1. ACC 600 : Advanced Managerial Accounting
Instructor : John Yammine
Balanced Score Card
Spring 2015
Financial : Adeeba Kaed Bey
Customer : Youssef El Zein
Business Process : Abdallah Battikha
Learning & Growth : Ali Rakan Sleiman

2. Spinneys is a British supermarket chain that grew to be international, is an impressive leading
premium supermarket retailer in the middle east and north Africa, was first established in 1924 by
Arthur Spinneys in Egypt, to sell high quality fresh produces, grocery, and baked goods @ the fair
price and in a friendly shopping environment. Spinneys opened its door to the Lebanese public in
1948 in Beirut old Souks area. Expanded in the 60s with different branches. Currently Spinneys
has 10 branches in Lebanon, and an owner of(Happy) brand with 2 branches provides high
discounts for customers buying in large quantities.
available: http://www.spinneys.com/Lebanon/

3. Introduction to the Balanced Scorecard
The balanced scorecard was initiated by two researchers from Harvard Business School by
Robert. S. Kaplan and David. P. Norton in the early 1990’s. It was designed and developed for
measuring strategic performance and management structure of an organization. Kaplan and
Norton define balanced scorecard as:
“The balanced scorecard retains traditional financial measures. But financial measures tell
the story of past events, an adequate story for industrial age companies for which investments in
long-term capabilities and customer relationships were not critical for success. These financial
measures are inadequate, however, for guiding and evaluating the journey that information age
companies must make to create future value through investment in customers, suppliers, employees,
processes, technology, and innovation" (Harvard business review)
At present balanced scorecards is being used as an organizational performance measuring
tool which measures the company from four different perspectives to transform the strategy in to
action in the critical divisions of a company.
Kaplan and Norton’s balanced scorecard helps people to view the organization in to four different
perspectives:
 Financial perspective
 Customer perspective
 Internal business process perspective
 Learning and Growth perspective

4. “These perspectives are interlinked and layered: so that financial results are determined by
customer satisfaction, which are in turn determined by internal processes and, underneath these
three layers, is the foundation of the learning and growth perspective” by Marr and Adams (2004)
who developed the Balanced scorecard for strategic performance measurement. They also proved
and said that the relationships between these 4 perspectives can be visualized in strategy maps.
“The Balanced scorecard is like the dials in an airplane cockpit; it gives managers complex
information at a glance” by Robert. S. Kaplan and David. P. Norton. Many managers and
academic researchers have tried to remedy the inadequacies of current performance measurement
systems by focusing on making financial measures more relevant. Others have said “Forget the
financial measures, improve operational measures like cycle time and defect rates; the financial
results will follow.”
When managers finding a hard situation of what choose between financial and operational
measures, Kaplan and Norton observed and worked with many companies and found that senior
executives don’t rely on one set of measures to the exclusion of the other. This also helped them
realize that no single measure can provide a clear performance target or focus attention on the
critical areas of the business. Managers needed a balanced form of financial and operational
performance measures. This made Kaplan and Norton to devise balanced scorecard that helped the
managers have a fast but comprehensive view of their business.
However, according to Marr and Adams (2004) a major weakness in the balanced scorecard is
the learning and growth perspective. The researchers Marr and Adams (2004) believe that this
latest attempt to evolve the balanced scorecard by Kaplan and Norton might have had an adverse
effect. Marr and Adams outline how Kaplan and Norton failed to acknowledge the large body of

5. writing on intangible assets and, therefore, produced an inconsistent, incomplete, and potentially
very confusing classification of intangible assets.
The scorecard tracks the objectives, measures, targets and initiatives of a company. But it is not
a cure at all, especially for the companies with bad financial situations and which has no time to
implement the plan. It also involves a high initial investment to educate and train their employees
to work for the new strategy. The advancement in technologies has also created software for
creating balanced scorecard by just giving inputs. But this is very expensive and also wrong
balanced scorecard software or one wrong input can set back the company’s ability to evaluate
their employees and performance.
Because the balance scorecard uses the financial and non-financial performance measures to
evaluate short – run and long – run performance in a single report, I am going to talk about the
financial perspective according to Spinneys Supermarket.
Financial Perspective
One of the interpretations is to project these strategies for Spinneys Supermarket on Revenue
Growth (Return on capital), Cash flow, Project Profitability and Reliability of
performance objectives:

