Business Communication: Characteristics, Scope, Purpose, Function, Importance

Business Communication: Characteristics, Scope, Purpose, Function, Importance

Communication is the vital link that not only forms the organization but also keeps it operational. Business communication is the communication that is made for the purpose of business.

Definition of Business Communication

Business communication is a system that affects change within the entire organization. Brennan says, “The exchange of information or ideas in the field of commerce and industry is called business communication.”

These definitions indicate that communication-related to any business matter falls under the category of business communication. Managers in business organizations make multifaceted decisions.

They correspond with other individuals and organizations to facilitate sales and conduct business. They exchange information, opinions, and views with both internal and external stakeholders.

They convey comments, advice, commands, orders, requests, and more to various individuals in order to complete tasks and obtain their responses or monitor their performance through various feedback channels. All these activities constitute business communication.

Business is an economic activity intended to earn profit. It utilizes resources to produce goods and services for the benefit of mankind with a motive to earn profit.

Business involves trade, commerce, and industry. Trade is the buying and selling activity of business, i.e., the buying and selling of goods and services are known as traded. Commerce is the activity that is required to overcome the hindrances in the way of doing business, like insurance, banking, warehousing, transportation, etc.

Industry is the means of creating utility. It is a technological process that converts inputs into output for human use. All these business activities need a communication network to perform them successfully.

Business communication is a process of exchanging information, ideas, thoughts, and views related to business activities with other individuals to establish a shared understanding of messages and achieve the objectives of the business.

Characteristics of Effective Business Communication

Good management depends on effective communication. The best organizations should have a well-established communication network that makes it efficient in both internal and external communication.

The question is, what makes communication effective? Thill and Bovee (1999:11) have identified certain characteristics of effective organizational communication, which are discussed below:

An open communication climate

An organization’s communication climate is its corporate culture, which influences the quality and quantity of information that flows through the pipeline. Factors such as management style, the organization’s history, physical setup, nature of the industry, and current events shape the communication climate.

In today’s competitive market economy, total employee involvement in promoting total quality is a necessity. Therefore, an open communication climate is a prerequisite for effective communication.

A commitment to ethical communication

Ethics is the normative science of conduct, and conduct refers to voluntary actions (Lillie, 1964:03). Ethics encompasses the principles of conduct that govern individuals or groups. Ethical individuals are generally trustworthy, fair, impartial, and respectful of others’ rights, with a concern for societal impact.

Ethics plays a crucial role in communication as language consists of words that carry values. The way we express ourselves influences how others perceive our message, shapes expectations, and behaviors. Ethical communication includes providing all relevant information, being truthful, and avoiding deception in any form.

To achieve this, we must be accurate and sincere in our messages, avoiding manipulative, discriminatory, or exaggerated language. We should not conceal negative information, present opinions as facts, or distort graphic data. Acting in good faith is essential.

An understanding of intercultural communication

A sound understanding of the intercultural communication climate is vital for both internal and external communication. Globalization has made this issue even more critical for global businesses, as workforces become increasingly multicultural and multiethnic.

Managers often encounter cultural diversity in the workplace. To compete successfully in today’s multicultural environment, businesspeople must overcome communication barriers not only in language but also in culture.

Proficiency in communication technology

Effective organizational communication now relies heavily on individuals’ ability to use and adapt to technology. The ever-changing technology landscape results in faster communication and an increasing volume of information that needs to be conveyed.

Today’s managers must understand, use, and adapt to technological communication tools to remain effective in their roles.

An audience-centered approach to communication

The fifth factor contributing to effective organizational communication is an audience-centered approach. It involves keeping your audience in mind throughout the communication process.

Empathizing with your audience, being sensitive to their needs, and considering their feelings are crucial aspects of business communication. Communication that takes the audience’s perspective into account is more likely to be effective.

Efficient flow of communication messages

Efficiency in communication means doing the right things in the right manner. Organizations can save time and money by reducing the number of messages, expediting message preparation, and providing proper training to writers and speakers.

Efficiency ensures that communication is transmitted in a timely and effective manner.

