External Business Communications

External Business Communications refer to the methods and strategies organizations use to convey information to parties outside of their internal structure. This includes communication with customers, suppliers, investors, and the public, and can take various forms such as emails, press releases, social media posts, reports, and promotional materials. The effectiveness of external communications is crucial for building and maintaining relationships, enhancing brand reputation, and engaging stakeholders.

Key elements of external business communications involve clear messaging, understanding the audience's needs, and selecting appropriate channels for delivery. Additionally, organizations must be mindful of cultural nuances and diversity when crafting their communications to ensure inclusivity and respect for different perspectives. Effective external communication can also influence public perception and drive business success. As businesses navigate an increasingly interconnected world, mastering external communications is essential for fostering trust and collaboration with external partners.

Published in: 2021

By: Scott Zimmer, JD

Subject Terms

External Business Communications

Last reviewed: February 2017

Abstract

External business communications are the activities through which a company transmits information generated within the company to one or more constituencies outside of the company. Information can be transmitted in this way to a wide variety of constituencies, from customers and shareholders to industry regulators and even business competitors. Some communications are made deliberately, but some become external inadvertently, such as confidential information that is leaked to outside sources. Most information, however, is distributed deliberately with the purpose of improving the company’s position in some way.

Overview

Business communication is often categorized based on what parts of the company the communication concerns, and the most important factor in making this determination is the boundary between what goes on inside the company and what occurs outside of company control. “Internal communication” is the term used to describe all of the information exchanges that occur within the firm, and includes types of communication such as employee training, interoffice memos and presentations, and office coordination activities—ordering office supplies, requesting help from the information technology department, and so on. Because these types of information transfer occur inside the company, the company can exercise more control over them, setting rules or establishing official procedures, ensuring that these are followed by everyone, and imposing consequences if they are not followed.

External communication is much less under the company’s control, because it involves all of the ways in which information is communicated by the company to the outside world. Although the company can try to control what information is sent out, it cannot do much to regulate what happens to that information once it is outside the company or how it is interpreted by others. The most that a company can do with regard to external communications is to try to exert influence over information that is released by selecting what information can be released and then phrasing that information in a way that is most beneficial to the company (Rollins & Lewis, 2014).

External business communication is not monolithic—there are many different types and forms that it can take, just as there are numerous audiences at which it may be directed. The different groups that have an interest in learning about a company are known as stakeholders—they have a stake in what happens to the company, either because they own shares of the company, the value of which they would like to see increase, or because they or their friends and relatives work at the company or do business with it (Stoykov, 2007).

Even customers and potential customers are stakeholders. A person who is considering the purchase of an expensive product, for example, would be very interested to hear about whether or not the company that manufactures it is expected to remain in business for the next few years, because this will affect the type of support the purchaser could expect to receive in the event that the product malfunctions.

Corporations are aware of the differing interests of their stakeholders, and when they prepare external communications they craft them to better fit the needs of the group or groups they are targeted at. Advertising messages emphasize the company’s products and the ways they enhance people’s lives, financial reports focus on how the company is positioning itself in order to take advantage of expected conditions in the marketplace, and so on (Waldeck, Durante, Helmuth & Marcia, 2012).

Press Kits. One of the most important external groups that a company can communicate with is made up of representatives of the media. These can include journalists working for newspapers, television stations, or Internet news sites. Some journalists may regularly monitor companies as part of their business and finance coverage, while others will inquire only about unusual events such as a product recall or the release of a much-anticipated product. Still others may be hostile to the corporation due to a conflict between their personal beliefs and the corporation’s real or perceived activities—these journalists may conduct investigative reports intended to reveal information that the company might prefer to keep obscure.

Whatever the motivation of members of the media, corporations seek to manage their communication with them accordingly in an effort to encourage them to provide favorable or at least neutral coverage of the company. One way this is done is by preparing and distributing press kits, which are sets of pre-packaged background information about the company and its products (Miletić & Đurović, 2015). The purpose of a press kit is to make it easier for a journalist to prepare a story about the company, by gathering together basic facts about the firm. Since companies create the press kits themselves, they invariably include the information that will improve their corporate image. When the average person picks up a newspaper or tunes in to a television segment, he or she is often unaware that a significant part of the report is taken directly from the press kit—that is, the company’s own public relations department.

Advertising. Another major component of external business communication is advertising, which involves the company informing customers and potential customers about its products and services, in an effort to encourage them to purchase those products and services, or to improve their opinion about the company. Advertising is vital to the success of most businesses, because people cannot support the company by buying its products if they do not know that those products exist.

