IMPORTANCE OF BUSINESS
Communication is the main integrating ingredient of business. No business can grow and
expand without proper communication channels. People maintain contact with each other
only by communicating with each other. We come to know about details of business dealings,
ﬁnancial information, issues regarding the employees, information about new technology,
new and innovative ways of managing organizations, market information and a host of
other things, only by communicating with various people. Communication helps business
Equally important, is the simplicity with which the communication channels should
function. Development and success of a business depend on how open and simple the
communication channels in the business are. If the channels and processes are complicated,
people get lazy and postpone the communication process. This can be detrimental.
Communication in business includes all contacts made both inside and outside the
Business Communication is deﬁned as the “process of transmission of information
within the business environment.” Business can have communication about both short-
term and long-term matters. Short-term communication will include immediate needs and
details that have to be sorted out and decided on immediately. For example, deciding on
promotion of a particular employee. Long-term planning can relate to strategies and policy
formulation for the company. Such as, what are the new areas of focus that the company
needs to plan for? What should be the core areas of the organization after ﬁve years? What
environmental changes can be anticipated?
Needless to say, the communication must be clear, simple and meaningful. The quality
of this communication directly inﬂuences the success of any business.
4 Business Communication
Information about objectives, job instructions, customer orders, production problems,
employee recognition, promotions, complaints, redressals and many other issues are
examples of vital information that is exchanged in the course of business. The day-to-day
operations of a business depend on the exchange of information among its employees.
Long range planning and decision-making are based on research, reports, proposals,
conferences, and meetings.
Research shows that an average person spends about 80 percent of his or her waking
hours in some form of communication. Business Communication ranges from conferences
and memo writing at work, to personal conversations and newspaper reading at home.
The higher the organizational level to which individuals progress in an organization,
the more the time they spend in communicating. Upper level executives in many businesses
or non-proﬁt organizations spend up to 95 percent of their working time communicating-
listening, speaking, reading and writing.
Research on the opinions of executives and college graduates reveals that the ability
to communicate effectively in business is ranked at the top of the skills necessary for job
success. In addition, many studies show that an individual’s communication skill level
relates directly to his or her receiving promotion and salary increases. A satisfactory level of
technical skill and knowledge in their ﬁeld is expected of every employee. How effectively
we communicate that technical expertise, however determines how successful we will be on
Communication skills are an essential job requirement in today’s business
In earlier times it was thought that communication ﬁnesse is required only for marketing
and sales personnel. But today, we know otherwise. For people at all organizational levels,
all functional areas, for both blue and white-collared workers, good communicative power
is a must. For people in the personnel department, there are situations where they have to
interact with the press or at times they have to deal with labor problems. This calls for skill.
Executives are expected to make speeches, prepare pamphlets, brochures, souvenirs, and
give interviews to media in order to project a favorable image about their company.
EFFECTIVE Business communication is beneﬁcial to both
Improving our communication skills will beneﬁt both the employee and the organization
he/she works for. They will become an asset to themselves as well as the organization that
they represent. The organization will also gain, if it has better communication both within
itself and outside the company.
There are a number of important advantages of business communication—
• Managing complexity all around: New techniques of production, marketing,
e-CRM, vendor management and newer methods of looking at proﬁtability are now
Importance of Business Communication 5
prevalent. Each process has become related with technology. Where there were
ordinary, hand-spun clothes, now there are technically perfect, synthetic ﬁbers.
Transportation was only walking on legs. Now you can travel across oceans with
hi-tech aeroplanes. Social consciousness of business is making waves like never before.
It is necessary for the success of the business to communicate effectively within the
company. Proper communication between various departments like the production,
marketing and personnel are necessary. If this is not done, it can lead to misunderstandings.
For example, if the marketing department does not communicate proper requirements of the
market, the production section will produce more or less of the required quantity of goods.
The company will have to suffer because their customers will not be satisﬁed.
• Better understanding and cooperation can take place: Mutual trust and
conﬁdence will prevail to a great degree if there are open communication channels.
Too many hesitations and barriers can hamper the open atmosphere and lead to
misunderstandings. Eventually the business will suffer. Communication can be
beneﬁcial to both the employers and the employees. The management gets better
returns and more committed employees. The employees also get a higher degree of
job satisfaction. For example, if a subordinate holds any grudge against his boss, he
should be able to discuss it with him. Otherwise, he will get disinterested in his job
and will not be able to perform well on the job.