6.  Revenue Growth objective can be achieved by:
o Developing new revenue sources (selling new products and services). This is
primarily a projection of Product Leadership strategy.
o Improving current profitability (working on customer value proposition). This is
primarily a projection of Customer Value strategy supported by customer service
dept at each branch, with a total of10 branches all over Lebanon located as follows:
o Sour, Saida, Ashrafieh 3 branches, Hazmieh, Jbeil,Tripoli, Jnah and Dbaeih. , and
they are the owner of (Happy) brand with 2 branches one at Deir koubel and the
other ateh Zouk Mousb
 Productivity objective incorporates the projection of Operation Excellence strategy:
o Decreasing costs.
o Resource optimization.
Depending on the scale of the business these objectives can be formulated in various ways:
 Small businesses might want to find and employ a new technology that would allow to
decrease costs;
 Large companies might achieve resource optimization by sharing resources and
technologies between departments, or achieving economic outcome by scaling production;
Thus, the financial measures tend to be the indicators of the strategy and the nonfinancial
measures in the three other BSC perspectives are leading indicators. Improvements in these
indicators must improve the financial performance in the future, while decrease in the nonfinancial
indicators such as customer satisfaction and loyalty, process quality, and employee motivation,
predict decreased future financial performance. Why this tool called balance scorecard? Because it

7. balances the use of financial and nonfinancial performance measures to evaluate short – run and
long – run performance in a single report. The balanced scorecard reduces managers’ emphasis on
short – run financial performance, such as quarterly earnings. The financial benefits of these long –
run changes may not appear immediately in short – run earnings; however, given the company’s
strategy, strong improvement in nonfinancial measures usually indicates the creation of the future
economic value. Moreover, the Balanced Scorecard’s financial perspective contains objectives and
measures that present the ultimate success measures for profit maximizing companies. Also
measures such as operating income and return on investment, indicate whether the company’s
strategy and its implementation are delivering increase in shareholder value. According to
Spinneys, their financial performance improved through two basic approaches: Revenue growth
and productivity.
Spinneys sources of revenue growth is to increase in customer satisfaction through selling
additional new products, promotional items, such as buy one get one free to attract new customers
and deepen relationships with existing customers as measured by customer surveys and repeat
purchases, also opening new branches to increase sales, cash income in the future. The third
component for Spinneys to enhance financial performance, profitability improvements, also occurs
in two ways: First, try to get good quality products with less cost; such cost reductions enable the
company to sell more. Second, by utilizing their financial and physical assets more efficiency,
companies reduce the working and fixed capital needed to support a given level of business. For
example, company can reduce the inventory levels required to support a given level of sales by
implementing just-in-time ordering goods. For - profit companies, the goal of the balanced
scorecard is to improve a company’s overall financial performance, nonfinancial measures simply
serve as leading indicators for the hard-to-measure long – run financial goals. Kaplan and Norton
do not disregard the traditional need for financial data, so the financial perspective depends on
timely and accurate funding data that will always be a priority, and managers must do whatever
necessary to provide it. This is true for Spinneys because they found that they need to include
additional financial related data, such as risk assessment and cost-benefit data.
This perspective evaluates the profitability of the strategy, because cost reduction relative to
competitors’ costs and sales growth are key strategic initiatives, the financial perspective focuses on

8. how much of operating income results from reducing costs and selling more units. So, Spinneys in
these issues depends on reliable data to improve their performance.
Moreover, through financial perspective Spinneys achieves their objectives and measures that are
shown in their balance sheet as a profit maximizing company. Through their return on investment
and earnings per share we can observe that their strategies are coming into reality and its
implementation are increasing shareholder value.
Balance inside the Financial perspective
As it was mentioned before, a typical balanced scorecard problem is that is not balanced and too
much attention is paid to the financial perspective. At the same time, another imbalance is often
seen inside financial perspective itself, where managers tend to focus on what can give faster results
(Productivity objectives), and tend to ignore long term opportunities provided by Revenue
Growth objectives.
Referring to the strategy of spinneys, the first 4 parts affect the financial perspective of the Balance
Scorecard.
1. To grow in Lebanon
Strategic
Objective
Measures Target
Improve Sales Revenue Achieved the
highest
revenue, in
Lebanese
market
Obtain/maintain
profit
Profit >0% increase
in profit

