Question

In FY 2007, what Lovallo & Sibony counter-balancing practice did the Blockbuster Board deploy? What cognitive bias was the practice intended to address? What is Blockbuster's value proposition and what L&S cognitive bias best describes it? Select the single best available answer from those presented below.

A) Shaking things up by firing Mr. Antioco and hiring Mr Keyes as CEO; Anchoring and insufficient adjust bias; a value-priced entertainment experience, combining the broad product depth of a specialty retailer with local neighborhood convenience; inappropriate attachment.

B) Purchased MovieLink, LLC; Champion bias; a value-priced entertainment experience, combining the broad product depth of a specialty retailer with local neighborhood convenience; inappropriate attachment.

C) Shaking things up by firing Mr. Antioco and hiring Mr Keyes as CEO; Anchoring and insufficient adjust bias; 4,855 stores in the United States; Overconfidence.

D) Purchased MovieLink, LLC; Excessive Optimism; a value-priced entertainment experience, combining the broad product depth of a specialty retailer with local neighborhood convenience; inappropriate attachment.

Answer 1

Dan Lovallo is a professor of business strategy and Oliver Sibony os director at McKinsey & Co. Both together are exploring the most common biases in business. The prime objective of their exploration is to create a coomon language. For this pupose they comeup with 5 Biases in Decision making.

1.Action Oriented Bias

2.Self Interest Bias

3.Pattern Recognition Bias

4.Social Harmony Bias

5. Stability Bias.

A Cognitive Bias can be described as an error in a systematic manner in thinking that arises when people are interpreting and processing the information around them and affects the judgemnts and decisions that they comeup with.

Some of these biases are related to memory, attention, attribution and some form psychological errors of human being.

Mr. James W. Keyes the former CEO of 7-Eleven has become the CEO of Blockbuster as a replacement for Mr. Antioco.. Mr. Keyes designed a business model for Blockbuster with full strategy in tailoring the product line to each store, relying mainley on data automation and reducing the size of the retail footprint in video rental chain.

He then purchased Movie link LLC as part of his business model to develop blockbuster.