1BUSINESS COMMUNICATIONAND MANAGEMENT

UNITS CONTENTS PAGE NO

I BUSINESS COMMUNICATION 5

II KINDS OF BUSINESS LETTERS 37

III NATURE AND SCOPE OFMANAGEMENT 90

IV ORGANISATION 129

V STAFFING 162

2PAPER - IV -Main

BUSINESS COMMUNICATION AND MANAGEMENT

UNIT - I

Business Communication - Meaning - Objectives -Effective Business Letter - Sources of Communication - Layoutof Business Letter - Kinds of Business Letter.

UNIT - II

Various Types of Business Letter - Letter of Enquiry -Order and Complaints - Circular - Status Enquiry - CollectionLetter - Bank Correspondence - Company Correspondence -Correspondence with Shareholders.

UNIT - III

Nature and Scope of Management - Functions ofManagement - Scientific Management - Planning - Importanceof Planning - Forecasting.

UNIT - IV

Organisation - Nature and Importance - Leading - Natureand Purpose of Directing - Controlling - Co-ordination -Meaning and Types of Control.

UNIT - V

Nature and Purpose of Staffing - Manpower Planning -Recruitments - Selection - Placement and Induction, Benefits,Scope, Types and Methods of Training.

3BLOCK PLAN (CONTENT)UNIT I BUSINESS COMMUNICATION1:0 Introduction1:1 Meaning1:2 Objectives of communication1:3 Communication Process1:4 Channels or Types of Communication.1:5 Barriers to Communication1:6 Essentials of Effective Business letter1:7 The Layout and Design of a Business Letter1:8 Kinds of Business LettersUNIT II KINDS OF BUSINESS LETTERS2:1 Letter of Inquiry and Reply2:2 Orders-Their Execution and Cancellation2.3 Claim, Complaints and Settlement of Accounts2.4 Circular Letters2:5 Status Inquiries2:6 Collection Letter2:7 Banking Correspondence2:8 Correspondence of a Company SecretaryUNIT III NATURE AND SCOPE OF MANAGEMENT3:1 Management3:2 Planning3:3 ForecastingUNIT IV ORGANIZATION4:1 Organization4:2 Leadership4:3 Directing4:4 Controlling4:5 Co ordinationUNIT V STAFFING5:1 Staffing5:2 Manpower planning5:3 Recruitment5:4 Selection procedure5:5 Placement5:6 Induction5:7 Training

4BLOCK INTRODUCTION

We are in the block of course Four - BusinessCommunication and Management. In this block we will discussabout the concept of Business Communication, Kinds of BusinessLetters, Business Management, Organisation and Staffing.

In the first unit you are going to learn about BusinessCommunication, process of communication, types ofcommunication and barriers to communication.

In the second unit we are going to discuss about the kinds ofbusiness letters like Letter of Inquiry and Reply, Orders-TheirExecution and Cancellation,Claim, Complaints and Settlement ofAccounts, Circular Letters, Status Inquiries, Collection Letter,Banking Correspondence, Correspondence of a CompanySecretary.

In the third unit you will get the clear idea about management,planning and forecasting.

In the fourth unit of this block you are going to explore aboutorganisation. We deal about directing, controlling and co-ordination.

In the fifth unit you will acquire the knowledge on the areaof staffing. This chapter contains recuritment, selection, placement,induction and training.

5UNIT I BUSINESS COMMUNICATION

UNIT STRUCTURE

1:0 Introduction

1:1 Meaning

1:2 Objectives of communication

1:3 Communication Process

1:4 Channels or Types of Communication.

1:5 Barriers to Communication

1:6 Essentials of Effective Business letter

1:7 The Layout and Design of a Business Letter

1:8 Kinds of Business Letters

SELF- ASSESSMENT QUESTIONS: I

1:9 Summary

Unit Questions

Recommendations for further readings

Answers of Self-Assessment Questions

6UNIT - I

BUSINESS COMMUNICATION

1:0 INTRODUCTIONThe word Communication is derived from the Latin

word communico which means To share. It is the act ofsharing or imparting a share of anything. In its vital sense, itmeans a sharing of ideas and feelings in a mood of mutualunderstanding. It is a two-way process in which a speakermust have a listener to share the experience.

Communication is the tool with which we exerciseinfluence on others, bring about changes in the attitudes andviews of our associates, motivate them and establish andmaintain relations with them. Without communication therewould not be any interaction between persons. Hence, therecannot be a Government or society withoutcommunication.

The ability of communication depends upon theadvancement of the society he lives. Among human beings,the more civilized and advance groups have higher com-munication ability than the less advanced groups. It isfound that about 75% of the effective hours of a man is beingspent on communication i.e., speaking, writing, listening, read-ing etc.

1:1 MeaningCommunication is the act of influencing and inducing

others to interpret an idea in the manner intended by thespeaker or writer. Communication is an exchange of facts,ideas, opinions or emotions by two or more persons. It is theprocess by which information is transmitted betweenindividuals and/or organisations so that an understanding

7response results. We shall now see some of the importantdefinitions given by eminent authorities on the subject.

DefinitionDefinition of W.H.Newman and C.F.Summer Jr

Communication is a exchange of facts, ideas, opinions oremotions by two or more persons.

Definition of Fred G.Meyer.According to Fred G.Meyer, Communication is the

intercourse by words, letters or messages, intercourse ofthoughts or opinions. It is the act of making ones ideas andopinions known to others.

1:2 Objectives of communicationCommunication is a process through which different

persons are connected to each other in such a manner toachieve a common objective. Without communication, groupactivity is impossible. It helps the members to co-ordinatewith each other, exchange their ideas and thereby to makeprogress.

1. Information:One of the important objectives of communication is

passing or receiving information about a particular fact orcircumstance. Every organisation whether a small or large, acomplex or a simple require information which is required tobe communicated. Top-level management personnel requirecomplete, accurate and precise information to plan andorganise. Employees become very efficient and responsibleif they know well about the various aspects of anenterprise. It can be done either through spoken or writtenlanguage or by using any other system of signs. Informationrequired for daily work can be given orally. If large groupshave to be informed, a meeting may be called.

8Information that are required for the organisation arenormally obtained from the sources like old files, personalobservation, Radio, TV, Cinema, Newspapers, Periodicals,Pamphlets, Government publications, Chambers ofCommerce, meetings, seminars and conferences, personalinterviews with people, questionnaire and trade fairs andexhibitions.

2. Advice:Advice is also a kind of information. It means opinion

given as to the action to be taken. Advice is normally given toa person either to influence his opinion or his behaviour. Itmay prove helpful, but it may also lead to disaster. So to makeadvice effective, while offering advice, the adviser should keepthe following points in mind:

1. Advice should be related to aspecific piece ofwork.

2. It should meet the needs of the recipient.

3. It should not make the recipient to feel inferior.

4. The adviser should make the recipient to feel thathe is being advised for his own betterment.

3. Order:Order is an authoritative communication. Orders are

absolutely necessary for any organisation irrespective of itsnature and size. It a directive to somebody, normally asubordinate, to do something, to alter the course of somethinghe has already done, or not to do something. An order to beeffective-

1. Should be clear and complete,2. Should be given in a friendly manner,3. Its execution should be possible.

94. Suggestion:The term suggestion means proposing something for

acceptance or rejection. Communication is used to conveysuggestion or ideas. This is being constantly done in all humangroups. Someone or the other is making suggestions and otherreact to them . This happens in any social group like a family,office, factory, State, Nation etc. Effective communicationpromotes the acceptance and trial of good suggestions.Subordinates normally give suggestions. This is because, theyare the ones who are actually involved in the work and havea better understanding of the shortcomings and can makeuseful suggestions for improvements. That is why, in bigconcerns suggestions are collected at regular intervals bymeans of a suggestion box. Such suggestions are known asupward communication.

5. Persuasion:Including, compelling or promoting a person to act

mostly in a positive way is known as persuasion. Persuasionis an important objective of communication. Managementtry to persuade their workers to put in their best effort; sellerspersuade their customers to buy etc. It takes place throughsome kind of communication. Persuasion is more easily doneby a person who-enjoys respect and confidence of thosewhom he wishes to persuade. However, if persuasion is to beeffective, they must not be conscious of being persuaded.

6. Education:Education involves imparting instruction, character

building, enriching mental faculties, giving training to humanbeings e tc . I t a ims a t widening the knowledge andimproving skills. It is carried on at various levels ofmanagement namely, top level, employees level and at thelevel of outside public. Employees are trained essentially bycommunication. All education takes place by means ofcommunication.

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7. Warning:Warning is a forceful means of communication. It may

be given orally or in writing. Very often, we come acrossnotices like No smoking, Beware of dogs, Danger etc.These are some warnings or cautions. In offices and factories,higher officials give warnings to their subordinates, byissue of memos.

