Give a model of a formal communication system that the company can follow. Identify the barriers in this model, how can they be removed?


The company will have to follow both vertical and horizontal communication models. Vertical communication will take place between superiors and subordinates, e.g. between sales manager to sales supervisor to insurance agents, etc. Horizontal communication takes place between different departments like between territory manager with another territory manager.

Barriers to effective communication:

The company can face some of the following barriers to effective communication:

(i) Semantic Barriers

(a) Badly expressed message

(b) Symbols with different meanings

(c) Faulty translations

(d) Unclassified assumptions

(e) Technical jargon

(f) Body language and gesture decoding

(ii) Psychological Barriers

(a) premature evaluation

(b) Lack of attention

(c) Loss by transmission and poor retention

(d) Distrust

(iii) Organisational Barriers

(a) Organisational policy

(b) Rules and regulations

(c) Status

(d) Complexities in organisational structure

(e) Organisational facilities

(iv) Personal Barriers

(a) Fear of challenge to authority

(b) Lack of confidence of superior in subordinates

(c) Unwillingness to communicate

(d) Lack of proper incentives.

Measures to overcome the barriers

(i) Clarity in the thoughts of the sender is a must for effective communication.

(ii) The sender should try to make the message meaningful and understandable.

(iii) The message should be precise and to the point

(iv) The sender should always take the feedback from the receiver.

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Similar questions
Business Studies | Principles and Functions of Management Standard XII
Y limited is a bank functioning in India. It is planning to diversify  into insurance business. Lately, the government of India has allowed the private sector to gain entry in the insurance business. Previously, it was the prerogative of LIC and GIC to do insurance business. But now with liberalisation of the economy and to make the field competitive other companies have been given licenses to start insurance business under the regulation of ‘Insurance Regulatory and Development Authority’.
Y limited plans to recruit high quality employees and agents and exercise effective direction to capture a substantial part of life and non life insurance business.


1. Identify how the company can supervise its employees and agents effectively. What benefits will the company derive from effective supervision?

2. What financial and non-financial incentives can the company use for employees and agents separately to motivate them. What benefits will the company get from them?

3. How can the company ensure that higher order needs i.e. esteem and self-actualisation as specified by Abraham Maslow are met?

4. Identify the qualities of leadership in this line of business that the company managers must possess to motivate employees and agents.

5. Give a model of formal communication system that the company can follow. Identify the barriers in this model. How can they be removed?

6. How can informal communication help to supplement formal communication model given by you in answer to question 5?

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