Three close friends one day decide to start a business. There is sufficient uncertainty about how successful the business may be. Nonetheless, they all express considerable optimism about the business and develop similar ideas about why the business will be successful. However, one year after the business started, the business was operating at a loss, and the friends decide to discontinue the business. When they were discussing starting the business they failed to consider possible reasons why the business may not be successful. These three friends fell prey to

Question

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The situation described in the scenario is an example of groupthink, which occurs when a group of individuals prioritize group harmony over critical evaluation of ideas and alternatives. The friends were overly optimistic and failed to consider potential problems with their plan, leading to the failure of the business.

Three Close Friends One Day Decide to Start a Business