8. Motivation:Inspiring the interest in their job in the minds of the

employees in known as motivation. If the people areadequately motivated, they will have high morale and this willbe low if the level of motivation is low. Low morale is thebasic cause for indiscipline. Motivation determines thebehaviour of a person to a greater extent. In motivation,employees are motivated in such a manner to work willinglyand eagerly. A motivated worker does not need muchsupervision.

9. Counseling:Counseling is done by a man of greater skill or

knowledge on some specific subject and he offers his counselwithout any personal interest. Companies, which are inter-ested in their employees welfare, have centres to counsel theiremployees. It is very much similar to giving advice. However,there are some differences between the two also. They are-

i) Counseling is objective and impersonal,whereas advice is personal touch.

ii) Counsel is almost professional, whereasadvice is not so, and

iii). Counsel is eagerly sought, whereas adviceis very often unwelcome.

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10. Morale Boosting:Morale is the term usually applied to armed forces

during war time and to sports and athletic teams. It refers toteam spirit and co-operation of people for a common purpose.Its importance has been realised by the management onlyrecently. The management feels that if the morale is high,production would be higher and on the other hand if it werelow, the production would also be low. It is already statedthat motivation and morale are inter-connected and dependanton each other. If the workers are highly motivated, morale isalso said to be high. On the other hand, if the degree ofmotivation is low, the morale is also said to be low.

11. Appreciation:Praising of initiative, good effort and work by

employees is known as appreciation. It is very useful forcreating a good attitude. It may be conveyed orally or inwriting. If given publicity, it will have better effect.

1:3 COMMUNICATION PROCESSCommunication is a process whereby one person or one

group conveys some information to another person or toanother social group. Communication is a social process forexchanging information and establishing understandingbetween two or more parties. Conceptually, communicationis seen as a two-way process by which people communicatewith one another. The sender, who creates a message designedto elicit a specific response from the receiver, initiatescommunication. The receiver interprets the message accordingto his own understanding and sends a message back to thesender. If the purpose of the sender and the response of thereceiver are inconsistent, the communication process will fail,and the sender may wish to initiate the process again withsome modifications to the message. Thus, the nature ofcommunication is considered as a continuous, inter-personalprocess.

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As shown in the following figure, the sender of thecommunication starts with and idea to be shared with thereceiver. Using a set of encoding skills, the sender translatesthe idea into a transmittable message. Employing encodingskills, the receiver converts the idea into a feedback messageto the sender. The sender now uses decoding skills to translatethe feedback and compares that with the original idea. Thesender determines whether the message was properly receivedand understood. Often, understanding is not achieved and thesender must try again. The communication process oftenbreaks down because the process is replete with barriers tocommunication.

1:4 CHANNELS OR TYPES OF COMMUNICATION.Types of communication can be discussed under the

following two broad heads.

1. On the basis of organisational structure:1. Formal Communication, and2. Informal Communication.

2. On the basis of media used:1. Written Communication, and2. Oral Communication

1. Organisational StructureOn the basis of organisational structure,

communication can be further classified into two namely,

1. Formal Communication, and2. Informal Communication

We shall now describe them briefly.1. Formal Communication:

Formal communication takes place via formal channelsof the organisational structure established by the management.These channels are deliberately created for regulating thecommunication flow and to link various parts of the

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organisation. They are helpful for performing functions likeplanning, decision-making, co-ordination and control. In aformal communication system, matters with regard to whoshould communicate, what, when and how to becommunicated and to whom to be communicated are all clearlydefined. The formal organisation chart describes the formallines of authority, power, responsibility and accountabilityof organisational members. All these relationships involvecommunication. Formal communications are in writing. Thereare three forms of formal communication namely

1. Downward,2. Upward, and3. Horizontal.

1. Downward Communication: Communication is said to be downward when it moves

from the top to the bottom. Downward channels are used forpassing on managerial decisions, plans, policies andprogrammes to subordinates down the line for theirunderstanding and implementation. Downwardcommunications are used by the superiors to convey theirorders, instructions and directions to their subordinates.In the words of D.Katz and R.L.Kahn, the purpose ofdownward communication are to-

1. Give job instructions.2. Create an understanding of the work and

its relations with other tasks.3. Inform about procedures.4. I n f o r m s u b o r d i n a t e s a b o u t t h e i r

performance.5. I n d o c t r i n a t e t h e w o r k e r s t o

organisational goals.

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However, downward communication suffers fromcertain drawbacks. They are..1. It develops an authoritative atmosphere

that might be detrimental to morale.2. A s i n f o r m a t i o n p a s s e s t h r o u g h t h e

various levels of hierarchy, it might bedistorted, misinterpreted etc.,

2. Upward Communication:Communication is said to be upward when it flows from

the subordinates to the top management. Upwardcommunication is used by subordinates for transmittinginformation, ideas, views and requests to their superiors onmatters relating to their jobs, responsibilities etc.,. Upwardcommunications are also used to convey views, suggestions,grievances and problems of subordinates to their superiors.It enables the subordinates to communicate to the superiorsthe progress of the work and response to the work assigned tothem. Upward communication may be oral or written. It alsoenables the management to know he extent to which the sub-ordinates understand the policies and programmes of the or-ganisation.

3. Horizontal Communication:Communication is horizontal when it flows betweenindividuals at the same operational level i.e.,. between twodepartmental heads. The purpose of the horizontalcommunication is to enable managers and others of the samerank to interact on important matters, to exchange informa-tion and co-ordinate their activities without referring allmatters to the top level management.

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2. Informal CommunicationInformal Communication is free from all the formalities

of formal communication. It is based on the informalrelationship among the members of the organisation. Informalcommunication is usually oral and may be conveyed by asimple gesture, glance, nod or smile. The informal relationshipthat supplements the formal organisational relationship isreferred to as the grapevine. According to H.Koontz andODonnel,

the grapevine, of course, thrives on information notopenly available to the entire group, whether because it isregarded as confidential, or because formal lines of com-munication are inadequate to disperse it, or because it is ofthe kind that would never be formally disclosed.

Informal communications are made by members of theorganisation to transfer information both on the matters oftask related and non-task related. These communications arefree from any trappings of authority and status differentials.Informal communications often serve as supplement to formalcommunications. Managers and others may sometimes passon information informally which they would not like totransfer formally for strategic and practical reasons.

II. Media Used:

On the basis of media used, communication can beclassified into four namely

1. Oral communication2. Written Communication3. Non-verbal Communication and4. Audio-Visual Communication

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1. Oral CommunicationOral communication refers to face to face

communication. It offers interchange of ideas at the personnellevel. There can be questions and answers . The sender andreceiver of the message are in direct contact. If the listener doesnot understand the message, he can ask for a clarification orraise questions and get the answers. If matters are to be conveyedwithin an organisation, oral communication is considered as thebest as well as the cheapest method of communication.Especially, it is of vital importance in handling difficult orcomplicated situations.

Merits of Oral Communication

Merits of oral communication are as follows:1. It is economical when compared to written

communication.2. It is more flexible and can be effectively

combined with gesture and other expressions.3. It is more effective on account of direct

contact between the communicator andcommunicatee.

4. It leads to better understanding becauseresponse to the message can be obtained onthe spot, and doubts, clarifications etc. Canalso be removed quickly.

5. It is faster and saves time.

Demerits of Oral CommunicationOral communication has certain demerits. They are:1. It is not suitable in cases where the message

is long and complicated, when the audienceis large and when there is no need forinteraction.

2. It does not provide any record for futurereference.

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3. It is time consuming and costly.4. It cannot be used as a communication media

where people scattered over a wide area.5. It can be irritating and wasteful when the

persons involved are poor in talking skills.

2. Written Communication

Written communication, on the other hand, is very widein its scope and covers entire paper work relating to all kinds oftransactions, agreements, proposals etc,. Infact, the main workof any office is written communication. Written communicationthough has a place inside the organisation, it is of paramountimportance in conveying messages to the external world. Thoughmodern devices such as telephone etc. have lessened thedependence on writing, it still serves as the main channel for allthe business transactions. This is because, a written communi-cation can carry assurance of transactions, confirm the dealingand form a reliable record for future reference. Besides, it isthe cheapest method of contacting the external world. Hence,it saves money as well as time. Moreover, people place morereliance in pen than in the tongue.

Merits of Written Communication: There are certain obvious advantages in written

communication.

1. Letters or written communications can be keptas a legal record.

2. They can be retained for purpose of futurereference.

3. They are formulated more carefully than oralcommunication.

4. They can save money and time.5. The written communication is used for all

practical purposes in every organisation.

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Limitations of Written Communication:A written communication, though has many points to its

credit, is not an unmixed blessing. It too has certain definitelimitations. It is not suitable under all circumstances. Thefollowing are the situations in which a written communicationis unsuitable.1. Complicated Matters:

Complicated or difficult matters cannot be handledthrough written communication.2. Confidential Matters :

Confidential matters cannot be reduced to writing3. Instructions and Clarifications:

Instructions to a subordinate cab be best given orallythan in writhing. If the subordinate seeks any clarification,he can get it at once.

