J'accuse -- It's Always the Others' Fault.

The much-heralded 1998 merger of Daimler-Benz and Chrysler has turned into a head-on collision between German and American business cultures, with the company's shareholders bearing the brunt of the impact. When Daimler Benz merged with Chrysler three years ago, the stated intent was to "globalize" Daimler's German business model by merging it with Chrysler's success driven corporate culture. As Daimler CEO Jurgen Schrempp declared at the time, "Chrysler is lean and very fast in its decision making. Our aim is to take the best of both companies and leave the worst." This strategy appeared to make a lot of sense in 1998. The reality of early 2001 looks quite different.

Sure, Chrysler is having considerable problems with the transition from one product cycle to the next. But executives in Stuttgart must have foreseen those glitches when they did their due diligence on the merger. Similarly, the fact that the boom in the U.S. car market was coming to an end was hardly unexpected. Whatever the faults may be on the U.S. side, it's hard to believe that they caught Daimler's top executives by surprise. Instead, these problems seem a welcome excuse to cover up the other mismanaged aspects of the merger-- and a questionable corporate strategy.

Jurgen Schrempp started his term as Daimler CEO emphasizing that he wanted to refocus Daimler on its core business of building luxury cars. He began by immediately reversing the efforts of his predecessor Edzard Reuter to create a diversified industrial conglomerate. But, shareholders must wonder, if Schrempp had been opposed to his predecessor's buying spree all along, why didn't he advocate changing strategies earlier instead of loyally plugging along--and destroying a lot of capital in the process?

Letting bygones be bygones, Schrempp bet that focusing on luxury cars alone wasn't a coherent long-term corporate strategy. In a world with too many car companies and considerable overproduction, he concluded that it was all a matter of buying or being bought--and focused on making Daimler-Benz a worldwide maker of mass-market automobiles. But given the troubles at Chrysler and the Japanese carmaker Mitsubishi, in which DaimlerChrysler now owns a 34 percent stake, his strategy is now a major drag on the company's bottomline and share price.

The most astounding failure may be how the firm managed its internal intercultural communications. Schrempp boasts that he was misleading his Chrysler peers the whole time they were negotiating the deal is unlikely to foster the kind of trust and open communications that are essential in running a global company. And Chrysler will be hard-pressed to achieve a turnaround when it simultaneously has to absorb a crippling brain drain of top executives.

It seems increasingly likely that Daimler will eventually have to find a new CEO, one who will be willing to unwind Schremp's attempt to blend different car companies together. But is there a manager who might achieve such a turnaround for Daimler? Maybe. Those who held Daimler-Benz shares before the merger may be forgiven for wondering what their stock might be worth today, without Chrysler (or Schremppian expansionism) dragging down results.

Naturally, these investors will look to one of Daimler's German competitors in the market for luxury cars to gauge what could have been. The model company might be Porsche, which has almost quadrupled its stock price over the past two years, while Daimler's declined by more than 40 percent. Porsche achieved its strong performance by pursuing the go-it-alone strategy of its CEO Wendelin Wiedeking.

So far, Wiedeking's approach--to position his company as a top brand around the globe--appears to be working, especially if viewed from a shareholder perspective. While Schrempp claims that he's positioning his company as a global player for the long haul and chides the markets for not understanding his strategy, Wiedeking is quietly getting the job done. Maybe Schrempp should take a page out of Wiedeking's playbook on how to run a successful company. Or maybe it would be best to simply replace the brash DaimlerChrysler CEO with his more quiet but effective counterpart at Porsche. If his magic worked at Daimler as it did at Porsche, Daimler's stock might now be worth four times as much as it was at the time of the merger--or $240 a share. Doesn't that sound better than the current $44 price?

Stephan Richter ([e-mail]) is publisher of TheGlobalist.com