Even when consumers are aware of a product, there may be other products that have been developed by competing firms, with which the product must vie for favor—in these situations, advertising is used to explain to consumers why they should choose one product over others. Because the livelihood of a business largely depends on encouraging people to buy what it is selling, and because advertisers have time to carefully craft their advertising to influence customers, advertising is the form of external business communication in which companies invest the most time and attention, spending large portions of their budgets to develop marketing plans and advertising campaigns (Patrutiu-Baltes, 2016).

Financial Reports. In addition to the forms of external communication that a company produces more or less voluntarily, there are some types of information that companies may be required to reveal to the outside world. Often this has to do with the financial state of the company, as government regulations require that certain kinds of data be released periodically, so that investors and those who are considering making an investment can base their decisions off of current performance figures.

In some cases this does not present a problem, apart from the company’s need to expend sufficient resources to collect and organize the information in preparation for its release; this may require hiring accountants and financial analysts to pore over the firm’s balance sheets and create quarterly and annual earnings reports, for example. This is usually the case when the company is performing well, and the news that is to be shared with the public is good. When the news is bad, however, this can have a severe impact on the company and its employees, because it may cause investors to decide to pull their money out of the company by selling their shares, or to avoid purchasing shares in the first place, placing the company in an even more precarious situation (Gerdewal & Seçim, 2014).

Websites. Regardless of the type of information being externally communicated or its intended audience, a company’s website is one of the main tools used to distribute it. In the days before the Internet, company information was primarily distributed in annual reports printed and mailed to investors, and in financial statistics gathered and published by business news outlets and later collected in reference sources which compiled such information from many different firms. The Internet has revolutionized external business communications in the same way that it has affected so many other aspects of modern life.

Instead of having to publish hard copy reports in huge numbers, company information and annual reports can easily be made available online, and delivered worldwide in a matter of seconds instead of days or weeks. There is virtually no limit to the types of company information that a corporation may choose to place on its website, from directories of its officers and staff to detailed research data used to help develop and test its products; for example, a drug manufacturer might use its website to link to copies of the scientific research that establishes that its medicines are safe and effective, in the hope that doing so will increase consumer confidence in the medication and result in higher sales (Shrivastava, 2012).

Lobbying. Some types of external communication are controversial by their very nature, and prominent among these is the practice of lobbying. Lobbying is the practice of meeting with elected representatives and other government officials in an attempt at influencing official policies and legislation to favor the interests of the person or organization doing the lobbying. Many companies, especially large corporations, spend large sums on lobbying each year. Critics of lobbyists argue that corporations’ use of lobbyists and campaign donations results in these entities having an unfair amount of influence, since average citizens lack the resources to lobby for protection of their interests.

Lobbyists and the corporations that employ them respond that all they are really doing is communicating their needs to legislators and that anyone can do the same. Lobbyists explain to government officials the challenges that a company is facing and the government actions that would be most helpful in allowing the corporation to overcome them. Typically, these actions involve the modification or elimination of regulations that restrict how the company can operate, or the provision of tax incentives for the corporation that will make it less costly to conduct its business (Bruyer, Jacobs & Vandendaele, 2016).

Further Insights

In part because businesses must manage their communications with so many different external interest groups, it happens that some types of external communication can interfere with each other. The overall goal of external business communication is always to portray the company in a favorable light, but this means different things to different groups. The company might wish to communicate with environmental groups about how safe its products are for the environment and how much research and development has gone into making sure they do not contaminate the natural world, but when investors hear about this message they may become concerned that too much time and money is being spent on unnecessary, ecofriendly activities. This could have the unintended consequence of causing investors to reconsider their support of the company. Similarly, lobbying often has negative effects on the public’s perception of the company, because some people feel that companies unfairly use their political connections and financial resources to convince legislators to protect them from unfriendly laws and regulations. Companies must therefore be extremely cautious in developing their external communication strategy, so they can attempt to compartmentalize each communication to the greatest degree possible, by using media channels specific to each target audience (Gramatnikovski, Stoilkovska & Serafimovic, 2015).

Discourse

Since the early part of the twenty-first century, social media networks have proliferated and are now many people’s primary source for news and information. Most people in the developed world belong to multiple social networks, and membership in at least one or two is common even in less developed regions. This presents a dilemma for companies seeking to manage their external communications, on at least two levels. First, most companies feel the need to have a presence on the larger social media networks, so that users of those networks can find out about the company, contact the company’s support staff, and stay up to date on new developments.