Scope of Business Communication

Scope refers to the area of operation or the extent of the field where a particular subject can be applied. It indicates the activities that are performed with the help of the concerned subject.

The scope of business communication, thus, refers to the field of activities of business that are performed with the help of communication.

With this in mind, the scope of business communication is discussed below:

Organizational Management

Business organizations are managed through a network of functions known as management, which includes planning, organizing, leading, and controlling. These functions operate in a cyclical process within an organizational structure. The organizational structure defines the authority relationships among individuals within an organization.

The vision, mission, policy, objectives, goals, and strategies are communicated to various layers of management and operational personnel who will execute these planned courses of action.

It’s essential that everyone in the organization understands the organization’s intentions in the same manner to ensure united concerted action leads to the desired organizational outcomes.

Tasks such as creating departments, delegating authority, motivating employees, coordinating activities, assigning roles, providing directives, evaluating performance, creating strategic and operating plans, and exercising control, among other management functions, all rely on communication. Thus, communication permeates every aspect of organizational management.

Supply Chain Management

The successful operation of business organizations depends on two fundamental functions: the supply of inputs and the distribution of outputs. These functions are interrelated and should be maintained consistently. Supply chain management encompasses these inbound and outbound functions.

The supply chain encompasses a longer channel, stretching from raw materials to components to final products that are delivered to end consumers (Kotler and Armstrong).

Tasks such as information processing, order processing, inventory management, transportation, and contracting require extensive information exchange and dialogue with suppliers and distributors. Business communication serves as the central tool for efficiently managing these tasks in a systematic manner.

Relationship Marketing

Marketing involves the process of creating and exchanging products and value through social and managerial activities to meet individuals’ and groups’ needs and wants (Kotler and Armstrong: 2001:6).

Relationship marketing involves creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders (Kotler and Armstrong).

To achieve success in relationship marketing, the interplay of the 4 Ps of marketing (product, price, place, and promotion) is crucial. Information sharing and exchange through a network are essential components of successful relationship marketing, and business communication plays a vital role in achieving this objective.

International Trade

International trade is a vital area of business communication. It involves the exchange of goods and services between two sovereign countries, typically through imports and exports.

Business people from different countries establish contact, exchange messages, build relationships, enter into contracts, and engage in the buying and selling of products. In some cases, companies directly sell goods to consumers by opening foreign branches or sales centers.

Communication serves as the means by which individuals establish a mutually understood meaning of business messages, motivating them to engage in the buying and selling of goods and services. Additionally, communication informs, motivates, and convinces customers or consumers in foreign countries to purchase products from international traders through various communication channels.

Public Relations

Business organizations must maintain relations with various publics, as defined by Philip Kotler and Gary Armstrong (200.1:92). Public refers to any group with an actual or potential interest in or impact on an organization’s ability to achieve its objectives.

Public relations involve presenting a positive image of an organization to the public, especially through providing information. It encompasses building good relations with various publics by obtaining favorable publicity, enhancing the corporate image, and addressing unfavorable rumors, stories, and events.

Publics include financial entities, media outlets, government agencies, consumer organizations, environmental groups, minority groups, local residents, and internal personnel. Developing and maintaining favorable relationships with the public requires various types of information and strategies, and effective public relations rely on communication. Press relations, product publicity, corporate communications, lobbying, and public service are major tools of public relations that are impossible to execute without communication.

Commerce and Trade

Commerce involves activities performed to overcome obstacles in conducting business, including insurance, transportation, banking, warehousing, and communication.

These activities improve business performance by eliminating barriers related to time, finance, risk, and distance between businesses and customers. Trade involves buying and selling goods and services, typically by developing relationships with consumers.

Communication is the means by which these activities are executed and maintained to promote business. Therefore, commerce and trade fall within the purview of business communication.

Social Responsibility

Social responsibility refers to an organization’s obligation to engage in actions that protect and improve society’s welfare, alongside its own interests. The growing interdependency between businesses and communities has created common interests between them, necessitating businesses to engage in socially and ethically responsible activities.