9. Return on sales ROS 0.032 /2011
& 0.056/
2012
2. To be an outstanding international retailer in stores and online.
Strategic Objective Measures Target
Increase market sales Revenue To be the market leader in
Lebanon
Obtain/maintain profit Profit 5% growth
3. To grow retail services in all our markets
Strategic Objective Measures Target
Achieve return on investment
(ROI)
ROI At least 10% ROI
Increase project revenue Revenue, margin 15% revenue expansion
4. To be a creator of highly valued brands.
Strategic
Objective
Measures Target
Growth in
underlying
diluted
earnings
EPS, TSR
(Total
Shareholder
Revenues
Maintain
>2%
earnings per
share.
Maintain

10. >2% total
shareholder
return
Upon my online researches I found financial information related to Spinneys that allow me
to extract some financial ratios, which are useful indicators of a firm’s performance and financial
situation.
The following types of ratios frequently are used:
Spinneys Super Market 2012 2011
1) The Acid Test Ratio tells us whether the entity could pay all its current liabilities if they
came due immediately. So, as we can see that Spinneys improved during 2012 and is better
than the market average. What is the market average???
Acid Test Ratio:
Cash+Short term investments 29,000+0 32,000+0
+Net current receivables +114,000 +85,000
----------------------------------------= ---------------- = $1.01 ---------------
=$0.93
Current liabilities 142,000
MA(market average)= 0.46
2) The Inventory Turnover ratio measures the number of times a company sells its average
level of inventory during a year. A high rate of turnover indicates ease in selling inventory:
a low indicates difficulty.
Inventory Turnover:
Cost of goods sold 513,000
------------------------= ---------- = $4.6
Average inventory 112,000

11. MA = 4.63
3) The Current Ratio measures ability to pay current liabilities with current assets. A high
current ratio indicates that the business has sufficient current assets to maintain normal
business operations, according to market ratio Spinneys current ratio is strong. We should
know that high current ratio lets say 25, this would indicate that the company is too liquid
and , therefore, is not using its assets effectively.
Current Ratio:
Current Assets 262,000 236,000
-----------------------= ------------ = $ 1.85 ------------ =$
1.87
Current Liabilities 142,000 126,000
MA = 0.60
4) Measuring ability to pay Long-Term Debt
They help us measure ability to sell inventory, collect receivables, and pay current
liabilities. Most businesses also have Long term debt. The key indicators of a business’s
ability to pay long term liabilities is the Debt Ratio which shows the proportion of assets
financed with debt. A debt ratio of 0.50 means that half the assets are financed with debt
and the other half is financed by the owners of the business. The higher the debt ratio, the
higher the company’s financial risk.
Debt Ratio – Financial Leverage Ratios
Total liabilities 431,000 324,000
------------------ = ------------ =$ 0.55 ----------- =$ 0.50
Total Assets 787,000 644,000
MA = 0.69

12. 5) Measuring profitability:
The fundamental goal of business is to earn a profit. We will examine four profitability
measures. Companies strive for a high rate of return on sales. The higher the rate of return,
the more sales dollars end up as profit. The increase in Spinneys return on sales from 2011
to 2012 shows the percentage of each sales dollar earned as net income and more successful
than market ratio which is .017
- Rate of return on Net Sales:
Net Income 48,000 26,000
---------------- = - ----------- =$ 0.056 ----------- = $0.032
Net Sales 858,000 803,000
- Rate of return on Total Assets:
Measures the company’s success in using assets to earn a profit.
 Creditors have loaned money to the company, and they earn interest.
 Shareholders have invested in stock, and their return is net income.
Net Income + interest expense 48,000 + 24,000
------------------- ----------------------= -----------------------=$ 0.101
Average total assets 715,500
The result 101 is much better than the market average of .0599.
- Rate of return on Common Stockholder’s Equity:
This ratio shows the relationship between net income and common stockholder’s equity,

13. how much income is earned for each $1 invested by the common shareholders.
Rate of return Net income – Preferred dividends 48,000 - 0
On common = ----------------------------------------------- = --------------- =$ 0.142
Stockholder’s equity Average common Stockholders 338,000
Equity
MA = 9.76
Spinneys return on equity of 0.142 is higher than its return on assets of 0.101. This
difference results from borrowing at one rate- say, 8%- and investing the money to earn a
higher rate, such as the firm’s 14.2% return on equity, this is directly related to debt ratio.
The higher the debt ratio, the higher the leverage. During good times, leverage increases
profitability. But leverage can have a negative impact on profitability as well. Therefore,
leverage is a double – edged sword, increasing profits during good times but compounding
losses during bad times. Once again, this result is better than the market one which is 0.105.
- Earnings per share of Common Stock:
Is the amount of net income earned for each share of the of the company’s outstanding
Common Stock.
Net Preferred
Earnings per income - dividends 48,000 - 0 26,000 - 0
share of = ------------------------------- = --------------- = $4.8 --------------
= $2.60
common stock Number of shares of 10,000 10,000
Common stock outstanding