• The big organization management: All organizations are trying to grow-in
terms of turnover, employees, proﬁts and products. Businesses are diversifying. It is
becoming difﬁcult to keep track. There are hundreds of examples of business having
worldwide ofﬁces. Currently, it is the age of globalization. Companies are opening
branches in many cities of one country. Employees have increased. Companies have
branches in other countries also. If all these branches spread all over the world do
not communicate regularly and effectively, confusion may prevail. The plans and
objectives of the company will not be understood properly. Hence, it is important
that regular meetings, conferences of the employees of the company are held so that
they are aware of company views and objectives. A common thread should hold
them, so that ultimately, the organization can beneﬁt. If a company’s head ofﬁce has
made some changes in the salary structure for all its employees, and the same are not
communicated properly to the staff in outstation branches, they might feel left out
and they will not know that they also have a got a salary increase. This might cause
anger and resentment in them.
• There is more cohesion in the organization: The current focus worldwide is
to integrate employees into one unit and make them function as one big family.
Companies are insisting on more employee interaction so that can develop a family
feeling and get emotionally attached to the organization. This can be possible only
if the communication channels are effective and strong. Companies organize tours
6 Business Communication
and family holidays so that the employees can get to know each other in an informal
setting. People can learn about their counterparts in other branches and interact
with them better. If they have a problem, they can contact them immediately, as they
already know them.
• The image of the company improves: If people are cared for, it shows. The
performance of the organization goes up. Outsiders notice when employees are
bound to a company. The company culture is a very important aspect. If the culture is
good, there are fewer turnovers of employees. They do not leave easily and become a
committed force. All this is possible only if there is effective internal communication.
• Proﬁtability increases: If business communicates properly, losses are reduced.
Double work gets avoided. Time is not wasted and proﬁts can go up. You can get to
know about cheaper sources of raw materials. Companies can also get to know about
newer markets to sell their goods and services. If a common form message is to be
created for the entire ofﬁce, it can be done by one employee and circulated to the rest
of the ofﬁces for their use. Money is saved and so is time.
• Opportunities available in the market can be known easily: If communication
channels are open, it is easier to have good market intelligence. New products, new
sales techniques, better product features, new research results—all will be known
faster. The logic is simple. If we are open to the environment, we get to know about it
fast, or else we loose out in the race.
• The employee turnover is less: Employee turnover refers to the number of people
who keep leaving any organization. If the communication channels are open, employees
feel free to discuss all issues that are pleasant and others that disturb them. They feel
less inclined to leave the company and this means that the employee turnover is less.
On the other hand, if they feel stiﬂed, and the environment is not open and friendly,
the chances are high that the employees will not stay for long. They will only remain
in the company till they get a better opportunity and a better working environment.
• Customer interaction is better: If companies invest in better communication,
there are higher chances that they will have a satisﬁed customer base and eventually
higher proﬁts. Customer’s need to give feedback to the producers about their needs
and wants. If communication channels are open, the organization will pay heed to the
customer needs and adapt themselves for catering to their needs.
• Dissemination and collection of information is easier: Information is
required for everything. Better decisions can be taken, better raw materials can
be used, better customer service and improved after-sales service is possible. In
the absence of adequate, timely and correct information, organizations very often
end up doing things wrongly, which can result in them gaining a bad reputation.
They may also take wrong decisions, which may cause them to reduce their proﬁts
and upsetting their employees.
Importance of Business Communication 7
CLASSIFYING BUSINESS COMMUNICATION
We can classify business communication into two broad areas for simpler understanding.
Internal communication is communication within an organization. When employees talk
to each other, when a superior gives a work instruction to his subordinate, or when inter-
departmental memos are passed around, internal communication takes place.
Internal communication is important to promote harmony within the organization.
People feel close to one another and they carry a ‘family’ feeling. This can help in imparting
a feeling of cohesion and closeness between the employees.
Effective internal communication can be seen in various instances.