This entails developing codes of social responsibility within the organization, training employees to implement these codes, and establishing a close link between business and society to understand social demands and requirements.

Communication is the tool used by management to develop, train, and execute these codes both within and outside the organization. Consequently, business and communication are inseparable.

Purposes of Business Communication

Business communication is a process of exchanging information, ideas, thoughts, facts, and concepts related to business activities to achieve mutual understanding and meaning of such messages for the organization’s goals.

It is directed toward accomplishing specific business purposes and is applicable to both internal and external business communications.

Therefore, all business communication serves business-oriented goals.

According to Lehman and DuFrene (1999), people generally communicate for three basic purposes: to inform, to persuade, and to entertain. However, business communication has additional objectives:

To Establish a Common Understanding of a Message

Business communication aims to transmit a mutually understood meaning of a message from the sender to the receiver. This common understanding forms the foundation for developing interdependent relationships between businessmen for conducting business or promoting their business interests. Thus, the primary purpose of business communication is to achieve a shared meaning of exchanged messages among individuals engaged in business.

To Exchange Business Messages

Business communication strives to facilitate the exchange of business messages between businessmen or business enterprises. Messages may contain information, ideas, concepts, views, or anything intended to communicate and execute a business plan. This message exchange can occur within a business organization or between different organizations. Regardless of the context, the goal is to exchange information or messages among people to achieve business objectives.

To Implement Changes

Change is inevitable in every business organization, but it is often met with resistance. To effect change within an organization, individuals must be informed and convinced to accept the change. This is achieved by providing favorable information about the risks and opportunities associated with the change. Communication is directed at bringing about changes in the functioning of a business organization, eliminating resistance, and making change acceptable to employees.

To Manage the Organization

Effective management of organizations requires planning, organizing, leading, and controlling organizational resources. Human resources are particularly critical as they activate other resources. An organization comprises role-related individuals with a common goal. Communication serves as the binding and leading tool that directs and coordinates group efforts into a concerted manner, enabling tasks to be accomplished through others. This makes effective management possible, and business communication plays a vital role in achieving this objective.

To Establish and Maintain Relations

A core objective of business communication is to establish and maintain relations with key actors in the business environment. The business environment significantly impacts business activities and acts as the context within which businesses operate. Key relationships, such as supply-chain relations, customer relations, public relations, and human relations, are essential for the smooth operation and success of a business. Business communication aims to develop and maintain positive human relations to create a favorable environment for the business.

To Create a Positive Image

The market is the battleground for businesses, and success depends on the market’s acceptance of the organization and its products. To create a positive organizational image in the market, a deliberate program is needed. Business communication is aimed at building and promoting such a reputation and image by circulating various communication materials that enhance the organization’s image among the public.

To Facilitate Joint Ventures

Joint ventures are increasingly common, particularly in the era of globalization. Collaboration between foreign and national organizations is essential for economic development. Initiating, negotiating, contracting, supervising construction, and operating joint ventures all involve extensive communication. Therefore, business communication plays a crucial role in facilitating the establishment of joint ventures.

To Boost Employee Morale

Employee morale, characterized by job satisfaction, team spirit, enthusiasm, and resistance to frustration, is essential within an organization. It is nurtured through the systematic instillation of ethics and a code of conduct among organization members. Business communication aims to boost employee morale through various communication programs.

To Enforce Discipline

Discipline is fundamental to maintaining order within an organization. Employees must be informed and trained in disciplinary codes, and appropriate actions, such as warnings, must be communicated when rules and regulations are violated. Business communication serves the purpose of disciplining people within the organization to establish consistency in behavior.

To Provide Counseling

Counseling is crucial for guiding individuals on issues such as retirement, alternative job selection, relieving frustration, career adjustment, and adapting to new environments. These situations can lead to psychological and social issues, potentially resulting in mental health problems. Communication is intended to provide industrial counseling to help individuals navigate these challenging situations.

Functions of Business Communication

Business is communication. Communication is the essence of an organization. The whole operation of the organization goes on through communication.