4. Assessing the Reaction:The reaction of the receiver can be best assessed only in a

face to face communication.5. For Expressing the Feelings:

When two persons are talking, many matters can be saidexpressly. But many matters are left unsaid or said byimplication i.e. understood. This is impossible through a writtencommunication.

3. Non-verbal CommunicationAll the communication that occurs in between the people

in an organisation may not be spoken, heard, written or read. Inother words, all the communication is not verbal. Some may benon-verbal i. e. unwritten and unspoken. The most 5 importantaspect in communication is to hear what is nt being said.Sometimes , the non-verbal message also helps in carrying a

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verbal message. E.g. smiling while greeting your colleague.Mostly, non-verbal messages are spontaneous. However, it doesnot mean that they are less important. Then on-verbal commu-nication includes the pitch and tone of the voices, bodymovement, physical appearance, time, touch, space and territory.The common types of non-verbal communication in businessare detailed as shown below.

1.Body Movement:Body movement as a media of communication can be

discussed under three heads namely,(i) Facial expression,(ii) Gestures, and(iii) Body stance.

i) Facial Expression: Successful communicators use facial expression as a very

effective media of communication. The most expressive part ofhuman body is face-especially eyes. Eye contact and eyemovements tell a lot about a person. Hence, normally receiverof oral communication give much attention to facial expressionwhile receiving the message. This is because it will give a lotof information about the inner feelings of the communicatee,which cant be understood otherwise. However, if a subordinatecommitted a serious mistake , executive may show anger on hisface. If this is the case the subordinates may feel very bad andact indifferently. So most of the executives now -a - days learntto scold the subordinate with a feeling of concern for him. Thistype of approach motivates the subordinates to improve theirwork performance.

ii) Gestures: Gesture is a motion of the body or limbs. It is an action

intended to express the idea of feeling or to enforce an argument.Gesture includes hand and upper body movements. Theyprovide a lot of important information to face- to - faceconversations. They are used to reinforce your verbal message.

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iii) Body stance: Body stance is another form of non-other communication.

It includes posture of standing, placement of arms and legs,distribution of weight etc. By seeing the standing position of aperson, one can understand whether he is interested in the talkor feel very bore etc. For example, leaning slightly towards thecommunicator would be taken as a sign of interest andinvolvement in the talk, whereas leaning back might be taken asa sign of boredom.

2. Physical Appearance: Physical appearance of a person is important for creating

a good impression. This is because attractive people tend to beseen as more intelligent and more likeable than unattractivepeople are. So they can earn more. One can not change all ofhis physical features. Some are changeable and others not.However, understanding the importance of physical appearancecan help any body to emphasise their strong points.

Ones clothing, Jewellery, furnishings at home and officeprovide information about their value, taste, status, age etc.Hence, we should give due weightage to these aspects also toget a good appearance.

3. Voice Qualities: No one speaks in single tone i.e. in an unvaried pitch of

the voice. Voice qualities include volume, speed, pitch, tone,and accent. They carry both intentional as well as unintentionalmessages.

Based on the pitch of the voice, the circumstance when itwas conveyed etc., same sentence might carry different meanings.For e. g. while answering the question who was late? Say youwere late, the emphasis is given to the word you i.e. theanswer here is you for the question who was late? Whereas whileresponding to the other persons denial of being late say you

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were late, emphasis is given to were. However ,while stressinghow late the person was, say you were late emphasis is givento the word late.

4. Space and Territory: Different types of communication occur at different

distances. Competent communicators determine their ownpersonal space needs and those of others. They make thenecessary adjustments to facilitate achieving his objective whilecommunicating with people who prefer more or less space.Edward T. Hall in his work, The Hidden Dimension hasstated that the psychologists have identified four zones withinwhich people interact.

i) Intimate Zone:Intimate zone extends from physical contact to about 18

inches where all your body movements occur. This is the areain which you move throughout the day. It is an area normallyreserved for close, intimate interactions. Business associatestypically enter this space infrequently and only briefly perhapsto shake hands or pat someone on the back

ii) Personal Zone:This Zone, extending from 18 inches to about 4 feet, is

where conversation with close friends and colleagues takes place.Unlike inter action in the intimate zone, normal talking is thefrequent in the personal zone. Some, but not a great deal of,business interaction occurs here. For example, business launchestypically occur in this zone..

iii) Social Zone:Social zone extends from 4 feet to 12 feet. This is the

zone where most business exchanges occur. Informal businessconferences and staff meetings occur within this space.

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iv) Public Zone :The public zone extends from 12 feet to as far as the eye

can see and the ear can hear. This is the most formal zone, andthe least significant interactions occur here. Because of the greatdistance, communication in the public zone is often one way, asfrom a speaker to a large audience.

4. Audio- visual communicationAudio-visual communication uses the methods that

are seen and heard. It makes use of short films, slides, videotapes, telecasts etc. Examples are small advertisement films, ordocumentary films related to social issues etc. Screened justbefore the main picture.

Audio-visual communication combines both sight andsound to attract the attention of the communicatee. If it is ofonly visual communication, people may just casually look at itand forget afterwards. But if audio is also combined with visualaids, the message conveyed will be retained much longer thanthrough other media. It is most suitable for mass publicity, propa-ganda and mass education.

1:5 BARRIERS TO COMMUNICATION

Communications fail due to various reasons.Sometimes, subordinates may not be receptive. Sometimes,the superiors lack in their expression. Besides, some otherbarriers may also come into operation. The various barriers tocommunication can be discussed as below.

1. Perception: An individuals view of reality is known as perception.

Two individuals do not see things exactly alike. People differgreatly in the way they perceive things and events. Even a singleindividual has different perceptual styles depending on time andcircumstances.

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Hodgetts say that, the senders meaning and thereceivers interaction are not always identical, but it is notnecessary that they be so. This is the basic barrier tocommunication.

2. Semantic or Language Barriers:Language serves as the basis for the communication. It is

the medium through which views are conveyed. Sender shouldselect the words and construct the sentences carefully. Wordsthat are used to convey messages have several meanings. Thesender selects the words as per his own frame of reference andwhich he thinks will convey the meaning he proposes tocommunicate. On the other hand, the receiver reads or listens tothe message and interprets it within his own frame of reference.As people vary in their experience, knowledge of the languageetc., there is a possibility of semantic distortions. Thus, semanticdifficulties come in the way of clear understanding.

3. Perfunctory Attention:If receiver pays very little attention to the message,

communication in the sense of transfer of information andunderstanding will fail. When the employee is pre-occupied witha number of problems, sender faces such problem. In this case,employee should be made to keep away his problems and listento the message. If this is not done, he cannot proceed thecommunication further.4. Status:

One of the basic barriers to communication arises due tostatus relationship that exits in every organisation. The superiorsubordinate relationships in the organisational structure inhabitfree movement of information and understanding, exchange ofideas, views etc.. Generally those who receive communicationjudge the sender and naturally senders status has its own weight.For e.g., any communication received from the management isviewed as troublesome by trade unions; any message fromworkers will be discounted by management etc.

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5. Resistance to Change:Generally, people resist changes. Resistance to changes

will be strong when the proposed change is great. Managersshould take all possible steps to overcome such resistance tochange. One method of overcoming resistance is explainingthe subordinates as to how they will be benefited by such changes.

6. Organisational Structure:Effective communication depends greatly sound

organisational structure. If the organisational policies, rules andprocedures are not clear, smooth flow of communication cannotbe ensured. If the organisational structure has several layers ofmanagement, it may result in delay and distortion incommunication. Lack of facilities that ensures effectivecommunication is another barrier that comes in the way of clearunderstanding.

7. Premature Evaluation:Premature evaluation refers to a tendency of forming a

judgement before listening to the message fully. Prematureevaluation misrepresents the message. Thus, it acts as a barrierto effective communication.

8. Emotional Attitude:Emotional attitude of the parties involved in the exchange

of information is another barrier to effective communication.When an individual is emotional, he may not be able to knowthe frame of mind of other person.

9. Failure to communicate:Failure to communicate is a pervasive barrier to

communication. The communicator may be lazy or it may beassumed that everything is known to all. Sometimes, failure tocommunicate may also arise from an intention to embarrass thereceiver or from complexes like superiority, inferiority or dueto status difference, Communication also has no impact on thosewho are not willing to listen / read the message.

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10. Other Barriers:Other barriers include faulty translation, badly expressed

messages, loss by transmission, lack of attention, unclarifiedassumption, inadequate adjustment period and communicationdistrust.

1:6 ESSENTIALS OF EFFECTIVE BUSINESS LETTERAll type of business letter must confirm to certain well

recognised principles and should possess certain essentialqualities. Business letters devoid of universally acceptedrequisites will prove ineffective.

The essential of a business letter can be analysed underthe following heads.

(i) The structure of a business letter.The structure of a business letter refers to the proper

arrangement of the various parts or the different elements ofa business letter. To give the letter the right look and to ensureclarity and convenience, the letter should consist of the fol-lowing components.