• Communicating with superiors: Any conversation, reports, or other information
that is passed within the company from the juniors to people on senior levels, will be
a part of internal communication. This information is not normally sent outside the
• Communicating with sub-ordinates: When managers have to communicate with
people who are on levels lower to them, it is called downward communication. It may
be in the form of orders, circulars, enquiries, memos and instructions. Communication
can be written or oral. What distinguishes it from external communication is that it
does not go outside the company. It is meant for internal use.
• Communicating with colleagues: It is very important for colleagues to communicate
with each other. The more they do it, the more, they will feel past of the entire
system. No one can function in isolation. We need to talk to each other to exchange
information, which is important in the conduct of business. Moreover, colleagues
must talk to each other so that they can build a positive organizational climate that
can help the individuals as well as the company.
• Communicating between departments: In the course of business, all departments
have to interact with each other. The marketing department has to arrange for selling
the new products that are made in the company. The research team has to keep in
touch with the resources of the company. In many other instances, all the divisions
have to keep in touch with each other, so that the unit functions as one whole. When
this does not happen, the company becomes disoriented and starts making losses
8 Business Communication
because there is no co-ordination of the members. This is a dangerous situation and
should be avoided at all costs.
External communication is communication with external agencies, both government
and private. It is an essential feature of all businesses. All suppliers, customers, ﬁnancial
institutions, support organizations, public and other environmental organizations that are
external to a company, have to communicate with it for various business dealings. This
results in external communication. External communications that have a long-range impact
include new product announcements, plant expansion plans, contribution to community
activities and annual reports. Effective communication with those outside a company brings
in orders builds goodwill, and ensures the continued existence and growth of the business.
• Interacting with customers: Customers are the most important part of any
business. Any business cannot survive without its customers. For this reason it
becomes important to deal with the customer in a correct way. Communication skills
like listening and responding to complaints, customer relationship management,
attracting and satisfying the customer are all part of communication skills. In today’s
markets there are umpteen numbers of competitors for any product. Mostly all the
brands compare equally well in the minds of the consumer. Marketing research has
revealed that organizations that can communicate better can also sell better. Sales can
be promoted through persuasion and persuasion is a form of communication.
• Dealing with Government agencies and departments: Companies are required
to deal with licensing authorities, customs and excise ofﬁces, income tax and sales
tax ofﬁces, post ofﬁces and banks. Many times they have to pull themselves out of
tricky and messy situations. This can become easier if a manager has cultivated good
communication skills. Tactful negotiation and pleasant talking can help to solve many
• Handling suppliers: Suppliers are vital to any business. The raw materials they
provide, the lead-time they require to cater to our needs, the care they take to put
into ensuring quality raw materials for us, depends on our relationship with them.
To maintain a cordial and harmonious business relationship, organizations must
make conscious efforts to communicate appropriately. Time delays, unnecessary
communication, wrong orders can be avoided, if care is given to our communication
abilities. Proper emphasis should be given to take care of our communication when
anyone in the company interacts with any of the suppliers.
• Dealing with the public: Many times it happens that business may violate certain
environmental regulations. In such situations, a public outcry can happen. The
company can handle these situations very effectively if they have good communication
skills. When the Union Carbide tragedy took place in Bhopal some years ago, the
company could not handle their communication very well with the public. They
Importance of Business Communication 9
closed their ofﬁces. In the same situation, if Union Carbide had presented a more
open and communicative front, the situation would not have got so messy.
• Communicating with the press: The importance of doing this effectively cannot
be overstated. The press is a medium that can make or break. Radio, television,
newspapers and magazines can go a long way to help the cause of any business. They
can contribute to a large extent during new product launches, giving free publicity,
handling public anger against a product or an issue. On the other hand, they can also
use their power to destroy. Famous leaders, companies and organizations have been
at the receiving end of negative barbs from the press. For example, politicians and
ﬁlm stars constantly try hard to keep the press in good humor. If they get offended,
the damage they can cause is phenomenal. Communicative skills are necessary to
deal with the forth estate. Not only talking to them, but also talking with appropriate
words and body language is important.
1. Deﬁne business communication.
2. What are the interactions that normally occur between customers and suppliers?
1. Communication skills are an essential job requirement. Discuss.
2. How is communication important to business?
1. Distinguish between internal and external communication.
2. How is effective business communication useful to an individual?