Communication is the building block of the organization. Business communication establishes links between and among inside and outside clients or customers. Obviously, it does tremendous service to men, society, and civilization.

Thayer (1968), Conrad (1985: 7-15), Gamble and Gamble (1996: 17-18), and other experts have mentioned various types of functions that communication performs in business organizations. The following is the discussion of integrated functions of business communication:

Information Function

Organizations need and process two kinds of information: external and internal. The information function of business communication encompasses all activities from conception to the use of information.

External information is sent and received to enable the organization to advertise its products or services, maintain its image in the community, and adapt its policy to the ever-changing pressures of its environment. Internal information provides the basis for determining the organization’s goals, assessing its own performance, and coordinating its individual subunits. Information exchange is the only means that an organization has to transmit expectations and requirements to the subunits and to get feedback from the working units about their performance.

Thus, the information function of an organization is critical. Problems occur when errors are introduced in the information exchange.

Command and Instruction Function

The command and instruction function of organizational communication is the primary means that managers use to keep their organizational units working toward the organization’s goals.

Commands and instructions help people stay within the organization’s policy and do their jobs well. If given correctly, commands and instructions minimize errors. Moreover, commands and instructions coordinate the individual workers so that their efforts integrate smoothly.

Influence and Persuasion Function

Organizations must use the influence and persuasion function of business communication to exercise certain kinds of control over the behavior of individual members.

Managers use motivational measures to influence and persuade people to commit their excellence and talents to the achievement of organizational goals effectively.

This action is done through various means of communication to direct them towards the desired goal of productivity, achievement, and targets within the stipulated time and resource.

Integration and Maintenance Function

This function of organizational communication aims to accomplish five goals:

  1. To keep the organization in operation. This is done by maintaining a good supply-chain management.
  2. To keep organization members going through channels. Otherwise, the individuals at the center of the organization’s networks are unable to process all the information.
  3. To sort and cross-reference the organization’s data. Without this activity, the organization could not continue to function.
  4. To relate the various parts of the organization to the whole and to the contexts in which they must work.
  5. To confirm the individual members and the organization. People need to believe that what they do is important, and that others respect their organization. Thus, it’s important that the organization’s communication system reinforces the employee’s sense of self-worth. Moreover, it is important to reassure employees that the organization is a good one. Otherwise, the individual members may begin to drift away to other organizations.

Understanding and Insight Function

Communication performs this key function of self-other understanding. When you get to know another person, you also get to know yourself, and when you get to know yourself, you learn how others affect you. In other words, we depend on communication to develop self-awareness.

Hora (1967) said, “To understand himself, man needs to be understood by another. To be understood by another, he needs to understand the other.” Interpersonal, small-group, and public communications offer us numerous opportunities for self-other discovery.

Through communication encounters, we are able to learn why we are trusting or untrusting, whether we can make our thoughts and feelings clear, under what conditions we have the power to influence, and whether we can effectively make decisions and resolve conflicts and problems.

Relation Function

Communication serves the function of building meaningful relationships between individuals and groups. It is through effective relationships that our basic physical and social needs are met.

We need other people as we need water. If we are cut off from human contact, we become disoriented and maladjusted, and our life itself may be placed in jeopardy.

Communication offers each of us the chance to satisfy our need for inclusion, control, and affection. It also gives us the chance to share our own reality with people from our own culture as well as people from different cultures.

Thus, customer relations, public relations, employee relations, industrial relations, international relations, social relations, and other types of relationships are built with communication.

Business operates smoothly by developing and maintaining all these relationships. Therefore, communication performs the function of building meaningful relationships with all other people within and outside the organization.

Ambiguity-Management Function

Ambiguity is the state of having more than one possible meaning of a message. It is a word or statement that can be interpreted in more than one way. It also indicates the state of being confused and difficult to explain because it involves many different factors in a particular issue. Communication channels information or a message in a concrete and clear manner to the other party.

It explains and interprets the message in a commonly understood meaning. It makes talking, listening, and writing simple, clear, and easily understandable with programmed action on language, context, encoding, decoding, and media.

