Julia

Types of Business Communication

 

Business communication is diverse and involves both ‘internal stakeholders’ within the organisation, as well as ‘external stakeholders’ outside the organisation.

 

Internal business communication

 

Internal business communication is the exchange of information within a company. It involvs:

1. Superiors
2. Peers
3. Subordinates
4. Employees/Unions
5. Shareholders

 

 The communication involved with these internal stakeholders.

1. Superiors- Every organisation has a formal reporting system. Superiors are the higher ups in the organisation to which you report. The frequency of interaction with them will vary, depending on your position and responsibilities, as well as their need for information.

 

2. Peers- Peers are your co-workers, or people at the same level within an organisation. For example, a marketing manager and an HR manager are peers, 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.

 

3. Subordinates- Subordinates are people in the organisation who work below you or report directly to you.

 

4. 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.

 

5. 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 all developments in the company. It is essential to communicate with shareholders to keeping them informed about the following:

 

Company’s progress on different fronts, Development programmers, new projects undertaken by the company, New capital issues. Any major problems faced by the company, the steps being taken to tackle the major problems.

 

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. Communication with the shareholder is done through:
Meetings, Conferences, Letters, Brochures, Advertisements

 

External business communication


 External business communication is essential to:
1.Market successfully
2.Build a favourable corporate image
3.Increase shareholder value
4.Overcome a crisis
5.Enhance credit rating

 

1.Market successfully- For successful marketing, organisations 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.

 

2. 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.

 

3. Increase shareholder value-When customers have a positive image towards the company, the company’s share value will increase and the 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.

 

4. 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, Restore the image of the company in the eyes of consumers, the media and society, Public relations require effective communication with various external stakeholders.

 

For example, 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.

 

5. Enhance credit rating- An organisation’s credit rating will also go up if it maintains good external communication. This way its borrowing ability will increase. The organisation can also raise more money for expansion and growth.

Communication involves interaction with the following stakeholders:

Consumers, Intermediaries, Suppliers, Government, Society, Bankers, Media

 

Business communication done with these stakeholders:

 

1. Consumers- Organizations need to communicate with consumers to provide information about: Their products and services, Special promotional offers, new product developments.
Organizations 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.

 

2. Intermediaries- Intermediaries refer to the trade – distributors, wholesalers, retailers, franchisees, etc. It is necessary to communicate with them to provide information about:

 

Product availability
Special offers
Incentives
Allowances
Contractual aspects
Order processing
Delivery aspects
Merchandising or the visual display of products

 

3. 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.

 

4. 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, etc.

 

5. Society- Some of the ways in which companies are participating in social development are:

Supporting women’s education
Building hospitals for the disabled
Building schools for children
Encouraging family planning
Ensuring that they do not pollute the environment

For 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.

 

6. 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.

 

7. Media- Today, the media are becoming more powerful and investigative. They 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.