14. EPS increased significantly in2012 (by almost 85%); most companies strive to increase it
by 10% -15% annually. Therefore, Spinneys needs to work on continuing to increase EPS
so that it is more competitive with other companies in its market.
To dig more deeply on evaluating stock investments, investors purchase stock to earn a
return on their investment, this return consists of two parts: (1) gains or losses from
selling the stock at a price above or below purchase price and (2) dividends. So the ratios
we will examine help analysis evaluate stock investments, which are as follows:
- Price/Earnings Ratio
Is the ratio of the market price of a share of common stock to the company’s earnings per
share. It shows the market price of $1 of earnings.
Market price per share
of common stock 60 35
P/E= ---------------------------- = ------- =$ 12.5 -------- = $ 13.5
Earnings per share 4.8 2.6
MA = 13.63
Spinneys P/E ratio 12.5 means that the company’s stock is selling at 12.5 times on year
earnings. The decline from 2011 P/E ratio of 13.5 is no cause for alarm because the market
price of the stock is not under Spinneys control. Net income increased during 2012.
- Dividend Yeild

15. Is the ratio of dividends per share to the stock’s market price per share. This ratio
measures the percentage of stock’s market value that is returned annually as dividends.
Preferrred stockholders, who invest primarily to receive dividends, pay special attention
to dividend yield.
Dividend per share
Dividend yield on of common stock 1.20 1.00
common stock = ----------------------- = -------- = $.020 -------- = .029
price per share Market price per 60 35
of common stock share of common stock
MA = 0.0356
An investor who buys Spinneys common stock for $60 can expect to receive 2% of the
investment annually in the form of cash dividends. The market, however is paying out
3.56% annullay.
In conclusion, “Although there are some criticisms concerning the balanced scorecard
approach, many of these seem to represent problems of practical application rather than
fundamental flaws” (Atkinson 2006). According to Spinneys the strategy has assisted in
accomplishing big goals by breaking them down into smaller, more achievable goals. Throughout
the years, Spinney’s strategy has been supported financially and the investments have high returns
(ROI). While Spinneys have achieved their targets for 2011 & 2012, the manner in which they
have done so can be considered to be slightly furtive, including demanding money from suppliers
for shelf space in their shops. We also see that they are selling online. Spinneys was ranked the first
super market among the competitors in the Lebanese market according to the high quality products,
achieved high customer satisfaction and loyalty by improving their services based on customer
feedback (Hot Line & customer service depts.) based on their loyalty program. They continue to
improve the innovation in business process strongly, they have strong commitment not only to the
product safety but also to community development.

16. Customer perspective of balanced scorecard, strategy performance balanced tool, proved to
be the most problematic part for assigning your strategy. As other parts such as financial and
internal business processes are already easily measured and stated by the workflow. We can never
expect what the customers may ask for or need to maintain their valuable loyalty, and gain new
ones. We can deduce from the name that this part of balanced scorecard, measures customer
satisfaction, and suggests new methods to expand our market share and work upon the client
feedback we collect. The customers we are talking about are not just the clients that are using our
products or services, it's also about business partners such as suppliers or distributors that also have
a great effect on the success of our business. The main market share of Spinneys Lebanon are
households with medium to high income level.
The main aim of the customer side in the balanced scorecard is to add and retain high value
customers. Increasing the number of our clients is important, but what's more important and
efficient is adding customers that add value to our business, which we need to recognize and
support by our customer service functions. Especially that fierce competition always rise providing
same product or service, our customer loyalty and satisfaction are what will give a competitive edge
to our brand, customers loyal to this brand are the main factor for constant growth and development
in the Lebanese market. This can only be achieved and attained by supplying a complete after sales
service and customer loyalty programs. We can clearly see this nowadays in the market by the
increase in usage of CRM soft wares and programs, since customer relationship management
proved to be a crucial tool of increasing our brand loyalty and market share.
On the other hand, we shouldn't forget our business partners that are also included in the
customer part of the balanced scorecard. In this segment, we focus on achieving and attaining win-

