Internal and External Communication

There are many different types of communication that take place within business units, all of which are crucial to operations. Communication is important firstly to make internal processes run as smoothly as possible. In addition, significant communication takes place with outside organisations and partners. Let's take a look and find out more about why communication is so important.

Internal and External Communication Internal and External Communication

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Table of contents

    Internal and external communication definition

    Internal and external are terms used to describe different aspects of a business. Internal refers to things that happen within the company, such as employee interactions, while external refers to things that happen outside the company, such as interactions with customers or suppliers.

    Effective communication improves business efficiency. The exchange of information between individuals or groups, either within the business (internal) or outside the business (external) is called communication.

    Communication is the exchange of thoughts between two individuals.

    Internal and external communication are the processes of exchanging information and messages within or outside of the business.

    Internal communication is the process of exchanging information within a business, while external communication is the process of exchanging information between a business and its external stakeholders, such as customers, suppliers, or investors.

    For example, if a business wants to communicate a change in its product offering to its employees, it would use internal communication methods such as a staff meeting or an email. On the other hand, if the business wants to promote the new product to customers, it would use external communication methods such as social media ads or a press release.

    Types of communication

    There are several types of communication, all of which are used in business on a daily basis. These are:

    1. Internal communication happens among employees of the same business.

    2. External communication happens between employees of a company and external entities (employees of another business, customers, external stakeholders, etc.).

    3. Vertical communications: in hierarchical businesses, if a message is communicated from a higher level to a lower level or vice versa, this is called vertical communication.

    4. Horizontal communication is communication between the same levels of a hierarchy.

    5. Formal communication refers to the official messages and statements sent by an organization.

    6. Informal communication is the casual conversation that happens between colleagues or unofficial conversation for which the organization is not liable.

    Another aspect of communication is one-way and two-way communication. In two-way communication, the receiver can respond to the message from the sender, while in one-way communication, the receiver cannot reply.

    It's important to note that these types of communication are not mutually exclusive and often overlap with one another. For example, formal communication can be both vertical and internal, as it involves structured communication between different levels of the organization.

    Types of internal communication

    Types of internal communication include:

    • Leadership communication: This involves structured and unstructured communication between leaders and their followers within the organization. It can take many forms, such as speeches, newsletters, and personal interactions.
    • Vertical communication: This involves structured and patterned communication between employees on different levels of the organization, including both upward and downward communication.
    • Top-down or downward communication which flows from the upper management levels to the lower levels of the organization. It can be in the form of policies, directives, or decisions.
    • Bottom-up or upward communication which flows from the lower levels of the organization to the upper management levels. It can be in the form of feedback, suggestions, or concerns.
    • Horizontal communication: This involves communication between individuals or groups at the same level of the organization hierarchy, and it promotes collaboration, teamwork, and the sharing of ideas and information.
    • Diagonal communication: This involves communication between individuals or groups in different departments or areas of the organization, who are not part of each other's regular reporting structures. It promotes cross-functional collaboration and problem-solving.
    • Grapevine communication: This involves communication through informal channels, such as rumours and gossip. It can be difficult to control and can sometimes be detrimental to the organization's goals and objectives.

    Internal communication can also be formal or informal.

    Types of external communication

    External communication can be categorised into the following types:

    • Advertising: communicating the benefits and features of a product or service to potential customers through various channels such as television, online media, radio, and print.
    • Public relations: This involves managing the image and reputation of the organization through communication with various stakeholders, such as customers, investors, and the media.
    • Customer service: This involves responding to customer inquiries and complaints.
    • Personal selling: This involves face-to-face communication between the organization's representative and the customer to persuade them to buy the product or service.
    • Corporate communication: This involves communicating with various stakeholders about the organization's mission, values, and goals, as well as providing updates on company performance and initiatives.

    Importance of internal communication

    Internal communication may vary from a single email sent by management explaining a new policy, to a general meeting, or a team meeting to decide changes in a product. Internal communication is necessary to:

    1. Keep employees well-informed - Organisations must communicate employees' exact roles and duties for an organization to achieve a common goal. Workers like to know about the plans of the organization and do not like to be kept in the dark.

    2. Provide holistic view to employees - News about achievements or problems faced by different departments is shared with employees so they can know the reasons behind changes to the company. This increases interdepartmental efficiency.

    3. Set an organizational structure - Regular communication between employees provides the same knowledge and value across departments. When done properly, this cultivates an organizational culture of trust.

    4. Create a platform for feedback - Internal communication allows employees to provide feedback, discuss an issue, or contradict opinions. Two-way communication is necessary for the improvement of product or business processes.

    Importance of external communication

    Organizations have to communicate with customers, suppliers, government agencies, and many others on a daily basis. Communication with outside organizations is, as the name suggests, external communication. This serves the following purposes:

    1. Communicating information: Businesses communicate about news, new contracts, or developments with external stakeholders.
    2. Branding: Proper external communication is important for image building. All channels should follow a proper strategy to create uniform branding and image.
    3. Potential customers: Businesses communicate with potential customers via emails, social media, or advertising. External communication must clearly communicate a unique selling proposition to customers.

    Both types of communication play a very important role in the efficiency and branding of the business.

