McDonalds failure in Bolivia as believed by marketing analysts across the world, was

natural. Though it sounds unbelievable and surprising for many across the globe.
McDonalds management was almost certain about the failure as their finest
promotional campaign, both in electronic and print media failed to yield any
result. McDonalds failed miserably to position their product in the minds of Bolivians.
A multinational giant with great resources couldnt understand the requirement of a
new market. The very idea of fast food burgers was not acceptable to the common
people. However, observers were not at all surprised as the concept of fast-food was
diametrically opposite to the concept of meal to traditional Bolivian society.
Bolivians were not at all accustomed to fast-food as part of their daily life. Food to a
Bolivian is something that has been cooked with care and love, whereas fast-food is
cheap, can be cooked easily and something that just fills the stomach when someone
is in hurry. Thus, the common Bolivian never accepted this concept. In a nutshell, it
was a deep cultural rejection as expressed in the documentary on this subject, just
after McDonalds left Bolivia.

How McDonalds made such a terrible mistake?

Subsequent publications clearly identified the research gaps before McDonalds took
investment decision in Bolivia. Katsioloudes & Hadjidakis (2007) argued that due to
lack of understanding of the socio-cultural aspect of their target market, McDonalds
failed to generate their expected sales. It is rather surprising how the research team of
McDonalds overlooked the potential challenges before entering into Bolivia.
Marketing analysts are clearly divided in their opinion. According to one group,
success of McDonalds in other countries was primarily responsible for lackadaisical
attitude towards cultural sensitivity of Bolivia, whereas opponents termed it as
misinterpretation of research outcome (Natural News, 2013). Whatever be the case,
after fourteen years of sustained effort, McDonalds finally decided to leave Bolivia in
2002.

Research gap that led to bankruptcy

Though McDonalds strategy, as evidenced from other countries across the globe was
to align with host countrys requirement and thorough customization to suit local
palate, failure clearly indicated possibility of research gap. McDonalds in Bolivia was
unable to match their offer to suit local needs. Theres a common believe that company
executives paid little attention to understand whether a society is ready to accept
conceptual changes in relation to their culinary and if their sustained promotional
campaign would result in displeasure among target customers. Such a failure of a
multination giant with finest managerial capabilities sparked debate throughout the
globe and attracted attention of socio-economic researchers.

According to the US media, Bolivians had already started accepting fast-food culture
and the decision of withdrawing was actually due to natural restructuring process, as
reported by Global Research News (2013). According to them, it wasnt because of
compulsion, as propagated by the international media. Whatever be the claims of US
media, even subsequent documentary on McDonalds, titled Why did McDonalds
Bolivia go bankrupt clearly stated that Bolivian culture didnt permit McDonalds to
permeate in Bolivian society with their offering, (Global Research News, 2013).
Common Bolivians always perceived McDonalds food as unhealthy and unfit for their
family. Despite finest promotional campaign for a period of fourteen years,
McDonalds failed to position themselves favourably, even among young Bolivians
traditionally the age group that is considered as risk takers. McDonalds internal
analysis also revealed that rejection wasnt due to the taste of food McDonalds
offered. It was because of the Bolivian belief about ideal food and methodology of
preparing the food (Global Research News, 2013). Bolivians believed that there was
no reason to accept McDonalds offer at the cost of their own health and family
members. Processed restructured meat technology of McDonalds was completely
rejected by Bolivians (Natural News, 2013). Moreover, a compound, namely
azodicarbonamide, a chemical agent used as flour-bleaching component to produce
plastic-foam was used by McDonalds (Examiner, 2009), though it was banned both in
Europe and Australia as a food-additive for a long time but not in Bolivia.

How economic was the departure?

Singh (2000) and Baldwin(2004) believe that bridging the gap between developed and
developing economies could only be possible if free movement and equal opportunity
to foreign capital could be ensured through government policies. As it has always
helped the developing economies to grow by bringing new management skills and
technology. Tschoegl (2007) argued that instead of spreading negative image about
McDonalds investment, it would have been a win-win situation if the international
media executed their responsibilities of revealing true reason of McDonalds departure,
i.e. restructuring their business. However, critics clearly rejected this view stating that
there shouldnt be any trade-off between public health and capital movement in food
sector, even if the country had accepted multilateral and pluri-lateral trade agreement.
Economists like Baldwin (2004) were apprehensive if foreign investment truly brings
long-term growth in case of developing and under-developed economies.

Observation
There is no denying the fact that globalization had its impact on traditional culture.
Quechua culture of Bolivia is not an exception. Huge inflow of capital, changing
lifestyle, altered perception about product quality, busy life-style and associated
adjustment in everyday life are reality in all the countries. Multi-national giants thus
were always in favour of developing promotional campaign in such a way which
would promote standardization and thus offering them scale advantage. However, in
case of fast-food chains like McDonalds, instead of product standardization on the
basis of expected product line by a sensitive culture, more emphasis were given on
better service encounter (i.e. transactional interactions in which one person provides a
service or good to another person) to position themselves.

