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CMA Foundation · Fundamentals of Business Economics and Management · Communication, Co-ordination, Collaboration, Monitoring and Control

In Arjun Pharma, a rumour about a plant shutdown spreads quickly among employees at lunch, though management has issued no announcement. Which statement about this communication is correct?

This is informal communication, known as the grapevine. It flows through social contacts outside the officially prescribed channels of the organisation. The number of people reached or the peer level of those involved does not make it formal, since no official channel or authority route is used.

  1. AIt is formal communication because it reaches many employees
  2. BIt is informal communication, the grapevine, which exists outside official channelsCorrect
  3. CIt is vertical communication because it passes through the hierarchy
  4. DIt is formal horizontal communication because peers are involved

Explanation

Communication outside officially prescribed channels is informal, and its network is called the grapevine. Number of recipients or the involvement of peers does not make it formal. It does not follow the official hierarchy, so it is not vertical formal communication.

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