What is Business Communication, and Why is it Important?

  • By Neha Siddhwani
  • 20 March 2023
business communication importance

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As human beings, we all live in communities and must communicate with each other. Communication plays a vital role in our everyday existence, as it is essential for living in a civilised society. Through communication, we gain knowledge about the world and the people around us, and without it, we would be lost.

In the business world, effective communication is the link that connects individuals, organisations, and nations. It can have a significant impact on achieving professional objectives, from job seekers to politicians. Moreover, business communication skills taught in the general MBA program are not only useful in professional settings but also in our personal lives, where they can be applied in unexpected ways.

In this blog, we will first take a peek at the business communication introduction, including the detailed meaning of business communication. We will also explore the importance of business communication and its types. 

What is Business Communication: Business Communication Definition

Business communication is the transfer of information within and outside a company. It involves creating, sharing, comprehending and responding to messages among various individuals through verbal and written mediums. The curriculum of an MBA degree includes the features of business communication, which can also be seen in the following:

  • Proposing novel business ideas
  • Developing plans and submitting proposals (business writing)
  • Implementing decisions
  • Negotiating and finalising agreements
  • Sending and fulfilling orders
  • Achieving successful sales
  • Conducting productive meetings
  • Offering constructive feedback to both employees and customers.

Importance of Business Communication

  • Improve employee productivity: Efficient communication within a business is crucial for enhancing staff efficiency. By communicating plans, policies, critical issues, and organisational goals, employees' productivity is improved, making them more efficient in completing tasks effectively.
  • Enhance business partnerships: Effective business communication also strengthens partnerships in business. A positive and cooperative relationship with other businesses is essential for the continued success of an organisation.
  • Encourage business innovation: The concept of business communication encourages innovation as it enables employees to express their ideas and suggestions openly. Courses such as MBA in business analytics may elaborate on the principles related to launching new products in the market by ensuring the performance of the sales team, market acceptance of the product, and timely delivery.
  • Implementation of plans and policies: Managers need to communicate policies and plans throughout the organisation in order to implement them on time. Effective communication ensures that plans and policies are disseminated to internal and external stakeholders.
  • Facilitate decision-making: Making informed decisions requires current information. Managers can gather information from various sources through effective communication and use it to make sound decisions.
  • Minimises likelihood of conflicts: Effective communication enables a smooth exchange of information between different parties involved in a business, resulting in fewer conflicts, controversies, and arguments.
  • Boosts employee satisfaction: Fair and smooth communication establishes better mutual understanding and bonding between employees and management, leading to increased employee satisfaction. This, in turn, encourages employees to give their best efforts towards achieving goals.
  • Improves managerial efficiency and leadership: Effective business communication enhances the operational efficiency of managers. With the help of clear communication, managers can carry out different managerial functions like planning, directing, organising, and controlling smoothly, which ultimately leads to effective leadership.
  • Ensures smooth functioning of different departments: If information is shared smoothly and effectively among inter-departments and intra-departments, different departments of a business, such as accounts, finance, purchase, operations, HR, IT, and production, can perform their tasks more accurately and timely. 

(Also Read: Importance of Soft Skills in Business)

Types of Business Communication 

  • Upward Internal Communication

Upward Internal Business Communication refers to the exchange of information from subordinates to higher-level managers in the organisational hierarchy. Leaders should facilitate information flow from lower-level employees to gain a comprehensive understanding of the company's operations.

This type of communication can take the form of surveys, feedback, forms, and reports, which employees deliver to their managers or team leaders. For instance, a marketing report may contain statistics on total website visitors, social media engagement, or total leads generated.

  • Downward Internal Communication

Downward internal communication is one of the most crucial factors in a business operating environment. It flows from superiors to one or more subordinates and is often in the form of a letter, a memo, or a verbal directive. While drafting or outlining a downward communication, leaders should maintain professionalism and clarity. For example, a memorandum outlining new company operations procedures, such as safety requirements and regulations, is a downward communication. 

  • Lateral Internal Communication

Lateral internal business communication takes place among employees within the workplace. Employees can communicate through various channels such as chats, messaging, email, and communication software solutions. 

This communication can occur within or among departments and is more frequent than other types of business communication. Regular communication among employees plays a vital role in enhancing employee engagement and productivity.

  • External Communication

External business communication refers to any communication that takes place with parties outside the organisation, such as customers, prospects, vendors, or partners. Different from internal business communication, external communication occurs less regularly.


Operating a business demands greater expertise beyond numerical understanding. To become a proficient manager, one needs to possess management, communication, and technological skills that can be acquired by pursuing a Master of Business Administration or MBA degree

Sunstone, a leading higher education service provider, offers an MBA program at several campuses throughout India. Our platform delivers assistance for admission, job placement, financial aid, industry-tailored career options, and other valuable resources to students.

FAQ - Business Communication

What is agenda in business communication?

An agenda is nothing but a concise list of topics that need to be covered during a meeting or discussion. An agenda is often referred to as a calendar. 

Why is communication important in business?

Communication is important to build connections among individuals, colleagues, and the business. Without a bridge of communication, day-to-day operations may become difficult to carry out. 

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