Hayleys Group is operating in Sri Lanka and 85 countries, having a diverse portfolio of business that are related to 16 different sectors. Being a diversified conglomerate, the company has presence in segments such as agriculture, logistics, leisure, tea exports etc. The PESTLE analysis of Hayleys examines the external environment being faced by Hayleys and its impact on the company.
Company Information
| Company Name | Hayleys PLC |
|---|---|
| Industry | Conglomerate |
| Founded | 1878 |
| Headquarters | Colombo, Sri Lanka |
| Key People | Mohan Pandithage (Chairman and CEO) |
| Products and Services | Agriculture, Plantations, Consumer, Industrial Input, Textiles, Hand Protection, Power and Energy, Leisure and Aviation |
| Revenue | LKR 269 billion (2021) |
| Net Income | LKR 10.7 billion (2021) |
| Employees | Over 38,000 |
| Website | https://www.hayleys.com/ |
Political Factors
The political factors of a country have a strong effect on a company as political disturbances cause interruption in business operations. Since Hayleys is an organization with global operations and working in different industries, the environmental dynamics are more complex for the company. Each segment is facing its own set of challenges and growth prospects.
For instance, political instability due to Russian conflict had disturbed the leisure and plantation sectors due to the resultant supply chain challenges. The logistics domain also had issues due to the political disturbance in Myanmar. In case of Sri Lanka, the government instability and political crisis had caused significant disturbance for all of its sectors.
Government’s decisions pertaining to ban on materials or products arising out of the political crisis and weakened economy had negatively affected its business segments. The agriculture sector for example is likely to have lower yields due to the short term ban on chemical fertilizer (Hayleys PLC, 2022).
Government’s poor financial policies had resulted in fluctuating exchange rate which effected the profitability of the company across different sectors. Moreover, the tax policies imposed by the Sri Lankan government also affect the way business operates. The management needs to make business decisions viewing the local and international political climate and its challenges.
Economic Factors
There has been a significant economic turmoil in Sri Lanka which impacted the company. Inflation and devaluation of the local currency has increased and there was a widespread economic discord across the nation. The prices of basic necessities, commodities and also energy have faced a high increase, exerting economic pressures to the consumers and businesses alike.
Pandemic has also been a negative social factor for the company’s operations. The management had to navigate through the difficult economic environment in the country and its effect on its different areas of operations. For example, the company faced issues in terms of the higher prices of fabric from its Chinese suppliers (The Island, 2023).
The country also struggled with the continued supply of energy, creating another challenge for the company. The retail domain of Hayleys was impacted by the rising prices and inflation as the consumer spending was compromised. The low disposable income of the people and a rising unemployment further made the economic environment unfavorable for the company.
The logistics segment was also effected as the company had to manage the higher energy costs and crude oil prices. The management had to tackle the issue by using the transportation resources more effectively. Adjustments such as identifying the shortest routes to the destination and following them has been implemented (Tea Bizz, 2022).
Social Factors
The social factors also have the potential to effect the sales and profitability achieved by the company in its different domains. Rising population and its composition as well as the level of urbanization effects the way business segments of Hayleys can progress. Positive trends in population development and urbanization create further business opportunities.
The demand of a product is another social factor that has a direct effect on the production and sales function in an organization. The construction sector has seen a decline in demand which in turn has slowed down the company operations in this area. Another way that customer demand affects the company is evident in textile domain.
There has been a surge in the demand of textile related products that are deemed to have lower harmful impact on the environment. This change in demand pattern has shifted the focus of the company’s textile segment on accessing and process materials that are more eco-friendly in nature (Hayleys PLC, 2022).
Technological Factors
The company requires the use of information technology to manage the business operations in its various segments. The pandemic has changed the way customers and businesses interacted with each other, increasing the dependence on digital medium. Hayleys has used social media presence, along with the other technology based tools to understand its market needs.
Artificial Intelligence, robotics and data analytics have been integrated as a part of the organization and its different subsidiaries. The company has also invested in technologies that would enable it to pursue automation and make the production process more effective and efficient.
Legal Factors
The management has implemented the legal requirements across all of its business segments in accordance to the regions where the company is operating. These laws are related to employee management, BOI, labor rights, consumer rights etc. Moreover, the safety and health of employees and related regulations are a critical part of the legal environment of the company.
Hayleys has applied the relevant ISO standards for risk management and quality assurance. Hand protection is one such example of legal implications of the employee safety laws (Hayleys PLC, 2022). In addition to this, implementing protocols to minimize the occurrence of fraud is also a legal requirement that has to be fulfilled by the organization.
Environmental Factors
The environmental initiatives taken by the company are reflected in the form of its focus on producing environment friendly material such as organic clothes. The company has also been able to reduce its carbon footprint up to 15% through installation of solar roof, which shows a positive step towards becoming sustainable (The Island, 2021).
In addition the company is focusing on implementation of material and waste management processes that bring it closer to its sustainability goals. The management has created the objective of achieving zero landfill waste in the next 7 years, along with attaining 30% reduction in the domain of GHG emissions.
Conclusion
Hayleys has been operating in a moderately unfavorable environment due to the critical situation in Sri Lanka, and the Russia and Ukraine war. The current macro-environment is showing a positive development in Sri Lanka, which would help the company to expand its sales and revenues.
References
- Hayleys PLC (2022). Annual Report. Retrieved from: https://www.hayleys.com/wp-content/uploads/2022/06/Hayleys-PLC-AR-2021_22.pdf
- Tea Bizz (2022). How Sri Lanka’s Tea Industry Is Coping With Continual Crisis. History of Ceylon Tea. Retrieved from: https://www.historyofceylontea.com/ceylon-publications/ceylon-tea-articles/qa-roshan-rajadurai-05.html
- The Island (2021). Hayleys Fabric cuts carbon footprint by 15% with Sri Lanka’s largest solar roof. Retrieved from: https://island.lk/hayleys-fabric-cuts-carbon-footprint-by-15-with-sri-lankas-largest-solar-roof/
- The Island (2023). Hayleys Fabric PLC ‘set to steer through’ stiff economic conditions. Retrieved from: https://island.lk/hayleys-fabric-plc-set-to-steer-through-stiff-economic-conditions/#:~:text=%E2%80%9CSuppliers%20of%20Hayleys%20fabric%20from,depreciation%20further%20aggravated%20cost%20pressures.