Reference no: EM131366866

General Manufactures widget manufacturing plant operating in Pleasantville (in a midWestern state) is at a crossroads. Profits have been dwindling over the past several years, and management feels that high labor costs are making their operation uncompetitive. The plant is unionized, but the union has agreed to a series of wage and benefit cuts over the years. New hires, now a majority of the workforce, are paid $14 an hour, while the old workforce is paid at a rate that corresponds to an hourly wage of $25. Pleasantville is, for the most part, a company town. Most of the residents work directly or indirectly for General Manufacturers, and the town would be devastated if the plant closed. The company has been the beneficiary of the policies of the town and the state in the past: they have been offered tax breaks, a highway was constructed to help move raw materials and finished products, schools and other facilities for workers and their families were established, utilities were billed at a discounted rate etc. In addition, generations workers of from Pleasantville have spent their working lives at General Manufactures and have seen it progress from a tiny plant to a major manufacturer of goods for an international market. John Smith, the CEO of General Manufacturers has a decision to make. He has the choice of remaining in Pleasantville, moving to a non-union location in Tennessee, or relocating the plant to a cheap-labor country.

1) What is the role of corporate governance in this scenario?

2) How does globalization complicate the issues surrounding each of the following: corporate social responsibility, ethical leadership, corporate governance?