What is an external or internal application?
If, for example, there is an advertised position in a company, an internal applicant is likely to be someone who is already working for the company (presumably in a low position, logically) and an external applicant who is not yet working for the company.
How do you phrase rejection?
In the rejection, show that you appreciate the commitment: Dear Mr.… / Dear Ms.… Thank you very much for taking the time for a personal interview as part of your application. We were happy to meet you and you made an extremely positive impression.
How to formulate a rejection?
State the reasons for the rejection Too expensive, too late, no interest, no need – the reasons for rejecting an offer can be varied. Whatever the reason, always briefly explain why the offer you are declining did not meet with approval.
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