1. The Heading.2. The Date.3. The Inside Address.4. The Salutation.5. The Body of the letter.6. The complimentary Close.7. The Signature.Each of these part has a definite place and position in

all business letters.1. The Heading

Almost all business firms use printed letterheads for theircorrespondence. Generally, the name and the address areprinted on the top of the letterhead but it frequently gives

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other particulars such as the description of business, the tel-ephone number, the telegraphic address, the telex number, Faxnumber, E-mail address etc. The letterhead of the large concernmay give the addresses of its branches and that of a branchmay give the address of its head office. To give a balancedappearance to the letter, nearly one fifth of the total spaceshould normally be used for the heading .

RANJAN PUBLICATIONS,17, Aminjikarai, R.S.N

Telephone :28 64 89 36 E-mail: ranjan@gmail.co

2. The dateThis gives the date of the month and the year. It appears

on the right hand side of the letterhead about five spaces belowthe heading. Some letterheads contain a printed lineindicating where the date should be typed. In England, theusual method of indicating the date is to state it in originalnumbers such as Ist March 2000. In U.S.A., it is usual to statethe numbers of month before the date in cardinal numberse.g. March 1, 2000. Some people omit the comma after thedate and the full stop after the year, but it is generallyconsidered correct to use them.

The practice of writing the date as 1-3-2008 or 1/3/2008should be avoided because it would give rise to errors,particularly in foreign correspondence. For example, in U.S.A.1/3/2008 would been January 3rd, 2008 while in England andin other Common Wealth Countries it would mean as 1stMarch 2008.

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3. The Inside AddressThis gives the name and full address of the person, firm

or company to whom the letter is written. It is one of theessential ingredients of the physical make up of the businessletter. It is generally typed two lines below the date line andabove the salutation on the left-hand margin of the letterhead.

Importance of Inside AddressThe typing of inside address is highly useful in many

ways. They are:

1. This will provide the despatch clerk all theparticulars that are necessary for writingthe address on the envelope.

2. If window type envelops are used, the insideaddress is a must.

3. Since it is also imprinted on the office copyof the letter, it will be easy to identify thenumber and the nature of the letters sent outto specified parties.

4. The SalutationThe salutation is the similar to greeting like good

morning, good day, good afternoon etc. used by us insocial life. It is written about three spaces below the insideaddress.

The form of salutation depends on the personal relationbetween the writer and the address as well as upon the lettersrank or position.

The following are the usual forms used in business letters.Sir, Dear Sir, Dear Sirs, Gentlemen, Dear Mr. Raveen,

Madam, Mesdames etc.

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5. The Body of The LetterThis is the most important part of the letter. The ultimate

object of a business letter is to convey a message. The bodyof the letter contains the principal message to be conveyed tothe other party. Hence the other parts, though necessary, areonly subordinates to the body of the letter. It is no exaggerationto say that the whole of this book deals with the writing of thebody of different types of letters. Therefore, the writer shouldtake utmost care to set out the matter clearly. The mattershould be properly arranged and presented in a logical manner.

In this connection, Mr.L.Gartside suggests thefollowing points which the reader should always bear in hismind.

1. Write simply, clearly, politely, grammaticallyand to the point.

2. P a r a g r a p h c o r r e c t l y c o n f i n i n g e a c hparagraph to one topic.

3. Avoid stereo typed phrases and commercials.

6. The Complementary Close or SubscriptionThe complementary close is merely a courteous leave

taking. In other words, it is merely a polite way of ending aletter. It is like the salutation, conventional in form andmeaning. A letter without a close or an appropriate close isvulgar and ineffective.

The complementary close is written three spaces belowthe last line of the body of the letter and just above thesignature.

7. The signatureThe signature follows immediately after the

complementary close. It is usually written in black ink.Facsimiles can be used only in case of circular letters.

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Since the letter binds the signatory, the signature hasassumed great importance. A person may sign in differentletters in different capacities. Therefore, the signatoryshould clearly indicate the capacity in which he signs. Forinstance, if the person signs in his individual capacity, hissignature does not bid the firm.

If he signs as a representative of the firm, he is notpersonally liable. Therefore, care should be taken whilesigning the letter.

1:7 THE LAY-OUT AND DESIGN OF A BUSINESSLETTER

The overall arrangement and appearance of the differentparts of a letter is called its lay-out. It refers to thearrangement of the various parts of a finished letter and to theneatness and spacing of the written matter.

With the advent of computers in almost all offices, thecomputer itself does the job of a suitable format and alignmentproportionate to the matter therein were the conventional lay-out refers to-

(i) Arrangement of a letter proper on paper. The arrangement of the typed area on the sheet of paper

should look good. As a rule, the body of the letter is expectedto start two spaces below the salutation and end two spacesabove complimentary close. The body should be aligned onthe right hand side with the first line of the inside address ofthe person to whom the letter is written.

(ii) Margins.The right hand and left hand margins should be of nearly

equal width, even though the former may be a little widerthan the latter. The margin should not be less than an inchwide, in any case. However, an inch and a half is generally

30

preferred. The margins on the sides should be about 2/3rd aswide as those at the top and the bottom in order to see that theletter looks well spaced.

(iii) Spacing.It is better to use single spacing between the lines, with

double spacing between the paragraphs. However, if the letteris short, double-spacing may be used throughout, with thefirst line of each paragraph indented to indicate the necessarydivisions.

(iv) Forms of Indentions. We come across four ways in which letters are typed

and indented. (a) Block or straight edged form; (b) Indentedor stepped-inform; (c) Semi-blocked or combination form; (d)Hanging indention form. Of these the first three are morepopular than the last.

(a) Block or Straight-Edged FormIt is the most popular form used at present. Indention

is avoided. The introductory address, salutation and bodyparagraphs are aligned right from between the paragraphswhich are indented.

This is the most symmetic form. It saves time for thetypist as there is no need to shift the carriage of the typewritertoo often.

(b) Semi-Block or Combination FormThis form of lay-out is combination of the Block and

Indented forms. The heading and the inside address are inBlock form while the initial line of each paragraph of the textis indented five to ten spaces. This enables to identify clearlythe separated paragraphs of the letter.

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Both these forms are usually accompanied by openpunctuation, i.e., no terminal marks punctuate the lines of theheading and those of the inside address.

(c) Indented or Stepped-in FormHere the lines of the inside address and the opening

line of each paragraph begin a few spaces away from themargin. The lines of the inside address are indented fivespaces to the right of the first letter of the preceding line above.Close punctuation is adopted in this form. There is a mark ofpunctuation for each line of the inside address.The full-stops are marked at the end of the last line of theletter-head and the inside address. The intervening lines ofboth are followed by commas.

(d) Hanging Indention FormIn this form the inside address and the salutation are

typed in BlockForm. The first-line of each paragraph in thebody of the letter commences right at the left-hand marginbut the subsequent lines are indented five or more spaces.Single spacing is used between the lines with double spacingbetween the paragraphs. This form is not much used.However, it is favoured in sales letters to draw the attentionof the customers. It is suitable for letters of a very informalcharacter that can stand novelty.

1:8 KINDS OF BUSINESS LETTERSIn every business concern, Letters have to be

drafted and sent to the customers on various occasions.Therefore, business letters depending on the occasion in whichthey are sent can be classified as under;

1. Letters of inquiry seeking information about therequired grades and replies.

2. Offers and acceptance.3. Orders and their execution

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4. Credit and status enquiry5. Claims and adjustments.6. Collection letters.7. Circular letters.8. Sales letters.9. Banking correspondence10. Insurance correspondence11. Export and import correspondence12. Agency correspondence13. Transport correspondence14. Secretarial correspondence15. Correspondence with the Government16. Public relations letters.

The above classification is purely a matter of conven-ience. The techniques of drafting these letters will bediscussed in subsequent chapters.

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SELF- ASSESSMENT QUESTIONSAnswer the following questions

1. Communication is an exchange of __________ by twoor more persons.

2 Face - to - face Communication becomes more effectiveif accompanied with appropriate body language.

True / False3. Match the following 1. Written communication - a. accurate 2. Oral communication - b. Permanent record 3. Information must be - c. Immediate feed back

1:9 SUMMARYCommunication is a process whereby one person or one

group conveys some information to another person or toanother social group. Formal communication takes place viaformal channels of the organisational structure establishedby the management. Informal Communication is free from allthe formalities of formal communication. Communications faildue to various reasons is called barriers to communication. Theessential of a business letter is to be analyses throughly in theend portion of this chpater.UNIT QUESTIONS1. Define communication.2. What are the objectives of communication?3. What are the process of Business Communication?4. Name the various methods of business communication.5. What are the advantages and disadvantages of oral,

written communication?6. State the main barriers to communication.7. Is communication essential to business?8. List out the kinds of business letters.9. Explain the layout of good Business letter.10. Explain the various essential of a good business letter.