17. win relationships with all our stakeholders, such as suppliers and distributors. Maintaining a solid
and long term relationship with our business partners is as essential as making sure our customers
are satisfied. In short, we can summarize this part of balanced scorecard in those few functions:
customer satisfaction, customer acquisition, customer retention, customer profitability and
increasing our market share.
To study and measure a live example of how this strategy is applied in real life and the
Lebanese market, we visited the offices of Spinneys Lebanon located in Dbaie area to further
discuss and get informed on how they implement the customer side of the balanced scorecard, and
got back with several findings.
Spinneys is a British supermarket chain that grew to be international, was first introduced to
the Arab world in Cairo back in 1924. It reached Lebanon for the first time in 1948 in Beirut Old
Souks area. Expanded in the '60s in areas of Rawche and Verdun, then closed during civil war
period, and was launched again in the Lebanese market in 1998 in opening Dbaie branch. Currently
Spinneys has 10 branches in Lebanon, and an owner of (Happy) brand with 2 branches, that is a
soft discount store with less assortments and variety than Spinneys super market, but provides high
discounts for customers buying in large quantities.
Upon an interview with Mrs. Darine Beem El Koussa, Marketing Department Head at
Spinneys Lebanon, we asked about what are their plans and strategy regarding their customers and
business partners. What we found out is that Spinneys pays crucial attention and dedication to its
customer service department, by implementing several points discussed below. First, each branch
of Spinneys Supermarket has a customer service office placed next to cashier stations, to collect
any customer feedback directly on the floor, for refunds and exchange, and to redeem customer
loyalty program points. Second, by implementing the customer loyalty reward points program over
years, Spinneys was able to build trust and value and brand loyalty with their customers. Third,

18. Spinneys has a charity collection point also in each branch, to fulfill their social duty and build and
maintain their brand image. This also has a positive impact on customer loyalty and satisfaction on
the long term.
Spinneys Lebanon, by capitalizing and highlighting the importance of customer service and
after sales service, was able to achieve and maintain the first position in the Lebanese market, by
acquiring the highest market share in the modern trade supermarket market of Lebanon, succeeded
by Le Charcuterie Aoun in the second place. In the following paragraphs, we will thoroughly
discuss the customer loyalty programs that Spinneys Lebanon have implemented and how they
were able to guarantee Spinneys to be a market leader in Lebanon.
First, alongside customer service counters in each branch of Spinneys Lebanon, a
centralized customer service center located in Dbaie collects and compiles monthly reports of all
incidents and feedback regarding customer care. Also a call center with a hotline (1521) located in
Hazmie area was introduced, to be able to follow-up and handle all customer needs around the
clock. These two centers will make sure all the customers' needs are met in their shopping
experience and after sales service. That is a very important factor in building and maintaining a
solid and long term relationship with our customers, as they are the main resource for every
business. Other than the customer service center and call center, Spinneys allocated marketing
budgets to advertise their customer care hotline and integrated feedback templates on their website
and social media. One of the well known aspects of Spinneys Lebanon is that they always have
items promotion and discount offers on certain products and the fact that those offers are advertised
in an attractive way through their billboards, catalogues and online media. Also they intensified
advertising of customer loyalty reward program that will be discussed and explained in the
following paragraphs.
Introduced in 2007, Spinneys Rewards, the customer loyalty program of Spinneys Lebanon
was able to distribute 600,000 customer loyalty cards, and giveaway hundreds of thousands of gifts
to subscribers in this program. In the past year, Spinneys worked on innovation of reward program

19. by introducing the clubs program, and by segmenting the rewards program into 3 segments. To
obtain the loyalty card, a simple registration form is to be filled in any of the customer care offices
found in all Spinneys branches. The points are rewarded as 10 points for each 15,000 LL spent in
Spinneys. Some merchandise will be rewarded by extra points depending on certain seasonal offers,
or for brands supported by Spinneys such as Tesco and Spinneys private label. Each family is to
have a maximum of 4 cards, and the account balance can be checked anytime on the website or by
the new Spinneys mobile application. Also, joining the club rewards will allow customers exclusive
entrance to club members on Spinneys website that informs loyal customers about up to date offers
and prices, and online shopping.
The newly introduced loyalty cards program comprises of the following: if you collect more
than 2,000 points in the period of 4 months, you will be eligible to apply to Golden member card
holder. Less than that figure you will be a classic card holder, and if more than that you will be
eligible for Platinum card holder. This segmentation will motivate customers to spend more at
Spinneys to collect more points, and be awarded more exclusive gifts and benefits. Plus Spinneys
customer care center make sure they keep all their awards program members up to date with all the
offers updated by Spinneys at least on monthly basis. This segmentation or leveling of customer
loyalty cards give higher recognition for loyal customers, and more benefit that will keep the
customers satisfied and willing to buy more of Spinneys products.
On the other hand, Spinneys introduced the clubs program for reward program members.
The clubs program are as follows:
_Baby Club
_Wellness Club
_Kids Club
_Pet Club
_Wine Club

