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Communication means the exchange of information, opinions, feelings and ideas between two or more parties. Communication is only effective if it is received and understood in the manner intended by the sender and the desired action takes place.

Good communication is vital for a firm if it is to be as productive as possible and ensure the optimum use of the resources. Effective communication enables managers to have a clearer understanding of the business and consequently better control of operations. It also allows the goals of the organisation to be transmitted to the employees.

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Internal communication is communication between employees or departments across all levels or divisions of an organisation. Internal communication is a form of corporate communication and can be formal or informal, upward, downward, or horizontal. It can take various forms such as a team briefing, interviewing, meetings, memos, an intranet, newsletters, the grapevine and reports.

External communication is the exchange of information and messages between an organisation and other organisations, groups, or individuals outside its formal structure. The goals of external communication are to facilitate cooperation with groups such as suppliers, investors, and shareholders, and to present a favourable image of an organisation and its products or services to potential and actual customers and to society at large.

Communication cycle

Communication can be looked at as a scientific process. It is made up of parts, or stages, in a closed loop, or cycle. A message is sent, it is received and understood there should be the desired result in the form of an answer, an action or a confirmation of receipt. Any failure in this loop will lead to ineffective communication.

  • The sender. All communication starts here, with the sender. The sender must know exactly the message that is to be sent. If this stage is unclear, the rest of the stages will be ineffective.
  • The message. This must be in the correct form and language for the recipient - it is no good if the sender understands it, but the language is too complicated for the receiver. The message must be designed with the receiver in mind.
  • The recipient. A message has to go somewhere. This is the person or place where the message is targeted. The sender must be clear who it is and where the recipient is.
  • The reaction. Messages are sent for a reason. The recipient has to respond to the message correctly.
  • The feedback. The response must be confirmed, the sender must be sent a reply or behave in a manner that indicates the message has been received and understood.

Five stages to communication

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Successful communication

If communication is successful:

  • Change is encouraged and transitions are easier
  • Commitment is developed among staff (and therefore enhances motivation)
  • Co-ordination within the organisation is more effective (therefore ensuring that the efficient implementation of plans and strategies)
  • Roles and responsibilities are clarified

If communication is not successful then:

  • Problems are not identified and addressed
  • Leaders becoming isolated and follow events rather than shaping them
  • Department rivalries develop
  • Motivation and morale may be affected
  • Bureaucracy becomes endemic and decision making slows
  • Profit falls

Good communication is usually effective communication. Large organisations which develop inadequate communication (diseconomies of scale) may address this by:

  • Developing flatter structures of management
  • Creating a more empowered workforce
  • Offering better employee training for different cultural and linguistic attitudes
  • Controlling the volume of communication
  • Limiting communication to those who need the information rather than copying it widely