Types of Business Communication based on Parties Involved

Types of Business Communication based on Parties Involved

Business Communication based on parties involved:

Business Communication is mainly two types on the basis of parties involved in the communication process. These are internal communication and external communication.

Internal communication: Internal communication refers to the flow of information to the internal participants of an organization. It happens only within the organization. The main purpose of this communication is to ensure smooth functioning of organizational activities. Internal communication may be of two types: vertical communication and horizontal communication.

(i) Vertical communication: When information flows between superiors and subordinates of an organization, it is known as vertical communication. Vertical communication can be of three types: downward communication, upward communication and diagonal communication

  • Downward consummation: Downward consummation occurs when information flows from superior to subordinates. Through downward communication, superior send organizational goals, plans, policies, job assignments, orders, instructions etc. to their subordinates.
  • Upward communication: Upward communication occurs when information flows from subordinates to superior. Though upward communication, subordinates convey their responses, reactions and performance feedback to their superiors
  • Diagonal / Cross communication: Diagonal / Cross communication occurs when information flows between persons at different levels who have no direct reporting relationships. Diagonal communication is used to speed information flow, to improve understanding and to coordinate efforts for the achievement of organizational goals.

(ii) Horizontal communication: When information flows among persons holding the same position or rank in the organization, it is called horizontal communication.


External communication: When an organization communicates with external or outside parties, it is called external communication. External parties include customers, suppliers, investors, bankers, insurance companies, government agencies, local communities etc. The main purpose of external communication is to exchange information with the outside parties.