Chapter 9 – Internal and External Communication

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Cambridge IGCSE Business Studies

Internal and External Communication

This chapter explains how businesses send and receive messages, why communication must be understood and acted upon, and how managers choose suitable methods while avoiding common communication barriers.

Sender, receiver and message Internal and external communication One-way and two-way communication Verbal, written and visual methods Formal, informal and direction Barriers and solutions

Topic 1: Communication Basics

Students first need to understand what communication means and why messages must be clear, received and understood.

1. Communication

Communication is the transfer of a message from a sender to a receiver who understands the message.

A message is the information or instruction being communicated.

When is communication effective?

Communication is only effective when the message is:

  • Received by the correct person
  • Understood
  • Acted upon as intended
Poor communication can lead to mistakes, delays and additional costs.

2. Internal Communication

Internal communication takes place between people within the same organisation.

Examples

  • A manager giving instructions to workers
  • Human Resources emailing employees
  • Departments sharing information
  • Meetings between managers and workers

Why is internal communication important?

Effective internal communication helps:

  • Employees understand instructions
  • Departments coordinate their activities
  • Managers guide and control employees
  • Reduce mistakes and misunderstandings

3. External Communication

External communication takes place between the business and people or organisations outside the business.

Examples include communication with:

  • Customers
  • Suppliers
  • Government
  • Banks

Why a business may communicate externally

  • To order goods from suppliers
  • To provide customers with prices or delivery information
  • To advertise products
  • To request payment from customers
Effective external communication is important because poor communication can damage the image and efficiency of the business and may cause customers to buy from competitors.

Topic 2: The Communication Process

This topic explains how messages move from sender to receiver and why feedback is important.

4. The Communication Process

Effective communication involves four important parts:

👤Sender

The person who sends the message.

📨Medium

The method used to send the message.

Examples: email, telephone and letter.

🎯Receiver

The person who receives the message.

↩️Feedback

The receiver responds to show that the message has been received and understood.

Communication process showing sender, message through a medium, receiver and feedback
Sender→Message through a medium→Receiver→Feedback

5. One-Way Communication

One-way communication occurs when the receiver is not expected or able to respond.

Examples

  • Notice
  • Poster
  • Instruction sign
Limitation: The sender cannot easily check whether the receiver has understood the message.

6. Two-Way Communication

Two-way communication occurs when the receiver responds to the sender.

Examples

  • Face-to-face conversation
  • Telephone conversation
  • Meeting

Advantages

  • The sender can check whether the message has been understood.
  • Employees can contribute ideas and may feel more involved and motivated.

Topic 3: Methods of Communication

Businesses can use verbal, written and visual communication. The most suitable method depends on the situation.

7. Methods of Communication

There are three main types:

1. Verbal communication

Messages are communicated by speaking directly to the receiver.

2. Written communication

Messages are communicated in written form, such as letters, emails and reports.

3. Visual communication

Information is presented using images or visual displays.

There is no single best method of communication. The most suitable method depends on the situation.

Verbal, written and visual communication methods

8. Verbal Communication

Verbal communication involves speaking directly to the receiver.

Examples

  • Face-to-face conversation
  • Telephone call
  • Meeting
  • Video conference

Advantages

  • Information can be communicated quickly.
  • Immediate feedback is possible.
  • Body language and tone may help explain the message.

Disadvantages

  • There may be no permanent written record.
  • The receiver may forget or misunderstand what was said.

9. Written Communication

Examples

  • Letters
  • Emails
  • Reports
  • Memos
  • Notices
  • Text messages

Advantages

  1. Provides a permanent record that can be referred to later.
  2. Useful for detailed or complicated information.
  3. Electronic messages can be sent quickly to many people.

Disadvantages

  1. Feedback may not be immediate.
  2. The sender may not know whether the receiver has read or understood the message.
  3. Too many emails can cause information overload.

10. Visual Communication

Visual communication presents information using images or visual displays.

Examples

  • Charts
  • Graphs
  • Diagrams
  • Posters
  • Photographs
  • Videos

Advantages

  • Can make information attractive and easier to understand.
  • Charts and diagrams can simplify complicated information.

Disadvantages

  • Usually provides no immediate feedback.
  • Graphs or diagrams may be misunderstood.

11. Choosing the Most Appropriate Communication Method

A business should consider:

1. Speed

How urgently does the receiver need the information?

