communication is required with suppliers to ensure transparency and clarity, with respect to specifications. The oral face-to-face channel is most appropriate, although the online channel is being increasingly used in supplier communication.
Government – Communicating with the government is particularly important in the Indian context and is a part of public relations. Many Indian companies even appoint a PR officer for maintaining good relations with the government. The reasons for communicating with the government include compliance with tax matters and legal aspects, seeking clearances for new activities such as joint ventures, borrowing from overseas banks, foreign exchange requirements and so on.
Communication with the government could take place through both oral and written channels. Periodic meetings may be held with regard to statutory compliances such as licensing. However, most of the time, written communication through formal letters is more appropriate. This is because clearances for various activities have to be sought in writing.
Society – As pointed out earlier, organizations need to communicate with the community at large to project themselves as responsible corporate citizens. “Corporate social responsibility” as it is called, is top priority with many organizations today. Supporting women’s education, building hospitals for the disabled, schools for children, family planning and non-pollution of the environment are some of the ways in which companies are participating in social development and then communicating this to society.
The channels of communication with society could be oral and direct – for example, talking to elders in a village or locality, about family planning or schools for children. Mass media advertising in the form of “public service advertising” could also be used to spread these social service messages
Example – United Breweries ran a public service campaign with the caption “Drinking and driving don’t mix”, to spread the message of avoiding drunken driving.
There is a large element of public relations in communication with society.
Bankers – Like shareholders, organizations need to communicate with bankers both in good times and bad times. The reasons for communicating with bankers are the same as those for shareholders. In addition, advance notice needs to be given to bankers regarding any dislocation in repayment schedules and justification has to be provided for any additional fund needs. The overall purpose is to build rapport with the bank, so as to increase borrowing ability.
Communication with bankers could take place through oral channels – for example, periodic meetings with the Finance Manager of the company to keep them informed of stock build up trends, or future trends that could affect working capital needs. Special meetings may also be held to keep them posted about expansion, contraction and diversification plans, lockouts, strikes and anything else that may affect cash flow.
In addition to oral channels, periodic written reports need to be submitted to the bank on overall business conditions. Transparency is needed in dealings with the bank and failure to keep them informed could lead to the company’s collapse.
Example – The Enron Company did not communicate with their shareholders and bankers about the difficult times that they were going through. This ultimately led to the company’s ruin.
Media – Today, the media are becoming more powerful and investigative and are intruding into people’s personal lives. If wrongly informed, the media can destroy an institution. Therefore, the primary reason for an organization to communicate with the media is to maintain good relations. If the company projects a favorable image to the media, the media in turn will carry a positive story about the company for free. This is known as “publicity” and is part of public relations.
For example, a press release in a newspaper may highlight some of the achievements or awards won by the company. This type of publicity is highly credible and can have a powerful influence on public opinion.
Communication with the media takes place through both oral channels such as press conferences, as well as written channels such as letters and news releases.
Examples – A few years ago, Reliance was prosecuted by the government for irregularities in the stock market. Shareholders lost confidence in the company. Reliance then mounted a counter campaign against the government, where they told the truth, gave the facts and figures and denied the allegations made against them. This helped them to regain lost confidence and salvage their image.
Similarly, when Coke and Pepsi were accused of pesticides in their soft drinks, they had to undertake a massive public relations exercise to set right their image in the eyes of the public.
* To Enhance Credit Rating – An organization’s credit rating will also go up if it maintains good external communication. This way its borrowing ability will increase and more money can be raised for expansion and growth.
Having emphasized the importance of external business communication, let us now go into the reasons for communicating with external stakeholders and the channels used to communicate with them, just as we did with internal communication.
The wheel of business communication illustrates that external business communication involves interaction with the following stakeholders –
Consumers – Organizations need to communicate with consumers to provide information about their products and services, special promotional offers and new product developments. They also need to redress consumer complaints, so as to maintain consumer preference and confidence in their brands.
The written channel is the most appropriate medium for communicating with consumers. This could take the form of letters, or mass media advertising.