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RECOMMENDATION FOR FURTHER READINGS1. Business communication - M.S. Ramesh,

CC.Palkan shethi, Madhumati,

2. Business communication& Customer Relations - Dr. C. B. Gupta

3. Business communication - Kathiresan & P.R. Radha4. Essentials of Business

communication - Rajendra pal, J.S.Korcahalli

ANSWERS OF SELF- ASSESSMENTS QUESTIONS:1. Facts, ideas, opinions, or emotions.2. True3. 1-b, 2-c, 3-a

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UNIT II KINDS OF BUSINESS LETTERSUNIT STRUCTURE UNIT II2:0 Introduction2:1 Letter of Inquiry and Reply2:1:1 Replies to Inquiries2:2 Orders-Their Execution and Cancellation 2:2:1 Acknowledgement and Execution of orders2:2:2 Refusal or Cancellation of Order.2.3 Claim, Complaints and Settlement of Accounts2:3:1 The Art of Drafting Letters of Claims and Complaints2:3:2 Hints on Writing a Letter of Claim or Complaint2:3:3 Settlement of Accounts (Remittance Letters)2.4 Circular Letters2:4:0 Introduction2:4:1 Objectives of Circular Letter2:4:2 Situation for Writing a Circular Letter2:4:3 Special Hints on drafting Circular Letter2:5 Status Inquiries2:5:1 Hints on giving Replies to Status Inquiries2:5:2 Steps in the Status Enquiry Correspondence2:6 Collection Letter2:6:0 Introduction2:6:1 Guiding principles for collection2:6:2 Hints on the drafting of collection letters2:6:3 Stages in Collections

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2:7 Banking Correspondence2:7:0 Introduction2:7:1 Banking Letters2:7:2 Elements of a Good banking correspondence2:7:3 Types of banking correspondence

2:8 Correspondence of a Company Secretary

2:8:0 Introduction2:8:1 Classification of Secretarial Correspondence

SELF- ASSESSMENT QUESTIONS: I2:9 Summary

Unit QuestionsRecommendations for further readingsAnswers of Self-Assessment Questions

37

UNIT - II

KINDS OF BUSINESS LETTERS

2:0 INTRODUCTIONBusiness correspondence extremely diverse.

There is a variety of correspondence that modern businessmanhas to deal with within his business routine. It is very difficultto classify the business letters or to give an exhaustive list ofthe kind of letters a businessman has to write because differentsituations call for different approaches. Hence, attempt ismade, in this book only to show a few common forms of lettersunder each class and deal with some of the important typesincluded in it.

2:1 LETTER OF INQUIRY AND REPLYi) Traders send letters of inquiry very frequently when

1. The goods they require are of a kind whichthey do not regularly buy and they do notknow the current price.

2. They want to ensure that they have beenreceiv ing goods a t the advantageousterms.

3. They want to discover better sources ofsupply, or

4. They want to tap new lines of business.

ii) While drafting such letters you should-1. Describe carefully the kind and quality of

goods required.2. Give an idea of the probable size of the orer.3. State clearly, the special form of packing etc.

desired, if any.

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4. State how the name of the supplier wasobtained, details of your business, whetherthe probable purchase should be for cashor on credit and give references if you wantto make credit purchase (particularly whenthe enquiry is addressed to a firm which noprevious transaction have been made).

5. Refer to the advertisement, if it is a firste n q u i r y m a d e i n r e s p o n s e t o a nadvertisement.

6. Request for lowest quotations together withan assurance of business.

7. Enquire regarding the time required fordelivery, terms of payment, discounts etc.,and find out whether insurance and deliverycharges are to be included in the quotations,i f the enquiry is made from a foreignsupplier.

8. Give an idea about the size and frequencyof future orders, the volume of businessexpected and the reasons for an optimisticoutlook, if the enquiry is made to getconcessional price for large or regularorders, or to obtain sole-selling agency fora region or country.

The letters of enquiry should be brief and to thepoint. The opening and closing sentences should be simpleand short.

iii) Watch the following opening sentences:(i) Will you please send us sample of...(ii) Please quote your lowest prices for the

following items/goods.

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(iii) Please send us your latest catalogue and pricelist of ...

(iv) Will you please let us know the terms andconditions....

iv) Closing sentences:(i) Will you please reply at your earliest?(ii) We are ready to cover all our requirements

through you, should your prices and termsprove satisfactory.

(iii) Please treat our inquiry as urgent.

2:1:1 REPLIES TO INQUIRIES The reply to an inquiry may take three forms:

(i) A letter answering the inquiry and referring to the catalogue, or samples.

(ii) A letter containing a quotation.(iii) A letter enclosing a quotation on a separate

paper or form.

The nature of the reply will, therefore, vary dependingupon the circumstances. No hard and fast rule can beprescribed in this regard. However, the specimen letters that follow may guideyou.

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LETTERS OF ENQUIRY AND REPLY

Letter No. 1. Request for catalogue.

MODERN CRACKERS,

P16, Raju Naidu Street,Paris Corner,

CHENNAI - 600 031Phone : 28712536,

e-mail : morfire@yahoo.co.in

Date : 22nd June, 2008.

ToThe Sunshine Fire Works,36-Thiurmayam RoadSivakasi - 21

Dear Sirs,

Sub : Request for latest catalogue and price list

Please send us a copy of your latest catalogue andprice-list and let us know your best terms for wholesalebuyers.

Thanking you.

Yours faithfully, For Modern Crackers.

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Letter No. 2 : Replay to letter No. 1.

THE SUNSHINE FIRE WORKS36-Thiurmayam Road,

Sivakasi - 21Cell No. 9994588033,

Ph.No. 239 245.e-mail: thesunshine@hotmail.co

To,The Modern Crackers,16, Raju Naidu Street,Paris Corner,Chennai - 600 031

Sub : Catalogue and Price-listDear Sirs,

We thank you for your letter dated June 22, andhave pleasure in sending you a copy of our latestcatalogue and price-list.

We need hardly add that behind every The SunshineFireworks is our reputation of 75 years as makers ofquality crackers and all other fire items, especiallydesigned for children.

Our list of prices is subject to a trade discount of30% and an additional commission of 5% in case yourpurchase from us exceed Rs. 1,00,000.

We trust that you will take advantageof theseterms.

Yours faithfully,for The Sunshine Fireworks.

Manager

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2:2 ORDERS-THEIR EXECUTION ANDCANCELLATION

An offer that is accepted is followed by an order. Theletter accepting a seller s offer is called a Letter ofAcceptance. Many times, the letter of acceptance itselfconstitutes an order and is sufficient to complete thetransaction. However, a formal order may also be sent. Anorder may also be placed, without any previous enquiry oroffer, i.e., on the basis of printed catalogues or advertisements.

Great care is necessary in the drafting of orders :(i) to ensure its efficient handling, and(ii) to eliminate all doubts resulting in the loss of time

and sometimes even the market.Hence, a businessman writing an order should:1. Give full and correct particulars of the quality,

size, colour, etc.2. Be precise in stating quantities. State

whether a part of the goods you haveordered may be sent, should it proveimpossible to supply the whole quantitywithin the time stipulated by you.

3. Indicate clearly the type of packing required.4. Mention the price and terms on which the

g o o d s a r e b e i n g o r d e r e d t o a v o i dmisunderstanding. Mention the mode of transport,whether by steamer, goods train, passenger train,parcel post etc.

5. Indicate clearly the address to which thegoods are to be delivered if the place ofdelivery is other than the address of the buyergiven in the order.

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6. Give necessary instructions if your intentionis that the seller should insure the goodsordered. Give special instructions forpacking, insurance, payment of customs dutyetc., at the end of the letter.

Other HintsIf only a few things are ordered, you can specify

the details in the body of the letter itself. But mention thedetails at the foot of the letter or on a separate sheet when alarge number or variety of goods are required.

Order FormsPrinted order forms that are perforated, numbered

and kept in serial order in Order Books are generally used bybig business houses. The person placing the order fills in thenecessary particulars. The order is generally made out intriplicate. The original is sent to the seller. The first copy isfield and the other copy is sent to the receiving departmentfor checking the items of goods on arrival. Thus, the orderforms save time and labour and facilitate quick filing and serveas a ready reference.

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LETTER NO. 1: An order for the Supply of Timber.

DEVAN WOOD MART

16, Developed plot,Industrial Estate, Guindy,

CHENNAI - 600 032Phone : 22254850,

e-mail : dewomart@sobha.co.in

Date : 14th March, 2008.To

The Manager,Sai Saw Mills,Tuticorin.

Dear Sirs,

Sub : Order for timber

Thank you very much for your letter dated February26, 2008 quoting price for 800 loads of teak now lyingin the Commercial Docks, which I accept, and you candraw on me for the amount named at three months,delivering half of the timber at my wharf at your earliestconvenience.

I will give you instructions shortly regarding thereminder.

Yours faithfully,

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2:2:1 ACKNOWLEDGEMENT AND EXECUTION OF ORDERSHints. While drafting the letter of acknowledgement andconfirmation (acceptance) of an order, you should -

(i) convey your thanks for the order placed;(ii) refer to the number and date of the order

letter; and(iii) specify (although it is a repetition) the key

points like the description and the quantityof the goods ordered, terms and conditionsrelating to delivery and payment etc.,

End the letter by soliciting further orders. Make areference to the total number of invoices enclosed to avoidthe possibility of being mislaid or improperly field renderingquick reference very difficult.

