WHAT would happen to your business if China invaded Taiwan? How would your clients react if America adopted an isolationist foreign policy? Where would your growth come from if globalisation were reversed? It might sound so far-fetched as to be irrelevant, but Clifford Chance, the global law firm, has commissioned one of its biggest strategic reviews to find out the answers so that it is prepared if any of the scenarios come about.

Peter Cornell, chief executive, said: “We’ve always done regular reviews in different offices or areas of the firm, but this time we want the big picture. We want to understand our risks and opportunities over the next 10 years, from 30,000ft.”

Ten months ago, Cornell commissioned Oxford Analytica, a consultancy that uses 1,000 academics across the world to predict geopolitical developments, to work on the review of its global strategy. Usually the Oxford-based firm works for governments or companies with large physical assets abroad, such as mines or oil rigs. Clifford Chance is thought to be the first multinational services company to undertake such a review.

“We haven’t seen a professional-services company do this before, but it makes sense,” said Michael Bates, Oxford Analytica’s director of consultancy and research. “Clifford Chance wanted to react to the fact that the share of international power is shifting and that the centre of gravity is moving towards Asia. They wanted to think through how these changes in particular would affect their company, staff and clients and how to adapt to them.”

Although headquartered in London, Clifford Chance has 6,500 employees in 28 offices in 19 countries. Oxford Analytica drew up three different geopolitical scenarios designed to allow the law firm’s management to consider how its work — and that of its clients — could be affected over the next decade.

The results of the review were delivered to Clifford Chance just two weeks ago and Cornell has appointed teams across the group to work out over the next few months how strategy should be altered. But already the law firm plans to implement a change in its corporate strategy. From now on, strategy will be be less practice-based and more geographically focused. In other words, instead of seeing its divisions as, say, banking, energy or commodity practices, it will think in terms of China, North America or Latin America in future.

The first scenario built by Oxford Analytica looks at the consequences of China being removed as one of the biggest economic opportunities at the moment. In the example, China becomes aggressive and invades Taiwan. This triggers a strong reaction from America and prompts strict trade embargoes on Beijing.

The result means that the global export market would be hit hard while the demand for oil, steel and other commodities would be reduced. The impact on Clifford Chance’s clients would be dramatic.

The second scenario looks at the impact of a reversal of American foreign policy to become more isolationist.

Bates said: “The US could be forced to withdraw its forces from the Middle East. Under different political leadership, it could decide to renounce the policy of overseas democratisation in favour of looking after the people of Louisiana and Texas. This ‘home first’ policy would have a big impact on multinational companies and the way they trade. Equally, which country would fill the vacuum? Europe or China, or someone else?” The third scenario given to Clifford Chance was that, instead of globalisation, the world regresses “back to the future” — countries and continents become separate and protectionist. For instance, America and Europe would construct trade barriers to block cheap imports from China and India, and countries would look to protect their domestic markets.

“The slowdown or reversal of globalisation is bad news for multinational companies,” said Bates. “But at least by doing this exercise, the problems are thought about and managed.”

Cornell said: “These are purely hypothetical predictions designed to get us thinking about our international business in a different and more innovative way. Thinking about the consequences of these scenarios and their impact on our business and our clients has been fascinating.”

Experts say that, with the advent of global terrorism, all multinational companies need to have far longer and more complex strategic plans if the fall-out and uncertainty after events such as September 11 are to be minimised.

Cornell said: “If companies had done this five years ago, maybe we would have been better prepared to react faster to the impact of events such as 9/11 or the Iraq war on the global economy.”

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