Intermediaries – This refers to the trade – distributors, wholesalers, retailers, franchisees, etc. It is necessary to communicate with them to provide information about product availability, special offers, incentives and allowances, contractual aspects, order processing, delivery aspects and merchandising, or the visual display of products. Keeping intermediaries aware and informed and motivating them to meet targets through competitions, prizes and incentives is extremely important for the success of any product.
The appropriate channels of communication with intermediaries could be both oral and written channels. Written contracts, advertisements announcing special offers and incentives and dealer newsletters inviting dealers to share their experiences, are examples of written channels. Periodic review meetings and continuous communication through sales staff are examples of oral channels.
Suppliers – These are suppliers of raw material, components, power, water or other utilities. Communication with suppliers is essential to give technical specifications, ensure quality and timely delivery. Today, due to “outsourcing” or relying on outside sources for raw materials and components, there is need for more sophisticated and direct communication and a more continuous, on-going relationship with suppliers. The internet now plays an important role in communication with suppliers, through “Business to Business” (B2B) communication.
Many organizations today enter into a partnership with their suppliers, whereby there is total involvement on both sides. For example, a company engineer might train the shop floor technical staff of a supplier of automotive components, in order to improve the quality of the components. The supplier on his side, may suggest a change in the company’s specification process.
Direct, one-to-one communication is required with suppliers to ensure transparency and clarity, with respect to specifications. The oral face-to-face channel is most appropriate, although the online channel is being increasingly used in supplier communication.
Government – Communicating with the government is particularly important in the Indian context and is a part of public relations. Many Indian companies even appoint a PR officer for maintaining good relations with the government. The reasons for communicating with the government include compliance with tax matters and legal aspects, seeking clearances for new activities such as joint ventures, borrowing from overseas banks, foreign exchange requirements and so on.
Communication with the government could take place through both oral and written channels. Periodic meetings may be held with regard to statutory compliances such as licensing. However, most of the time, written communication through formal letters is more appropriate. This is because clearances for various activities have to be sought in writing.
Society – As pointed out earlier, organizations need to communicate with the community at large to project themselves as responsible corporate citizens. “Corporate social responsibility” as it is called, is top priority with many organizations today. Supporting women’s education, building hospitals for the disabled, schools for children, family planning and non-pollution of the environment are some of the ways in which companies are participating in social development and then communicating this to society.
The channels of communication with society could be oral and direct – for example, talking to elders in a village or locality, about family planning or schools for children. Mass media advertising in the form of “public service advertising” could also be used to spread these social service messages
Example – United Breweries ran a public service campaign with the caption “Drinking and driving don’t mix”, to spread the message of avoiding drunken driving.
There is a large element of public relations in communication with society.
Bankers – Like shareholders, organizations need to communicate with bankers both in good times and bad times. The reasons for communicating with bankers are the same as those for shareholders. In addition, advance notice needs to be given to bankers regarding any dislocation in repayment schedules and justification has to be provided for any additional fund needs. The overall purpose is to build rapport with the bank, so as to increase borrowing ability.
Communication with bankers could take place through oral channels – for example, periodic meetings with the Finance Manager of the company to keep them informed of stock build up trends, or future trends that could affect working capital needs. Special meetings may also be held to keep them posted about expansion, contraction and diversification plans, lockouts, strikes and anything else that may affect cash flow.
In addition to oral channels, periodic written reports need to be submitted to the bank on overall business conditions. Transparency is needed in dealings with the bank and failure to keep them informed could lead to the company’s collapse.
Example – The Enron Company did not communicate with their shareholders and bankers about the difficult times that they were going through. This ultimately led to the company’s ruin.
Media – Today, the media are becoming more powerful and investigative and are intruding into people’s personal lives. If wrongly informed, the media can destroy an institution. Therefore, the primary reason for an organization to communicate with the media is to maintain good relations. If the company projects a favorable image to the media, the media in turn will carry a positive story about the company for free. This is known as “publicity” and is part of public relations.
For example, a press release in a newspaper may highlight some of the achievements or awards won by the company. This type of publicity is highly credible and can have a powerful influence on public opinion.
Communication with the media takes place through both oral channels such as press conferences, as well as written channels such as letters and news releases.
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