20. Each club is to reward loyal customers, tailor-made to suit the needs and shopping habits of clients.
Choice of joining each of the five clubs is upon preferences and priorities of customers. The baby
club includes discounts and offers on products for new born babies. Kids club is for products for
kids between 4 and 12 of age. Wellness club includes insight and offers for all health conscious
clients. The wine club is for wine lovers, covering all kinds of wine and its utensils ranging from
glassware and display stands, to special refrigerators for wine. Finally, pet club is for pet lovers that
provides offers and discounts on special tools and food for pets. To keep up with all the offers and
updates on Spinneys clubs program, the following website was put in order to help communication
with customers : www.spinneysrewards.com.
Below we can see the net income of Spinneys in two consecutive years , the implementation of the
customer loyalty program guaranteed the growth in sales and market share.
- Rate of return on Net Sales:.
Net Income 48,000 26,000
---------------- = - ----------- =$ 0.056 ----------- = $0.032
Net Sales 858,000 803,000
In conclusion, Spinneys had the right strategy to be able to become a market leader in
Lebanon short after their launching in 1998. Capitalizing on customer care and after sales service is
as important if not more than maintaining high quality standards for products and services. The
customer rewards program, alongside with clubs program are a proof that Spinneys has succeeded
in applying and measuring customer satisfaction and loyalty. By advertising their loyalty programs
and their benefits, people were excited to be part of this program to benefit from the amazing offers
and discounts.

21. People spend big amounts of money daily on fast moving consumer goods and food items
and grocery that Spinneys supplies. Another step to enhance the customer experience is adding
electronics and home appliances to some of Spinneys branches so that customers will find all what
they may need on daily basis in Spinneys outlets. Giving priority to customer care and service is the
most important factor to building brand loyalty, especially in the ever changing needs of customer
in our markets and several competitors in the same domain. We are sure that Spinneys made the
right decision by implementing the customer satisfaction side of balanced scorecard, and they were
able to fulfill its goals of customer acquisition(more than 600,000 loyalty cards), customer
profitability(offers and discounts with more points you collect), and market share(1st in modern
trade in Lebanese market). Finally, we can ensure that Spinneys was able to set an example to all its
competitors in the Lebanese market by fully applying customer satisfaction and loyalty. Investment
in advertising, marketing and customer loyalty programs are of utmost importance, since we can
find these products in many retail outlets, but the customer care and loyalty rewards provided by
Spinneys Lebanon gave it a strong competitive edge, and that's what's keeping Spinneys in the first
position in the Lebanese market. Also we can’t ignore that the team behind this success has a main
role. In the following chapter we will learn more about learning and growth of the labor force.

22. “With the balanced scorecard,” a CEO of an engineering company told us, “I can continually test
my strategy. It’s like performing real-time research.” That is exactly the capability that the
scorecard should give senior managers: the ability to know at any point in its implementation
whether the strategy they have formulated is, in fact, working, and if not, why.
The first three management processes—translating the vision, communicating and linking,
and business planning—are vital for implementing strategy, but they are not sufficient in an
unpredictable world. Together they form an important single-loop-learning process—single-loop in
the sense that the objective remains constant, and any departure from the planned trajectory is seen
as a defect to be remedied. This single-loop process does not require or even facilitate
reexamination of either the strategy or the techniques used to implement it in light of current
conditions.

