Heritage Manufacturing Company
This case study involves the sale of capital equipment to a developing country that has experienced financial difficulties over the years. The payment period is spread out over three years and the company's primary bank does not have a large long-term country exposure limit for Egypt.
This case is designed to explore several important aspects of international business transactions. First, there is the issue of the available company financing alternatives, which include examining the methods of financing exports, revealing the risks associated with the transaction, and analyzing the various alternatives to find the best solution for this company. This transaction focuses on the use of a Letter of Credit. Second, there is the issue of exploring how financial institutions set and manage country exposure limits. Third, there is the issue of how the company and the financial institution evaluate the creditworthiness of the country.