It also informs about the noise factors interrupting the communication that helps make communication effective.

Moreover, various communication devices, forms, structures, rules, etc., are developed to avoid ambiguity in organizational communication. These activities are ambiguity-management functions of communication that create an effective communication environment.

Importance of Business Communication

Communication is the lifeblood of business. Without communication, there cannot be any business. No business can develop and sustain in the absence of effective internal and external communication. Communication is also an integral process of the management functions itself.

A number of writers (Melcher and Beller, 1957; Timber, 1967, etc.) have treated the interdependence of managerial effectiveness and communication. The following discussion of its roles will make the importance of business communication clear:

Linking Pin

Business communication links together the people in the organization to achieve the common purposes of business organizations.

It binds them together as a concerted team and acts as the linking pin among them to work as a social unit. It also establishes a consistent relationship with various work units of the organization and ensures equality in the pace of their performance and progress.

Promotion of Managerial Efficiency

Managers perform certain roles to maximize the use of organizational scarce resources (Mintzberg, 1975). These roles are interpersonal roles, informational roles, and decisional roles. We know that a role is the expected behavior of a person in a position or status by others. Roles are performed through communication.

The performance of managerial roles is also executed through communication. Thus, communication efficiency will obviously promote managerial efficiency, which will lead the organization to success.

Leadership Execution

Leadership is the process of directing and influencing a group of people toward organizational goals. It requires communication to exert influence or to direct the workforce so that they can understand the view of the leadership and act accordingly.

All misunderstandings and confusions among people about organizational matters as well as the directives, have to be rectified for the smooth functioning of the organization. Employees must also understand and accept the motivational programs.

They are to be convinced with information about the justification of the motivational schemes. All these tasks of leadership are executed successfully by means of business communication.

Investigation and Research

The investigation is a general phenomenon of organizational management. Many matters are required to be uncovered through investigation to make appropriate decisions.

Research is done to explore opportunities and identify threats in the external environment to develop the right strategy for organizational sustainability and prosperity in the competitive market. Communication is the only means that helps management in doing such activities.

Business Promotion

Promotion is a strategic function that develops an image, information, and loyalty in the market and expands the market for the product of the organization.

It involves advertising, personal selling, sales promotion, publicity, and public relations. Business communication executes all these functions related to business promotion.


Negotiation is regularly done with vendors, channel members, trade unions, small groups, and other interested parties to make contracts or to settle differences.

The success of negotiation is very much dependent upon communication skills, as the whole process of negotiation is nothing but communication. The actions of talking, listening, persuading, informing, coercing, contracting, forcing, and other corroborating activities are done with the help of communication.

Performance of Managerial Functions

Managers perform the functions of planning, organizing, leading, and controlling.

They make plans based on past and future information, staff positions with the right people through recruitment and selection, delegate authority, set spans of control, coordinate activities, lead people, and control them with various tools and techniques.

These functions are performed through communicating with people working in various positions in the organization.

External forces are also connected with the organization through communication. Therefore, communication is the inevitable resource for the execution of managerial functions.

Promotion of Innovation

Innovation is a new idea applied to initiating or improving a process, product, or service. It gives a new dimensional use of the existing product or process. Innovation gives a competitive edge in the market. Employees are a vital source of innovation.

Therefore, organizations encourage people to contribute to innovation through the process of communication.

Promotion of Collaboration

Joint ventures, strategic alliances, mergers, pools, etc., are the demands of the day. Globalization makes these actions more essential for the survival of a firm in the increasingly free economy.

The exchange of information, ideas, and mutuality are the basics for developing favorable interactions to promote collaborative ventures between or among firms of the same country or of different countries worldwide. Business communication promotes these collaborative activities through its relational function.

Bringing Change

Change is inevitable in every organization. However, people generally resist change due to many rational or irrational reasons.

So, bringing change in the organization requires a lot of activities to neutralize resistance. Change management uses many fruitful techniques to influence people to accept changes. All these techniques are communication-based.

Therefore, no change can occur without communication.