23. Most companies today operate in a turbulent environment with complex strategies that,
though valid when they were launched, may lose their validity as business conditions change. In
this kind of environment, where new threats and opportunities arise constantly, companies must
become capable of what Chris Argyris calls double-loop learning—learning that produces a change
in people’s assumptions and theories about cause-and-effect relationships. (See “Teaching Smart
People How to Learn,” HBR May–June 1991.)
Budget reviews and other financially based management tools cannot engage senior executives
in double-loop learning—first, because these tools address performance from only one perspective,
and second, because they don’t involve strategic learning. Strategic learning consists of gathering
feedback, testing the hypotheses on which strategy was based, and making the necessary
adjustments.
Spinneys: The balanced scorecard supplies three elements that are essential to strategic
learning. First, it articulates the company’s shared vision, defining in clear and operational terms
the results that the company, as a team, is trying to achieve. The scorecard communicates a holistic
model that links individual efforts and accomplishments to business unit objectives.
Second, the scorecard supplies the essential strategic feedback system. A business strategy can
be viewed as a set of hypotheses about cause-and-effect relationships. A strategic feedback system
should be able to test, validate, and modify the hypotheses embedded in a business unit’s strategy.
By establishing short-term goals, or milestones, within the business-planning process, executives
are forecasting the relationship between changes in performance drivers and the associated changes
in one or more specified goals. For example, executives at Metro Bank estimated the amount of
time it would take for improvements in training and in the availability of information systems
before employees could sell multiple financial products effectively to existing and new customers.
They also estimated how great the effect of that selling capability would be.
Another organization attempted to validate its hypothesized cause-and-effect relationships in
the balanced scorecard by measuring the strength of the linkages among measures in the different
perspectives. (See the exhibit “How One Company Linked Measures from the Four Perspectives.”)
The company found significant correlations between employees’ morale, a measure in the learning-

24. and-growth perspective, and customer satisfaction, an important customer perspective measure.
Customer satisfaction, in turn, was correlated with faster payment of invoices—a relationship that
led to a substantial reduction in accounts receivable and hence a higher return on capital employed.
The company also found correlations between employees’ morale and the number of suggestions
made by employees (two learning-and-growth measures) as well as between an increased number
of suggestions and lower rework (an internal-business-process measure). Evidence of such strong
correlations help to confirm the organization’s business strategy. If, however, the expected
correlations are not found over time, it should be an indication to executives that the theory
underlying the unit’s strategy may not be working as they had anticipated.

25. Especially in large organizations, accumulating sufficient data to document significant
correlations and causation among balanced scorecard measures can take a long time—months or
years. Over the short term, managers’ assessment of strategic impact may have to rest on subjective
and qualitative judgments. Eventually, however, as more evidence accumulates, organizations may
be able to provide more objectively grounded estimates of cause-and-effect relationships. But just
getting managers to think systematically about the assumptions underlying their strategy is an
improvement over the current practice of making decisions based on short-term operational results.
Third, the scorecard facilitates the strategy review that is essential to strategic learning.
Traditionally, companies use the monthly or quarterly meetings between corporate and division
executives to analyze the most recent period’s financial results. Discussions focus on past
performance and on explanations of why financial objectives were not achieved. The balanced
scorecard, with its specification of the causal relationships between performance drivers and
objectives, allows corporate and business unit executives to use their periodic review sessions to
evaluate the validity of the unit’s strategy and the quality of its execution. If the unit’s employees
and managers have delivered on the performance drivers (retraining of employees, availability of
information systems, and new financial products and services, for instance), then their failure to
achieve the expected outcomes (higher sales to targeted customers, for example) signals that the
theory underlying the strategy may not be valid. The disappointing sales figures are an early
warning, in the profile of Spinneys as discussed in the financial perspective, the growth of net sales
is a proof that team training is paying off.
The human resource management must make sure that their labor force compliance to team
learning and building in parallel with customer value propositions, competitors’ behavior, and
internal capabilities. The result of such a review may be a decision to reaffirm their belief in the
current strategy but to adjust the quantitative relationship among the strategic measures on the
balanced scorecard. But they also might conclude that the unit needs a different strategy (an
example of double-loop learning) in light of new knowledge about market conditions and internal

