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TSR Wiki > Study Help > Subjects and Revision > Revision Notes > Business Studies > Using Annual Reports as a method of external business communication

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Advantages and Disadvantages of Using Annual Reports as a method of external business communication.

Annual reports are also a method of external communication. It is a more formal and written method of communication. It provides information to customers and anyone who requires information about the company. They can get a copy of any annual report from a public limited company. It usually communicates important information and is used in a business to record the position at a particular point in time. It states any new developments, objectives, and financial status about the organisation.

The advantages to using annual reports

• It can contain detailed information such as figures.
• Visual information can be used e.g., tables, charts etc.
• A written record of the business is kept at a particular moment in time.
• Shows the public that the organisation does keep in touch with what they want.

The disadvantages

• Rival companies can gain access to this information to increase competition between the organisations.
• A report is a formal method of communication and is therefore time consuming to prepare.
• If a reader of the report wanted to give feedback, then the process for this would be long causing the barriers of communication to occur.
• Annual reports have to be produced every year even if the company had a bad year.
• Annual reports have open channels of communication because they can be read by anyone.

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