You need not confirm the order, if the order is executedat once. Where the order cannot be executed owing to someproblem or defect like-

(a) the lack of correct and clear informationrelating to the terms of delivery and payment,

(b) modification of the terms of offer;(c) exhaustion of stocks;(d) offering substitutes; and(e) extension of time of delivery etc.,You should point out such problem or defect in the letter

of acknowledgement and confirm the order when-(a) the requirement is fulfilled;(b) the defect is corrected; or(c) the problem is solved.Word the letter tactfully and with due courtesy. For

instance, if a delay in execution is anticipated owing to theinsufficiency of stocks, persuade the customer to give hisconsent for a delivery at a later date (after some time).Likewise, offer some substitutes, if any.

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Letter 1.Letter regretting inability to execute order owing toexhaustion of stock and offering substitutes.

VARSHINI CLOTH STORES

Ph................... 48, Kelambakkam,Fax................. Vandalur main road,

Mambakkam,Chennai - 600048

May 21, 2008.

ToM/s. K.V.P. Textiles,728 - Dr. Nanjappan Road,Gandhipuram,Coimbatore.

Sirs.

Sub : Inability to execute your order

We thank you for your order V215 dated May 12,2008 for 150 metres of each of the sample patternsenclosed with your letter. These patterns were importedby us three years ago and they have been completely soldout. We are, therefore, sending you samples of the latestdesigns of imported cloth and shall be glad to receiveyour order for them.

As our stock of some of these designs are very limited,please order your requirements within 7 days from thisdate. Needless to say, your orders will always receiveour prompt and careful attention.

Thank you.Yours faithfully,.............................

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Letter 2. A letter confirming only a part of the order.

Nitin ElectronicsPh ................ 25-A Wing,E-mail ..................... Vakola Bridge, Santacruz (E),

Mumbai - 5522nd June, 2008

Sub : Execution of your order in part

We thank you for your order of 18th June. Weshall be pleased to supply you items 1 to 14 at the pricesmentioned by you. As regards the remaining six items,we are sorry that we are unable to accept your prices.We enclose a proforma invoice showing the lowest pricesthat we shall charge you for these remaining items andon receiving your confirmation we shall at once despatchthe goods.

As you have instructed us to send all the goodsin one lot, we are withholding the execution of the firstpart of the order till we hear from you. In case you requirethe goods very urgently, please wire acceptance of ourprices to enable us to despatch the goods immediately.

Thank you.

Yours faithfully,

...................

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2:2:2 REFUSAL OR CANCELLATION OF ORDER.REFUSALA business house may have to refuse or decline an order

under unavoidable circumstances like--(i) an order received directly from a retailer

of a particular locality where a retail sellingagency has already been granted to adealer of that locality;

(ii) unsound financial position of the customer;and

(iii) sudden bankruptcy of the customer etc.,While drafting letters of Refusal, a businessman should

(i) state the reasons for declining the orderp o l i t e l y a n d d i r e c t t h e c u s t o m e r t ot h e nearest retail agent (in the first case);

(ii) refuse the order under some other reason /pretext (in the second and third case); and

(iii) suggest a few alternative, if any, to pleasethe customer.

CANCELLATION.An order placed already may have to be cancelled under

certain unforeseen circumstances, provided(i) the order is a recent one;(ii) the manufacture of goods has not been taken

in hand; or(iii) the dealer has not yet despatched the goods.After deciding to cancel and while drafting a letter of

cancellation of an order the businessman must communicatethe decision immediately to the supplier, preferably bya telegram followed by a letter; and point out clearly theactual reason for cancellation particularly when the decisionwas taken owing to inordinate delay in its execution.

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Letter No. 1. A letter of refusal expressing inability toexecute an order.

NRT TIME ZONEPh...................... Opp. Canara Bank,Fax ................... Vakola Bridge,E-mail .............. Mumbai.

ToStandard Watch Company,Kempegowda Road,Bangalore.

Dear Sirs,Sub : Inability to execute your order on the stipulated

date

We thank you very much for your order of 2ndFebruary for 2008 Clickwel Wall Clocks for deliveryby 5th March, 2008.

We greatly appreciate your interest in clocks and wishwe were in a position to accept your order. But as wehave already in hand several pending orders, which willkeep our factory busy for a long time, it will not bepossible for us to book your order, even if you were goodenough to extend the date of delivery by several months.

To cope with the increasing demand for Jupiter clockswe have ordered a new plant from Japan and it is likelyto be installed next May.

We are very sorry for our inability to serve you atpresent, but look forward to the time when we shall beable to attend to your order. We will keep in touch withyou.

Thank you, Yours faithfully, per pro.N.R.I Time Zone,

N.R. Narayanan, Manager.

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Letter No. 2 : A letter cancelling order for undue delay.

J.K. MILLS

Ph................. 28, Periagoundanpalayam,E-mail :.......................... Beema Nagar,

Pollachi road,Coimbatore..

Date : 5th May, 2008M/s Asif Mohamed & Brothers,Mysore-7Dear Sirs,sub: Cancellation of the Order

We had placed an order with you on 4th April, 2008.for 10 dozens of Royal Banians to be delivered on 4thMay, 2008 But till now we have received neither thegoods any letter from you.

As the time of delivery expired long ago we arecompelled to cancel the order, and to refuse them thegoods arrive we are sorry.

Yours faithfully,Ezilarasan,

Manager

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2.3 CLAIMS, COMPLAINTS AND SETTLEMENT OFACCOUNTS

Errors very frequently occur even in the best managedbusiness houses, because to err is human. The moment anydiscrepancy or mistake is discovered by any trader, he mustimmediately bring it to the notice of the supplier by writing aletter of complaint or clam. Instead of unnecessarily enteringinto a dispute, the supplier should honourably try his best tosetttle the matter amicably, if the defects are proved.

Occasions giving room for a claims or complaint aremany and varied in nature and hence it is very difficult toenumerate all of them in full. However, the following are themost important causes that give rise to claims and complaintsthat are mostly made by buyers :

(i) inordinate delay in the execution of the order.(ii) variance in the quality and quantity of the

goods supplied as against those ordered.(iii) supply of wrong goods or goods of inferior

quality.(iv) de l ive ry o f damaged goods owing to

defective packing(v) var iance in the te rms and condi t ions

relating to the payment and delivery etc.,2:3:1 The Art of Drafting Letters of Claims and Complaints

A trader must be extraordinarily careful while draftinga letter of claim or complaint in a satisfactory manner becausesuch letters are generally drafted in a mood of dissatisfactionor anger. Successful drafting of claim and complaint letterscall for great tact, politeness, sympathy and patience, in orderto avoid unnecessary bitterness, long and tedious disputes andlegal proceedings over patty issues.

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2:3:2 Hints on Writing a Letter of Claim or ComplaintThe letter should be :1. fair and temperate but not apologetic;2. based only on facts without imputation;3. friendly and courteous letters prove more

effective than a letter breathing fury andthreats in gaining the co-operation of thereader;

4. comple te , fu rn i sh ing a l l the de ta i l sconsidered very necessary to adjust whatis wrong (like the date of the originaltransaction, the order number or the invoicenumber, the list or description of goods etc.,);

5. definite and reasonable in its request forredress; that is, it should make a concretesuggestion for redress; and

6. brief in the statements relating to theinconvenience suffered by the customerbecause of the error.

If any complaint proves to be unfounded or unjustified,the buyer should not hesitate to acknowledge his error andapologise.

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Letter No. 1 : A letter complaining the despatch of defectivegoods.

ARUNACHALA EDUCATIONALCHARITABLE TRUST

Goyal Complex,Chennai Road,

Thiruvannamalai.April Ist, 2008

ToM/s. Mathi Publication,117- Maduai Main Road,Palakkarai,Trichy.

Dear Sirs,

Sub : Defective and damaged books

Thank you very much for the despatch of 16 bookson Business Communication sent to us as per our orderNo. MBH/71/7 DATED March 28, 2008. On goingthrough these books we found that one of the copies sentby you is incomplete as pages 45 to 64 (20 pages) aremissing while another copy is badly damaged.

Will you please let us know immediately whether weshould send them back so that you may replace by defectfree copies?

Thank you.Yours faithfully,

.......................................

For Arunachala Educational Charitable TrustManokaranr,

Trustee.

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2:3:3 SETTLEMENT OF ACCOUNTS

(REMITTANCE LETTERS)After receiving the goods ordered, the buyer should not

only acknowledge their receipt (unless the goods are sent witha delivery note) but also arrange remittance of the amountdue to the seller. The mode of payment depends upon thearrangement between the buyer and the seller. The possiblearrangements are :

(i) C.O.D. (prompt cash remittance after thereceipt of goods).

