why communication is important for a business

2.4 Internal and External Communication – Why Communication Is Important

Effective communication is the lifeblood of any business. It links people, processes and information, enabling a company to operate smoothly, adapt to change and achieve its objectives.

Why Effective Communication Matters for a Business

• Facilitates coordination – aligns activities across departments so resources are used efficiently.
• Supports decision‑making – supplies accurate, timely information that managers need.
• Motivates staff – keeps employees informed, involved and valued, which boosts productivity.
• Builds relationships with stakeholders – helps meet the aims of customers, suppliers, owners, the community and other external parties.
• Reduces errors and misunderstandings – clear messages minimise costly mistakes.
• Enables change management – explains the reasons for and benefits of change, helping to overcome resistance.

Internal vs. External Communication

Internal communication occurs between people inside the organisation – e.g. managers and staff, or different departments. Typical examples include intranet memos, team meetings and shift‑briefings.

External communication involves parties outside the organisation such as customers, suppliers, shareholders, regulators and the media. Typical examples include press releases, advertising, customer newsletters and supplier contracts.

Methods of Communication – Benefits and Limitations

Impact of Effective Communication on Business Performance

1. Higher employee productivity – clear instructions reduce re‑work and downtime.
2. Improved customer satisfaction – timely, accurate responses build trust and loyalty.
3. Better financial results – efficient operations lower costs and can increase revenue.
4. Greater adaptability – rapid sharing of market intelligence enables swift strategic shifts.

Barriers to Effective Communication (Cambridge Syllabus)

• Language & cultural differences – affect all types, especially external and digital communication.
• Physical distance & technological limitations – most problematic for formal oral and digital methods when infrastructure is poor.
• Information overload – typical of informal written (instant‑messaging, social media).
• Emotional barriers (stress, low morale) – can hinder both oral and written exchanges, particularly informal oral.
• Organisational hierarchy (communication barrier) – restricts upward flow of information in formal written and formal oral channels.

Strategies to Overcome Barriers (with brief evaluation)

• Use simple, clear language and avoid jargon – especially important for formal written and digital messages.
  Evaluation: Easy to implement, but may require regular monitoring to ensure consistency.
• Choose the most appropriate channel for the audience – e.g., video‑conferencing for remote teams, face‑to‑face briefings for sensitive issues.
  Evaluation: Improves understanding, yet can increase planning time and cost.
• Encourage feedback and active listening – set time for questions after formal oral presentations and provide a “reply‑all” option for important emails.
  Evaluation: Enhances two‑way communication, but may generate large volumes of responses to manage.
• Provide training in communication skills and IT tools – ensures staff can use intranets, cloud‑based project software and social‑media platforms effectively.
  Evaluation: Reduces errors long‑term; initial training costs and time away from routine work must be justified.
• Establish regular communication routines – weekly briefings, daily instant‑message updates, monthly intranet newsletters.
  Evaluation: Builds habit and reliability; risk of routine becoming perfunctory if content is not kept relevant.
• Introduce anonymous suggestion boxes or online surveys – helps bypass hierarchy barriers and gives staff a safe voice.
  Evaluation: Can surface hidden issues; must be paired with genuine follow‑up to avoid cynicism.

Application Boxes – Choosing the Most Suitable Method

Suggested Diagram

Summary

Communication links people, processes and information, making coordination, decision‑making, motivation, stakeholder relationship building and change management possible. By understanding the five main types of communication—including modern digital/IT methods—recognising their specific benefits and limitations, identifying likely barriers for each type, and applying targeted (and evaluated) strategies, businesses can create a communication culture that supports long‑term success and meets the expectations of both internal and external stakeholders.