    Internal communication examples

    Examples of internal communication include:

    • E-mail correspondence: This may include updates within teams working on the same project, communication from the HR department to employees, or important communication about the company’s future from the CEO. Many companies now use integrated software for email communication, work planning, and coordination. Some examples of this software include Microsoft Office and Google Office suites.
    • Team meetings: Daily team meetings to catch up on the work everyone is doing are common in many companies. Some companies have a long tradition of general meetings, called ‘Town halls’ in startup vocabulary.
    • Oral communication: A formal discussion about work planning between two employees may be oral, but it holds the same importance as written communication. For example, a restaurant manager informs the waiter to clean a table in the far corner of the dining area.

    External communication examples

    Examples of external communication include:

    • Email and newsletters: Many companies communicate regularly with customers via emails or newsletters subscriptions. These emails can be informative and do not always sell something. For example, Sainsbury’s provides information about healthy eating habits to their customers.
    • Social media: Social media is a new-age external communication medium. Many organizations find it helpful to use social media platforms like Facebook, Twitter, Instagram, etc. for communicating as well as for gathering feedback from their customers. For example, A make-up brand launching a new product can do market research on young adults using organic products via social media.
    • Press releases: Companies use press releases as a form of external communication to reach out to stakeholders via an official statement. For example, they can declare news of the merger of two brands via press releases.

    Internal and external communication strategies

    Internal and external communication go hand in hand. When a business conveys something internally to its employees, it does not come as a shock to employees when conveyed externally. Also, employees may reflect positively about the information in the external world.

    The combined internal and external plan to achieve a common aim is known as a communication strategy.

    How do you create the best internal communication strategy?

    1. Involve employees
    2. Review current strategy
    3. Set realistic goals and timeline
    4. Track success using key performance indicators
    5. Proofread communication before sending it out to avoid confusion
    6. Use internal communication tools like Slack or Microsoft teams for fast communication.

    Examples of successful internal communication strategies

    TED: Average human attention span is 15 to 18 minutes. Hence, all TED meetings are maximum of 18 minutes.

    Netflix: Netflix has an internal communication strategy of a small online meeting between board members and management in which quick questions are discussed and stored for later.

    Amazon: Amazon provides information to their employees in messages less than 100 words, as people do not tend to read emails longer than 100 words.

    How do you create the best external communication strategy?

    1. Define objectives and mission statement
    2. Know your audience
    3. Deliver value
    4. Choose a platform for communication
    5. Involve employees and customers
    6. Go online with an internal communication strategy
    7. Track success.

    Examples of successful external communication strategies:

    Newsletter subscription from Tesco: Tesco supermarkets share information about running discounts on different groceries.

    Use of Twitter by Elon Musk: Elon Musk created a huge increase in businesses when he tweeted that Tesla would accept Bitcoin as payment.

    Press release: energy companies in the UK informed customers via a media release that energy prices will increase in 2022 by around 50%.

    Communication is essential for all businesses as it improves project performance, delivers values, and improves employee and customer relations. Businesses can choose from a number of plans to improve both internal and external communication, thereby bettering the overall efficiency of the business.

    Internal and external communication - Key takeaways

    • Communication is the exchange of thoughts between two individuals.
    • Effective communication improves business efficiency.
    • Internal communication happens between the employees of the same business.
    • Examples of internal communication include e-mails, team meetings, or oral communication.
    • External communication happens between employees and external entities (employees of another business, a customer, external stakeholders, etc.).
    • Examples of external communication include e-mails and newsletters, social media, or press releases.
    • Internal and external communication strategies go hand in hand.
    • Types of internal communication include leadership communication, vertical communication, horizontal communication, diagonal communication, top-down communication, bottom-up communication, grapevine communication
    • Types of external communication include advertising, public relations, personal selling, customer service, and corporate communication.
    Frequently Asked Questions about Internal and External Communication

    What is internal communication?

    Internal communication happens among employees of the same business.

    What are the differences between internal and external communication?

    Internal communication is the process of exchanging information and messages within a business, while external communication is the process of exchanging information and messages between a business and its external stakeholders, such as customers, suppliers, or investors. 


    Both types of communication help businesses achieve their goals. Internal communication allows organizations to function and operate efficiently, while external communication helps them reach new customers, or receive feedback on the quality of their products.

    What is the importance of internal and external communication? 

    Internal communication is important to keep employees well-informed, provide a holistic view to employees, set an organisational structure, and create a platform for feedback.


    External communication is important for communicating information, branding, and potential customers. 

    What are the strategies for internal and external communication? 

    Internal communication strategies include:


    1. Involve employees
    2. Review current strategy
    3. Set realistic goals and timeline
    4. Track success using key performance indicators
    5. Proofread communication before sending it out to avoid confusion
    6. Use internal communication tools like Slack or Microsoft Teams for fast communication.


    External communication strategies include:


    1. Define objectives and mission statement
    2. Know your audience
    3. Deliver value
    4. Choose a platform for communication
    5. Involve employees and customers
    6. Go online with internal communication strategy
    7. Track success.

    What are some examples of Internal and external communication? 

    Examples of internal communication include E-mail correspondence, team meetings, and oral meetings.


    Examples of external communication include email and newsletters, and social media.

    What does it mean 'internal' and 'external' in business?

    Internal and external are terms used to describe different aspects of a business. Internal refers to things that happen within the company, such as employee interactions, while external refers to things that happen outside the company, such as interactions with customers or suppliers.

    What is external communication?

    External communication is the process of exchanging information between a business and its external stakeholders, such as customers, suppliers, or investors.

    Test your knowledge with multiple choice flashcards

    Which of the following is NOT a type of communication?

    Social media is an example of ____ communication.

    Email communication is an example of ______communication.

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