Information flow between different functional areas of a business

The information flow between different functional areas of a business can be separated in to two flow: internal flows (information shared within a business) and external flows (information shared with other businesses).

Internal Information flows

The internal information flow in a business is the process by which information flows between various departments within the business.

Information can flow upwards, downwards or laterally between various departments. If you think of a business an elevator, the ground floor might be where customers are. The first floor might contain the marketing and purchasing departments and the second floor might contain the admin and management departments.

If the information flow is upwards, then that means information is flowing up the elevator, so marketing department might be sharing information with the admin department. A downwards flow of information is the reverse of that, with a lateral flow of information being a case of the marketing and purchasing departments sharing information (which in our example are both on the same floor).

Internal Information flows to external parties

Businesses give information to other businesses such as suppliers as the purchasing department will need to give information to the supplier about stock they need -v- stock they have. Businesses may also share information with regulators or government bodies i.e. for tax purposes or to comply with health and safety regulations.

Levels of Organisation

Along with internal and external flows of information, there are three main categories which information typically falls under in a business:


1. Strategic information (senior management)

The strategic information flow involves the long term planning for a business (2 years +). This flow is about setting goals for the business such as the number of new branches it may want to open or the number of staff it for-sees hiring over the next few years. Strategic information is planning for the foreseeable future of a business.

2. Tactical information (middle management)

This is the short term plan for a business and is focused on the near future (1-2 years).  A tactical information flow is used to look a year to two ahead of today in order to set out how a business will reach the strategic goals. For example, in order to open a new branch in a certain area, the decision should be based on research of suggested areas to find out if it would do well in the areas and if similar businesses are already there.  The point of a tactical plan is to work towards the strategic plan.

3. Operational information (junior management)

An operational plan works towards the immediate plans for a business.  A timeframe for this can be a week to several months. For example a business may want to increase sales in a specific branch / region where sales have slipped due to increased competition. The business may decide to increase marketing spend in that branch or extend opening hours etc… operational plans are used as a stepping stone toward reaching the goals of the tactical plans.