4 Main Types of Business Communication

4 Main Types of Business Communication

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Syed Aquib Ur
Syed Aquib Ur Rahman
Assistant Manager
Updated on May 13, 2024 18:30 IST

Explore the four broad types of business communication that occur within an organisation and externally. Why because, communication is the foundation of any successful venture. It enables companies to establish and maintain relationships with customers, suppliers, and stakeholders and ensure everyone is aware of goals, expectations, and outcomes. 


The business environment is always dynamic. That’s why various types of business communication play a critical role in achieving organisational objectives. 

Today, we will explore the four types of business communication, upward, downward, lateral, and external, and provide examples. Do read up on the fundamentals of business communication before reading further.

Here are the four main types of business communication. 

Upward Communication

This method of business communication refers to the flow of information from lower-level employees to higher-level employees. It involves providing feedback, suggestions, and ideas to management. This type of communication is important as it ensures that the organisation is aware of employee concerns, needs, and ideas.

Let’s say, you work as a customer service representative in a company, receiving a high volume of customer complaints about a particular product. 

You email your manager outlining the issue and suggesting a possible solution to improve customer satisfaction. This email is an example of upward communication.

Pros of Upward Communication 

  1. Upward communication creates better workplace environment as communication flow is given importance from the ground up. An employee at any level feels valued and that satisfies their need for belongingness
  2. In organisations, the top level management can implement changes that are suggested by employees and that builds trust and reduces employee attrition. 

Cons of Upward Communcation

  1. One of the biggest challenges is how information from low level management can disrupt organisational structures with tall hierarchies. Especially those which follow autocratic leadership style
  2. Upward communication may not benefit an organisation when the manager is unwilling or dismissive of their teams or some individuals. 

Downward Communication

Downward communication is the flow of information from higher-level employees to lower-level employees. It involves communicating company policies, goals, objectives, and performance expectations. 

This type of communication in business is important as it ensures that employees are aware of their roles and responsibilities and are working towards achieving organisational goals.

Suppose, you work as a manager in a company, and you need to inform your team about a new policy that affects their work. You schedule a meeting and give a presentation outlining the details of the policy, its impact, and how it affects their work. This presentation is an example of downward communication method.

Pros of Downward Communication 

  1. This type of business communication is useful for effective delegation. When done right, it creates a sense of responsibility among members as they can find deeper meaning in their work. 
  2. Downward communication is essential in large organisations. Employees get less confused with their tasks and they feel less less burdened. 

Cons of Downward Communication 

  1. Downward communication only works better when there is less criticism and the managers also recognises the efforts the employee puts in. 
  2. This form of communication can also lead to too much micromanaging, which is sometimes synonymously adopted for the controlling function of management

Lateral Communication

Lateral communication is the flow of information between employees at the same level in the organisation. It involves sharing information, ideas, and opinions to achieve a common goal. This type of communication is important as it promotes teamwork, collaboration, and innovation.

Imagine you work in a project team in a company, and you need to coordinate with your colleagues to ensure that the project is completed on time. You create a group chat and share updates, progress reports, and feedback on the project. This group chat is an example of lateral communication.

Pros of Lateral Communication

  1. Sharing ideas and expertise freely across departments can lead to more creative solutions and faster innovation.
  2. Decision-making is faster as cross-team collaboration and reporting become more streamlined. 

Cons of Lateral Communication

  1. If conflict management is not taken care of properly, lateral communication can push individual employees into siloes, which again does not benefit productivity.
  2. Unchecked lateral communication sometimes can lead to information overload, and can cause confusion. 

External Communication

External communication refers to the flow of information between the company and external parties, such as customers, suppliers, and stakeholders. It involves communicating the company’s products, services, and values to the public. This type of communication is important as it helps to build the company’s brand, reputation, and customer loyalty.

Let’s take an example of this business communication method. 

Think as you work in the marketing department of a company, and you need to promote a new product to potential customers. You create a social media campaign to raise awareness about the product, including eye-catching graphics, catchy slogans, and interactive content. This social media campaign is an example of external communication.

Pros of External Communication

  1. Effective communication with customers fosters loyalty, builds trust, and encourages engagement with your products or services.
  2. Communicating the vision, strategy, and financial health can attract investors and potential business partners.

Cons of External Communciation

  1. Sharing sensitive information externally requires strong security measures to prevent data breaches or leaks.
  2. Inaccurate or unclear communication can lead to confusion or misunderstandings with external audiences.

Parting Thoughts

Upward, downward, lateral, and external communication all play critical roles in ensuring that everyone in the organisation is on the same page and working towards a common goal. 

Make sure to check out business communication courses.

About the Author
Syed Aquib Ur Rahman
Assistant Manager

Aquib is a seasoned wordsmith, having penned countless blogs for Indian and international brands. These days, he's all about digital marketing and core management subjects - not to mention his unwavering commitment ... Read Full Bio