An organized enterprise does not exist in a vacuum. Rather, it is dependent on its external environment. It is a part of larger systems such as the industry it belongs to, the economic system and society. Thus, the enterprise receives inputs, transforms them and exports the outputs to the environment. Clearly, an open-system model that includes interactions between the enterprise and its external environment describes any business or organization.

The inputs from the external environment may include people, capital and managerial skills, as well as technical knowledge and skills. In addition, various groups of people will make demands on the enterprise. For example, employees want higher pay, more benefits and job security. On the other hand, consumers demand safe and reliable products at reasonable prices. Suppliers want assurance that their products will be bought. Stockholders not only want a high return on their investment but also security for their money.

It is the task of managers to transform the inputs, in an effective and efficient manner, into outputs. Of course, the transformation process can be viewed from different perspectives. Thus, one can focus on such diverse enterprise functions as finance, production, personnel and marketing.

Communication is essential to all phases of the managerial process for two reasons. First, it integrates the managerial functions. For example, the objectives set in planning are communicated so that the appropriate organization structure can be devised. The second purpose of the communication system is to link the enterprise with its external environment, where many of the claimants are. For example, one should never forget that the customer, who is the reason for the existence of virtually all businesses, is outside a company. It is through the communication system that the needs of the customer are identified, and this knowledge enables the firm to provide products and services at a profit.

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