Which do you think is better for the organization hiring an external manager from outside the company or promoting one internally ? give reasons .

It is always a good practice to look for required person internally. If there is no deserving person OR for any other reason it is not possible to promote him then only, you should hire from outside.

For, if we keep on hiring for senior positions from outside then it will not motivate our existing employees. Because, growth happens to be one of the most important motivating factors.

Hello Anas I think it purely depends on company's vision because as a HR and team manager / higher up you will certainly know who is capable to handle a higher position and given a promotion will justify the post. If its a tactical area which internal person doesnt have hands on experience then HR and higher management should definetly higher from outside who has experience and handle such situations and excelled in it.