suppose we want to find LCS for 3 strings. Does finding the LCS (LCS(string,x, string y), string z) give the right solution?
No it is not.
With this counter example:
x = 'baa', y = 'aab', z = 'b' you can see that lcs(x, y, z) = 'b', and that lcs(lcs(x, y), z) = lcs('aa', 'b') = ''.
As a side note, while finding a LCS between two strings can be done in polynomial time, the problem of finding a commom LCS between an arbitrary number of strings is NP-hard.