Just as with any other form of external communication, corporate social media accounts must be carefully managed and integrated into the firm’s overall communication plan. At the same time, employees of the company all belong to their own social networks, and the “inside information” that they have access to by working at the company can therefore be put at risk by even the most innocent of social media posts. This has led corporations to implement strict policies about what may and may not be shared on social media by employees.

At the same time, some companies have realized that their own employees can use social media to help support the company’s activities, by posting about the company’s products and helping to spread enthusiasm about them. Still, even this type of activity must be well thought out, lest it be perceived as contrived or even manipulative; there have been a number of cases where a company tried to get its employees to spread the word about a product while concealing the fact that the company was pressuring them to do so. If and when consumers find out this has occurred, there is often a backlash against so-called astroturfing. The name is derived from the observation that the company is trying to fake a grassroots community (Beckers & Bsat, 2014).

Terms & Concepts

Competitive Advantage: A competitive advantage is any kind of superior position in relation to one’s competitors. Companies in the same market are constantly competing with one another for the same customer base, so they seek to gain any kind of advantage over their rivals that they can. External business communication such as advertising is an important part of this process because it is used to inform customers of the ways in which one company feels that it is better than another.

Marketing Plan: A marketing plan is a detailed description of the various strategies that a company intends to use in order to promote itself, its products, or both. It should describe the target audience of the marketing campaign, the types of media that will be used, and the content of the messaging.

Media Relations: Media relations is a formal function in all but the smallest of companies. It concerns how the company interacts with journalists and the organizations they work for, in order to control what information is released and how it is framed so that the company can be portrayed in the most favorable light. Effective media relations can mean the difference between a company that is the subject of an expose and one that is able to exercise more influence over media coverage of its activities .

Press Kit: A press kit is a set of information products that is prepared by a company for distribution to members of the media, in order to help them report on the activities of a company. It usually contains basic information about the history of the firm and its current structure, presented in such a way as to emphasize the company’s successes and bright prospects for the future.

Public Relations: Public relations is the broader category of activities of which media relations is one component. It includes all of a company’s activities designed to improve its reputation, which has caused it to sometimes be referred to as reputation management.

Stakeholders: Stakeholders in a company or other organization are those who have some type of interest in the performance of the company. This interest could be financial, legal, or personal. Since many companies are financed by investors who believe that the company will do well, it is important for a firm to monitor its external communication to ensure that stakeholders have a favorable view of the company’s prospects.

Bibliography

Beckers, A. M., & Bsat, M. Z. (2014). An analysis of intercultural business communication. Journal of Business & Behavioral Sciences, 26(3), 143.

Bruyer, T., Jacobs, G., & Vandendaele, A. (2016). Good pharma? How business communication research can help bridge the gap between students and practitioners. Business & Professional Communication Quarterly, 79(2), 141. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=116081281&site=ehost-live

Gerdewal, M. T., & Seçim, H. (2014). A business communication design for information technology (IT) organizations based on information technology infrastructure library (ITIL). Business Management Dynamics, 4(5), 12. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=110258089&site=ehost-live

Gramatnikovski, S., Stoilkovska, A., & Serafimovic, G. (2015). Business communication in function of improving the organizational culture of the company. UTMS Journal of Economics, 6(2), 267.

Miletić, S., & Đurović, Đ. (2015). Improving enterprise interests through the process of business communication. Ekonomika, 61(1), 43. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=101773177&site=ehost-live

Patrutiu-Baltes, L. (2016). The impact of digitalization on business communication. SEA: Practical Application of Science, 4(2), 319.

Rollins, W., & Lewis, S. (2014). A comparison of processes used by business executives and university business communication teachers to evaluate selected business documents. Journal of Organizational Culture, Communications And Conflict, (1), 139. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=100277127&site=ehost-live

Shrivastava, S. (2012). Identifying the major components of business communication and their relevance: A conceptual framework. IUP Journal of Soft Skills, 6(4), 51–66. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=85170846&site=ehost-live

Stoykov, L. (2007). Nature and definitions of business communication. Language in India, 7(2), 2–37.

Waldeck, J., Durante, C., Helmuth, B., & Marcia, B. (2012). Communication in a changing world: Contemporary perspectives on business communication competence. Journal of Education for Business, 87(4), 230–240. Retrieved October 23, 2016, from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=92042451&site=ehost-live

External Business Communications

On this Page

Subject Terms

External Business Communications

Abstract

Overview

Further Insights

Discourse

Terms & Concepts

Bibliography

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