A stalking horse is a decoy used in business and politics to test the waters or disguise intentions. The strategy involves using a third party to pitch ideas or tarnish reputations. The horse is compensated but takes the full blow if the plan fails. The strategy can be unethical and risky if discovered.
A stalking horse is the name given to a role in a strategy where a decoy is used to gain an advantage in a particular situation. The term stalking horse comes from a hunting strategy in which the hunter hides behind his horse to obtain a favorable distance between the prey before attacking. In modern times, stalking is a commercial and political strategy of using a third party to test the waters.
In business and politics, another party, usually working undercover, pitches ideas on behalf of the original party. In this scenario, the “horse” is typically used as a decoy or as a distraction to disguise the real intentions of the bigger player, the “hunter”.
A high-level politician can persuade a lower-ranking official to do a job he can’t be caught doing. The inferior official can be used to tarnish another official’s reputation, leading to the accused official being removed from office. The senior politician then acquires the position that was held by the disgraced official without being held accountable.
In business, this strategy can be used by a larger company to test the waters for the acquisition of another company or a company close to bankruptcy. A company close to bankruptcy could use the same strategy as the stalking horse. The “horse” for the bankrupt makes a first favorable offer, preventing subsequent bids. The strategy provides a safety net for the company facing failure, reducing the consequences of failure. The horse, on the other hand, will take the full blow if the plan doesn’t work out.
There are many reasons a party might be willing to be the sacrificial horse. The horse, more often than not, knows that its hunter has the means and power to reward it if the plan succeeds, even if it fails. As such, being the stalking horse normally creates a win-win situation for the horse.
In business, the horse may be a weaker firm that wants a larger share of the market due to the demise of the target firm. In politics, the horse may be a junior officer, seeking the patronage and power of the senior official. The horse can also participate out of loyalty. It could be someone who is about to retire and wants to go out for attention or who wants to return a favor.
There are pros and cons to this strategy. The hunting horse can ideally protect the original player from unnecessary risk and ensure that he receives the intended result of the enterprise. The horse, in most cases, is well compensated. It is possible, however, for the strategy to cause unfortunate consequences if the move turns out to be unfavourable.
Some consider it unethical to use a stalking horse, whether in business or politics. If the strategy is discovered, the consequences can be extremely damaging to the hunter.
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