26. capabilities. In any case, the scorecard will have stimulated key executives to learn about the
viability of their strategy. This capacity for enabling organizational learning at the executive
level—strategic learning—is what distinguishes the balanced scorecard, making it valuable for
those who wish to create a strategic management system.
Last but not least, the internal business process is one of the main factor that contribute in
maintaining quality and cost efficiency. Those in return will insure customer loyalty and sales
growth.
As it is commonly defined, a business process has also been defined as a set of activities and
tasks that, once completed, will accomplish an organizational goal.
The objective is to focus on how spinneys is using its business processes to achieve maximum
performance and retain all of its customers without losing their loyalty.
As Mrs. Darine (head of retail at spinneys Lebanon) said that spinneys is applying to the
American system of Costco and 7-11 that has succeeded in the united states and are applying it here
all over Lebanon.A lot of objectives are on the table and time is of the essence because of the direct
competition of charcutier aoun and other supermarkets.The main focus of spinneys was to capture
an even bigger market share than what they already have which is 750,000 customers.To reach this
extra market segment, the management chose the upper lower class of the Lebanese people.
Accordingly, Spinneys needed a price sensitive strategy to target those segments. For them to be
able to give such discounts, happy stores are being built. The main function of a happy store is to
sell only products in quantities. For example, rice will be sold by packs of 10 kg. Facial tissues will
be sold in packs of 50 boxes and so on, this way the lower class families will be able to buy bigger
quantities at lower price thus attracting new customers.
Three stores are expected to be open by the end of the year and their location will be in key
suburban areas to reach the maximum number of target market people.
The next objective in this business process is to start handing out spinney’s exclusive gold and

27. platinum cards to new customers who deserve it(to earn a gold card one must reach a certain level
of sales in a certain period of time).With this card you can accumulate points and exchange it for
gifts. This incentive is great to retain customers and as we can see from the numbers given by the
department HOD, profits have more than doubled ever since they introduced the gold program.
Furthermore, the day spinneys gives double points on everything, the crowds go wild and sales
reach unholy levels during these days. Currently spinneys has handed over 600,000 cards in late
January 2015 . This number was 25,000 in early march 2012.Form this increase in cards you can
see how much sales have increased and the effectiveness of the card program. Business is more
than booming in a time where companies struggle to survive.
Product delivery happens in 2 steps; one delivery container delivers to the local branch and
another delivers directly to the warehouse where products will be stored for no longer than 2 weeks
And with 10 branches installed over Lebanon and 3 more coming along the way, you can only see
success for this firm.
More SBUs were to input an electronics division to try and penetrate the electronics market which
is already saturated and controlled mainly by khoury home and abed tahhan.
All these steps are done through careful planning and precise training.
For example, every new cashier must undergo a rough one month training program which consists
of sitting near an experienced cashier for one week, then attending the academy at spinneys
headquarters where he must apply what he learned in simulators and create the same environment
that he will encounter.
This way he will be able to provide customers with the best possible service and keep the
satisfaction level at spinneys stable at a record 99% customer satisfaction. These statistics have
been provided to us by the customer service department.
Furthermore, if all the previous weren’t enough, spinney has made a basket of essential goods
under its own name and called them the spinneys products.Of course these products have the same

28. quality standards as the local brands. But since they are manufactured in-house, they provide
spinneys with a competitive advantage and can be sold at a lower price.
Of course customers loyal to other brands will not change their habit because of a cheaper
product, but consumers who have product price as their first priority; the induction of spinneys
products is the best thing that has happened to them yet.
The normal spinneys superstore consists of the following.
1. A crew of cashiers.
2. Another crew of customer service people.
3. A local supervisor and the branch manager.
Finally comes the cleaning crew and the meat and cheese people who are always monitored by the
local supervisor and the ultra-sophisticated cameras.
Security and inventory people are always going through the aisles to ensure no problems occur
between customers and that goods are always placed in a proper order so customers can view them
easily.
A great addition to the spinneys product portfolio is the introduction of the new spinneys
mobile application for iOS and android. Now anyone, even if he isn’t at spinneys customers can
view what spinneys has to offer and can even shop online. After he has filled his digital cart he can
pay by credit card and a delivery boy will deliver his product to his doorstep.To make it easier for
people to come and shop spinneys, service shuttles have been put on the road to transport any
customer to the nearest spinneys branch and back to where he came from.Through the mobile
application, users can view their accumulated points to know if they can exchange them for the
gifts.
Finally, Spinneys is leading the Lebanese market in modern trade. Full application of the
Balanced Score Card is one of the reasons why it is still number 1 in our market. All the aspects of
the balanced score card are as important and effective as each other and need full implementation
and monitoring to ensure the business we are running is up to market standards. This strategy
setting technique is efficient for all businesses in all market segments. The increase in market share

29. of Spinneys Lebanon, and the increase of their branches from 1 to 10 in a decade. Are strong
factors that signify that it is a success story to be shared and that we can learn from.
Example of spinneys loyalty card on mother’s day

30. Spinneys’ future happy store

31. An example of how the spinneys store is unified with the same black and yellow
décor and its friendly atmosphere.
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