(ii) Credit for a certain period (whose paymenti s t o b e m a d e w i t h i n t h e s p e c i f i e dp e r i o d b y c a s h , o r c h e q u e o f b yacceptance of a Bill of Exchange).

The cost of remittance is generally borne by the debtorwho remits, excepting in a few special cases where the creditormay bear. It is easy to effect payments by transferring theamount from the buyers account to that of the seller, if bothare having their own separate bank accounts. Remittancesagainst periodical statements of accounts received by thedebtor from the creditor are generally arranged when thereare regular dealings between them.

The Letters of Remittance should be written withspecial care and accuracy as they involve matters relating topayment of money.

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Letter No. 1: Letter acknowledging receipt of goods andinforming remittance by cheque.

PALAVAN PALACEPh........................ East Coast RoadFax...................... Mahabalipuram - 28E-mail................. May 3, 2008..

ToM/s. Rohini Enterprises,Mysore.

Dear Sirs,Sub : A cheque for Rs. 2250/-

The Camel Hair Rugs invoiced by you on April 30,2008. have arrived and are satisfactory. We enclose acheque for Rs. 2.250 (Rupees two thousand two hundredfifty only) in full settlement of the amount of your invoice.The cheque No. Is ............ of corporation Bank.

Please acknowledge receipt and credit us with theamount.

Thank you.Yours faithfully,

...........................

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2.4 CIRCULAR LETTERS2:4:0 Introduction

In the course of business, occasions may arisewhen it becomes necessary to notify all the customers aboutcertain fundamental changes in the firms policy, constitution,place of business etc. In those circumstances, the facts arecommunicated to a large number of customers through circularletters. A circular letter can be defined as a letter containinga formal message addressed to a large number of customers.Since the message to be conveyed is the same, the circularsare generally printed or cyclostyled leaving space for insideaddress.

The names and addresses are incorporated or typed onthe space provided. Thus, a circular letter is a letter of whichmany copies are prepared and sent to a number of customers.

2:4:1 Objectives of Circular LetterThere are four objectives of writing circular letters.

They are the following.

1. To obtain publicity for a cause, a campaignor a productintroduced.

2. To make the reader interested in theircontents.

3. To i m p r e s s t h e r e a d e r w i t h f a c t s a n dinformation about the firm, its policy etc.

4. To gain the confidence of the reader.

2:4:2 Situation for Writing a Circular LetterCircular letters are usually written in the following

occasions :

1. Establishment of a new business.2. Admission of a partner

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3. Change in the address of the place of business4. Death or retirement of a partner5. Purchase of a business.6. Obtaining an agency.7. Price reduction and clearance sales.8. Conversion of partnership into a company.9. Introduction or arrival of new products or new

schemes.

2:4:3 Special Hints on drafting Circular LetterCircular letter is a constructive force. To make it more

effective, different strategies should be adopted for differentoccasions. Therefore, the task before the writer is not an easyone. The following points are to be borne in mind whiledrafting circular letters.

1. Establishment of a New Business:A circular letter announcing the establishment of a new

business should touch the following matters.

1. Name of the firm, address and the nature ofits business.

2. Date of opening of the business firm.3. The knowledge of the proprietor, his

experience and reputation.4. A reference that the goods of high quality

are being offered at competitive prices.5. The capital at the disposal-exact amount

however, should not be disclosed.6. An invi ta t ion for a t r ia l order and a

s u g g e s t i o n t h a t t h e r e s u l t w o u l d b esatisfactory.

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2. Admission of a Partner:A letter of this type should touch the following points.

1. Circumstances that led to the admissionof the partner, expansion of business etc.,

2. The name of the incoming partner.3. His business experience, knowledge and

ability.4. An appreciation about his assistance and

how i t sha l l he lp the f i rm to sa t i s fycustomers wants more effectively.

5. An expression of thanks to the customers fortheir patronage in the past and a courteousrequest for its continuance in future.

3. Change in the Address: This letter should highlight the following.

1. The reasons the promoted the firm to shiftto new premises.

2. The relative superiority of the new premises.3. The address of the new premises.4. An explanation how the new location shall

be conducive toefficiency in manufacture ordistribution.

4. Retirement or Death of a Partner:The letter should include the following points.

1. An announcement of the fact either death orretirement with regret and so appreciationwith reference to his service.

2. An assurance that the business shall becontinued on the same lines as before

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3. In case of retirement, specify the reasonsthat led to his retirement.

4. A note tha t the reconst i tu ted f i rm isadequately financed, deficiencies havebeen adjusted by contribution from theremaining partners.

5. If the name of firm is changed, the newname should be communicated.

5. Purchase of a Business: The letter can be drafted on similar lines

suggested for circularis announcing the establishment of abusiness. In addition to them, the following points should beincluded:

1. An announcement of the fact and the nameunder which the business shall be conductedin future.

2. If the firm has been successful in the past,a reference that the traditions shall bepreserved.

6. Obtaining an Agency: Drafting a letter to announce the obtaining of an

agency cells for special skill and care. It should cover thefollowing points.

1. The details of the agency obtained.2. Comparative merits and advantages of the

goods or services entrusted under theagency.

3. If the product offered is unknown in thelocality, a reference to the excellence ofthe product and fairness of its prices.

4. An invitat ion for a t r ial order and ana s s u r a n c e t h a t t h e r e s u l t w o u l dbe satisfactory.

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7. Price Reduction or Clearance Sales: A price reduction or clearance sales is generally

advertised in newspapers or by posters and handbills. But, attimes, businessmen can announce them by means of thecircular letters as well. The comparative advantage of acircular letter over the other means of advertising are thefollowing.

1. A letter can be addressed to a special classor a selected number of persons and is lesslikely to be overlooked.

2. The product can be more fully explainedo r d e s c r i b e d i n a l e t t e r t h e n i n aadvertisement.

3. A let ter unlike an advert isement canbe kept by the recipient in his file forfuture reference.

While drafting circulares of this type, the followingpoints must be touched.

1. The nature and date of the sale and the mostattractive features of the offer.

2. An invitation to the customer to visit theshop.

3. Range and variety of the products offeredu n d e r c l e a r a n c e s a l e s . H o w e v e r ,c a r e s h o u l d b e t a k e n t o r e m o v et h e impression that they are only forthe fortunate few.

4. If the reduction in price is really great, theactual price should be quoted.Both theoriginal prices and the reduced pr icesshould be given, so that the customercan make comparison of the reduction.

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8. Conversion of Partnership into a Limited Company1. An expression of the expansion of the

firms business and the consequent needfor more capital.

2. An assurance that their quality shall suit thecustomers needs and tastes.

3. The competitive return of the prices, termsetc.,

This type of circulares is purely sales letters, which aimsales promotion. Therefore, the principles for drafting salesletters are equally applicable to these letters also.

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SPECIMEN CIRCULAR LETTERSLetter 1. Establishment of a New Business

K.S. PAPER MART

48, T.H. Road,Chennai - 600 005.

10th May 2008.Dear Sir,

We are pleased to inform you that on 20th May2008, we shall be opening a retail paper stores, underthe style K.S. Paper Mart at the above address, whereyou may rely on receiving high-quality paper atcompetitive prices.

The capital at our disposal is sufficient toenable us to honour our obligations and to lay in stocksdifferent varieties to satisfy the most exactingrequirements.

We hope that a trial order would win yourfurther custom. An opportunity to prove the truth ofthis claim would be greatly appreciated.

Yours faithfully,K.S. Paper Mart,

K. SridharJ. Sundar

Partners.

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Letter 2. Admission of a Partner

RATHNA ELECTRICALS

15, Netaji Road,Coimbatore - 641 001

15th May 2008.Dear Sir,

We are pleased to inform you that we have this dayadmitted into partnership Mr. K. Ranjit, who has for manyyears been associated with our business in variousresponsible positions.

We are confident the Mr. K. Ranjit will exert everyeffort to further the interest of our firm and we trust thatyou will continue to favour us with your valued custom.

Yours faithfully,Rathna Eletricals,

N. PoaghavanManaging Partners.

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Letter 3. The Change of Address

ARUNA MACHINE TOOLS (P) LIMITEDNo. 10, Industrial estate,

Madras Main Road,Madurai - 625 001.

10th May 2008Dear Sirs,

The steady growth of our business has made essentialan early move to a larger premises. Our old factory hasrapidly become unable to cope efficiently with theincreased demands of both old and new customers andto ensure satisfactory service, a large area at the aboveaddress has been acquired.

The site is particularly good one in the heart ofa large Industrial estate within the easy reach of therailway and the road transport difficulties are thusreduced to minimum and early deliveries are ensured.

The new factory offers great scope formechanization and a resulting increase in both thequantity and quality of our output is confidently expected.Transitional periods, as you know will give rise toconsiderable difficulty. We trust that you will in thecircumstances allow us a certain amount of latitude. Asthe factory will be ready for production within a for night,we can assure you of the prompt delivery of all goodsordered newt week.