Conclusion
Hawkes (2007) stated that access to calorie-rich, nutrient-poor fast-food items,
especially after globalization, is responsible for diet-related chronic disease (DRCD),
while trying to determine social-determinants of health as a part of Globalization
and Health Knowledge Network research activity. Moreover, published report about
malnourished children among South-American countries clearly reveals dangerous
impact of policy-paralysis at government level. Bolivia is no exception. In case of
Bolivia, more than one quarter of children had stunted growth and number of
overweight women increased by nine percentage point between 1994 and 1998. On
the contrary, US researchers identified Bolivia as nutrient-deficient country whenever
it was question of child-nutrition. They always identified high positive correlation
between malnutrition and cultural abstinence of accepting nutritious food from other
societies, in lieu of their own preparation. However, many researchers criticised the
findings as biased and motivated to assist multinationals. Whatever be the scenario,
Bolivians didnt agree to switch-over and continued displaying high faith on their own
culinary.
Why Bolivia Allows KFC and
Starbucks, but Bans
McDonald's
In May, 2014, Starbucks announced that it will open its first
location in Bolivia soon, while Yum! Brands said that it will do
the same. McDonald's previously failed in the country, closed
all of its stores, and was later banned. What will its
competitors do differently?
Mike Fee
(mikefee)
Jul 11, 2014 at 4:30PM
McDonald's (NYSE:MCD) failed in Bolivia. It operated in the country for 14 years and
eventually closed all of its locations by 2002 amid cultural rejection from locals and the
government.
Aside from Cuba, Bolivia is the only Latin American country without golden arches. This
failure was a surprise, since Bolivians love eating hamburgers. Turns out they just
prefer to buy them from local street vendors instead of giant fast food chains.

Anti-American government
Following the McDonald's failure, Bolivians elected Evo Morales as their President in
2006. He has deep anti-American sentiments and is extremely cautious on allowing
western products, brands, and culture into the country. His strong stance specifically
against giant US fast food chains even included a plea to the United Nations in which he
called their influence "a threat to humanity."
These are pretty strong feelings. Even Venezuela, an ally of Bolivia with similar political
and ideological beliefs, has around 140 McDonald's locations.
Bolivia rewrote its constitution in 2008 with specific measures to protect the country
from foreign interests and place a focus on local businesses and investment. It also
included measures to protect the country against large-scale industrial agriculture.

Powered By

INVERTED CLOCK IN LA PAZ, BOLIVIA

In fact, the government is so anti-Western that the clock on the constitution building in
the city of La Paz is anti-clockwise. Yes, you read that correctly--the clock has inverted
hands. Bolivian Foreign Minister David Choquehuanca calls it the "clock of the south,"
saying that the country is being creative and does not have to obey or follow Western
principles.

It's the end of the world as we know it

In August, 2012, Bolivia even proposed banning Coca-Cola from the country in an effort
it called the "end of capitalism." The ban would take effect on Dec. 21, 2012, which just
so happened to be the end of the Mayan calendar (remember all of that end of the world
talk?). However, after a few months, the country had not made the ban formal or
enforced it.
Two western giants entered the country at around the same time. This unprecedented
move came as more of a surprise to investors than if the Mayan apocalypse actually
happened. What's the reason for the sudden change of heart?
Changing policy?
Many investors were taken by surprise last month
when Starbucks (NASDAQ:SBUX) announced that it would soon enter the Bolivian
market. It will have a small presence there, as it will only add 10 locations over the next
several years. Earlier last week, Yum! Brands (NYSE:YUM) announced that it will enter
the country as well and attempt to do what McDonald's could not: create a profitable fast
food business that appeals to locals.

Research gap that led to bankruptcy

Though McDonalds strategy, as evidenced from other countries across the globe was
to align with host countrys requirement and thorough customization to suit local
palate, failure clearly indicated possibility of research gap. McDonalds in Bolivia was
unable to match their offer to suit local needs. Theres a common believe that company
executives paid little attention to understand whether a society is ready to accept
conceptual changes in relation to their culinary and if their sustained promotional
campaign would result in displeasure among target customers. Such a failure of a
multination giant with finest managerial capabilities sparked debate throughout the
globe and attracted attention of socio-economic researchers.

According to the US media, Bolivians had already started accepting fast-food culture
and the decision of withdrawing was actually due to natural restructuring process, as
reported by Global Research News
A local partner is the key
Starbucks will open its first location in the commercial business center of Santa Cruz via its
subsidiary Delosur. The company has had a relationship with Latin America since it opened its
doors in 1971, as it buys coffee beans by the ton. It only makes sense for Starbucks to build a
presence in the region after decades, which includes Panama and Columbia as well.

Foolish takeaways
Regardless of the size or success of a company, it can only enter certain markets by finding and
working with a local partner. Opening a handful of new locations will not move the needle for
any of these Western giants, but it is an important step toward building long-term relationships
in new markets