2. Cost

Some methods are more expensive than others.

3. Amount and detail of information

Detailed information may need a written document, chart or diagram.

4. Receiver

Is the message intended for one person or thousands of people?

5. Need for a written record

Contracts and important agreements usually need written evidence.

6. Need for feedback

If a quick response is needed, verbal communication may be more suitable.

Exam point: Do not simply state that email is best because it is fast. Apply the method to the situation: email may be suitable for sending sales figures to several managers because the information can be sent quickly and provides a written record that can be referred to later.

Topic 4: Formal, Informal and Direction of Communication

This topic helps students identify whether communication is official, casual, downward, upward or horizontal.

12. Formal and Informal Communication

Formal Communication

Formal communication is communication through official business channels using professional language.

Examples

  • Official emails
  • Reports
  • Letters
  • Formal meetings

Informal Communication

Informal communication occurs casually between people using everyday language.

Examples

  • Conversations during breaks
  • Discussions between colleagues
Informal communication within a business is sometimes called the grapevine. It can spread information quickly, but it may also spread rumours or inaccurate information.

13. Direction of Communication

Communication can travel in three directions.

Downward Communication

Information passes from managers to employees below them.

Example: Manager → Supervisor → Worker.

Usually used for instructions and business decisions.

Upward Communication

Information passes from employees to managers.

Examples: employee suggestions, complaints and feedback.

Horizontal Communication

Communication occurs between employees or managers at the same level of the organisation.

Example: Marketing Manager ↔ Operations Manager.

Downward, upward and horizontal communication

Topic 5: Communication Barriers and Solutions

Communication can fail because of problems with the sender, medium, receiver or feedback. Students must also explain how barriers can be overcome.

14. Communication Barriers

A communication barrier is a factor that prevents effective communication.

Problems can arise from:

  • The sender
  • The medium
  • The receiver
  • Feedback
Communication barriers and solutions

15. Problems With the Sender

Possible problems

  • Using difficult language or jargon
  • Speaking unclearly
  • Making the message too long
  • Sending the message to the wrong person

How to overcome them

  • Use clear and simple language
  • Keep the message brief
  • Make sure it is sent to the correct receiver
  • Ask for feedback

16. Problems With the Medium

Possible problems

  • Choosing the wrong communication method
  • The message becoming distorted through a long chain of command
  • Technical failure
  • The message being lost

How to overcome them

  • Choose an appropriate method
  • Use the shortest possible communication channel
  • Have alternative communication methods available
  • Ask for feedback

17. Problems With the Receiver

Communication may fail because the receiver:

  • Is not listening
  • Does not understand the message
  • Does not trust the sender

How to overcome them

  • Emphasise the importance of the message
  • Use clear language
  • Ask for feedback
  • Develop trust between sender and receiver

18. Problems With Feedback

Problems may occur because:

  • No feedback is received
  • Feedback takes too long
  • Feedback becomes distorted
How to overcome them: Businesses should use communication methods that allow direct and quick feedback between the sender and receiver.

Topic 6: Key Definitions and Examination Checklist

Use this final topic for quick revision before attempting past-paper questions.

Key Definitions

TermMeaning
CommunicationTransfer of a message from sender to receiver who understands it
MessageInformation or instructions being communicated
Internal communicationCommunication between people in the same organisation
External communicationCommunication between the organisation and outside individuals or organisations
SenderPerson who sends the message
ReceiverPerson who receives the message
MediumMethod used to communicate the message
FeedbackResponse showing whether a message has been received and understood
One-way communicationCommunication with no response from the receiver
Two-way communicationCommunication involving a response from the receiver
Formal communicationCommunication through official channels
Informal communicationCasual communication using everyday language
Communication barrierFactor that prevents effective communication

What Students Must Know for the Examination

Students should be able to:

  • Distinguish between internal and external communication.
  • Explain why effective communication is important.
  • Identify the sender, receiver, medium and feedback.
  • Distinguish between one-way and two-way communication.
  • Distinguish between verbal, written and visual communication.
  • Explain important advantages and disadvantages of each method.
  • Choose and justify the most suitable communication method for a business situation.
  • Understand formal and informal communication.
  • Understand downward, upward and horizontal communication.
  • Identify common communication barriers.
  • Explain how communication barriers can be overcome.
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