We take this opportunity of expressing ourthanks for your confidence in the past, and we hope thatthe improvements we shall introduce will lead even tomore business.

Yours faithfully,For Aruna Machine Tools (P) Ltd.,

V.M.P. RenganathanGeneral Partners.

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2:5 STATUS INQUIRIESGoods may be sold for cash or credit. When they

are sold for cash the deal ends there. But when they are soldon credit; it is necessary to know the trustworthiness of thecustomers. Hence the Credit Sales play a vital part in thegrowth of any business.As business on credit invariably carriesan element of risk of non-payment businessmen always makeenquiries regarding the financial standing, reputation,credit-worthiness and above all the character of the newcustomers before entertaining credit deals withthem. Such information relating to the status of CreditCustomers can be obtained from all or any of the followingsources:

(i) Business acquaintances of the prepositivecredit customer;

(ii) Credit Information Agencies (also calledMercantile Inquiry Agencies); and

(iii) Banks.(i) Trade References

Usually an order for goods or application for anappointment or an Agency from an unknown person willcontain Trade References, i.e., the names of firms orindividuals to whom inquiries about his standing may beaddressed. If the order or application does not give anyreference, a request to furnish the same must be made verytactfully by careful wordings.

The business friends of a prospective customer who isin need of credit facility or an agent who wants agency maysupply the required information free of charge.

The firm giving credit or a job or an agency should takecare to see that the persons whose names are given asreferences are themselves reliable, by making use of severalsources of information and checking them against one anotherbefore a final favourable decision is taken.

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(ii) Credit Inquiry AgenciesInformation Bureaux supply reliable information

regarding the status and standing of any person of firm,professionally, according to a fixed scale of charges.

Such information can also be had from Chambers ofCommerce and Trade Associations.

(iii) Bank References As a Banker will answer Status inquiries only from

another banker, the business house making the inquiry mustaddress it to its own banker and ask him to obtain the requiredinformation from the banker whose reference the prospectivecustomer or agent has given.

2:5:1 Hints on giving Replies to Status Inquiries1. Make it as brief as possible, but let it be clear

and adequate.

2. State only on the basis of your personalk n o w l e d g e a n d e x p e r i e n c e o f t h ecorrespondent and not on hearsay.

3. Do not specify the amount up to which itwould be safe to grant credit unless theinquirer is very particular about it.

4. Express the unfavourable opinion withextreme care and tact, the best way out isto state that you are unable to express anyopinion about the person about whose statusthe inquiry is made. Avoid mentioning thename of the firm, if it is necessary to givesome unfavourable opinion.

5. Always make it clear that -

(i) You are in no way responsible for theinformation you give;

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(ii) t h e m a t t e r s h o u l d b e t r e a t e dprivate and strictly confidential;and

(iii) you should not to be quoted2:5:2 Steps in the Status Enquiry Correspondence1. Seller / Dealer - to Customer - asking for his

Trade and Bank Reference.2. Customer - to seller - furnishing his Trade

and Bank Reference.3. Seller - to (i) Trade Reference

to (ii) Bank Reference4. Trade Ref. - to Seller giving Favourable or

Unfavourable Reply.5. Bank Ref. - to Seller giving Favourable

Unfavourable Reply.6. Seller - to customer executing refusing

to execute the order.

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Letter No. 1: A letter asking for reference.SIDDHARTA FURNITURE WORKS

110, Subash Road, Shimoga - 6.Phone No.......................Fax ...................E-mail ..............

March 4, 20....

ToMessrs Shankar Rao & Brothers,4, Gurumurthy Street,Hassan - 5Dear Sirs,

Sub : Your Trade and Bank References

Thank you for your order of March 1, 20 .....We are glad to inform you that it is having our attention.It has been a regular practice of our firm to ask for a fewtrade references, while opening an account for the firsttime. As we did not have the pleasure of doing businesswith you earlier, you would be helping us a lot if youcould send us, at your earliest, the names of two or threebusiness houses of standing.

Yours faithfully,For Siddharth Furniture Works

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Letter No.2: A letter by the customer furnishing his codeand Bank References.

SHANKAR RAO & BROS.4, Gurumurthy Street,

Hassan-5Ph......................Fax ...................E-mail .............. March 8, 20....

M/s Siddharth Furniture Works110, Subash Road,Shimoga-5

Dear Sirs,

Sub : Our Trade and Bank References

As required by you we are furnishing below our Tradeand Bank references with whom we have been havingbusiness transactions since last fifteen years.

Trade Reference - Varum & SonsShop No. 10, MajesticCircle,Bangalore- 560002.

Bank Reference - Corporation Bank of OrbitYard, Hubli-2.

Kindly complete the formations and execute our orderat your earliest.

Thank you,Yours faithfully,.....................

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2:6 COLLECTION LETTER2:6:0 Introduction

Credit is incidental to trade. No businessman cansurvive in this competitive business world without extendingcredit to his customers. When credit is given to the customer,the problem of collection shall naturally arise. Thebusinessman cannot realise the real profit on a sale until hecollects the amounts involved in it. In other words, profitwill remain as a mere obstruction if collections of credit salesare unduly delayed or result in large amounts of bad debts.

Timely collection is also very important from the pointof working capital position of the firm. Prompt collectionreleases the funds locked in debtors accounts and ensures asteady flow of working capital and facilitates further business.If uncleared even to continue his business unless he isfinancially sound. It is, therefore, rightly remarked that agood collection record is one of the essentials for success

A collection letter is also called a Dun. A Dun is aspecial notice sent to draw the immediate and special attentionof the debtor. The word Dun is derived from the MiddleEnglish word Dunnen, which means to make a loud noise,i.e., each successive collection letter has greater force andpressure than the previous one. A dun means an importunate(persistent) creditor or bill collector. To dun means toimportune for payment of debt. Therefore, Dunning lettersor Collection letters refer to a series of letters written againand again for the settlement of account.

2:6:1 Guiding principles for collectionThe purpose of collection is to collect the amount when

they are due. No firm can afford to allow its customers totake undue liberty with the credit facilities given to them. Atthe same time, undue pressure shall irritate the customers andeven lead to a loss of valuable customers. It is, therefore, a

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delicate task and similar to the task of walking on a wire or arope where the walker should maintain a balance. Whilecollecting the dues also the businessman should strike abalance between leniency and firmness.

But no hard and fast rule can be laid down forformulating collection policies. The collection proceduretends to very with individual circumstance, nature of thecustomers, their past records, the possible difficulties theyare facing. The collection policy, in spite of the minorvariations required, should be governed by two cardinal

principles. They are :

1. Prompt customers.2. Good but slow payers3. G o o d b u t u n a b l e t o p a y b e c a u s e o f

u n a v o i d a b l e circumstances.4. Fraudulent or reckless customers.

2:6:2 Hints on the drafting of collection letters1. Draft the Collection Letter after a careful understandingof the peculiar nature of the customer, the way in which hehas handled his account and his present condition etc.,There are different types of customer such as:

1. Honest.2. Dishonest3. Negligent4. Miserly5. Aggrieved (those who are in financial difficulties).

2. Assume that the customer will pay (if you consider thecustomer hopeless, he may take advantage of this).

3. Do not be apologetic (in requesting payment from yourcustomer, you are asking no favour).

4. Make straightforward request for payment.

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5. See that the tone of a collection letter is courteousand friendly but firm.

6. Leave the way open for the debtor to pay with goodgrace.

7. Never send it on postcard.8. Apply the highest pressure only at the time when the

customers business is at its highest peak.9. Leave an interval of a weak or two between two

collection letters.10. Avoid as far as possible threats (or legal action) because -

1) it is confession of the deplorably inefficiencyof the collection epartment;

2) it is expensive;3) it leads to a slow and tedious process; and4) it will result in loss of customers. However,

when a threat is made, see that the same isc a r r i e d o u t , w h a t e v e r m i g h t b e t h econsequences.

2:6:3 Stages in CollectionsThe stages in the collection process are well

established. The collection letters are usually written in aseries. In each successive letter, the tone becomes strongerand sent out at intervals varying with the type of credit riskand the amount involved. Even for a fourth grade customerwho is fraudulent, all the successive stage should be passed.In other words, even after knowing a debtor as reckless, thecreditor should not resort to the final stage of warning at thebeginning itself. The following are the routine stages in thecollection process.

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I. Sending Statement of AccountII. RemindersIII. Stronger Reminders.IV. Inquiry and DiscussionV. Appeal and Urgency.VI. Demand and Warning.

Stage I - Sending Statement of AccountThe actual collection correspondence starts from the

stage of sending reminders, because sending a statement ofaccount is the duty of the creditor. A statement of Account isa copy of the customers account in the sellers ledger showingthe balance to be paid as on a particular date. It serves as asimple reminder to the debtor that he owes a particular amounton the date of the statement or letter. It does not make anyrequest for payment. If the first letter remains unrepaid, areminder is sent pointing out the possibility of an oversightor loss of the document. A duplicate statement of accountaccompanies the second letter. These two letters are merestatements. The second letter is also know