1 Planning via System Dynamics Models; Strategy Dynamics of Market Evolution Andreas Hadjis & George Papageorgiou European University Cyprus 6, Diogenis Str. Engomi, PO Box 22006, 1516 Nicosia, Cyprus Tel. 00357-22713803 Fax. 00357-22590539 ahadjis@euc.ac.cy, g.papageorgiou@euc.ac.cy Abstract Realizing the importance of developing an integrated approach for effective Product Life Cycle (PLC) Management this paper examines the use of the system dynamics approach to capture the market evolution structure. After going through a review on Product Life Cycle Management and the System Dynamics approach a holistic model of market evolution is developed involving the most important components of the business environment problem situation such as the buying process, PLC characteristics, Customer Satisfaction and plausible Marketing Strategies. The model is further assessed on a number of dimensions such as its ability to emulate the evolution of the product through the stages of the PLC, and the ability of the model to provide valuable information for formulating effective strategies. Keywords: Strategic Management, Product Life Cycle Management, Planning Models, System Dynamics Introduction The increasing complexity of the organizational-environmental problem situation presents a great challenge for today’s managers. The fact that market continuous evolves for almost all products calls for new approaches in managing Product Life Cycles, which take into consideration the many interdependent parts, which continuously change over time. Two components appear to be especially crucial in such an integrated approach: the structure of the organizational system and the steering possibilities or decision rules that the organizational structure allows. High complexity though arises as system structure exhibits all its possible observable manifestations in many variables having their roots in the patterns of interaction between important components of the system. To deal with the high complexity we need to take a perspective for the role of strategic management as that of reducing the uncertainty of these variables, which operate between organization and its environment and ensure the organization’s continuous adaptation in new business situations. Further, a high priority task is the identification of favorable or unfavorable configurations of the structural elements showing a high intrinsic steering capacity, hence increasing the governance of the system under study. Normally, favorable configurations of the structural elements manifest themselves in desirable outputs, resulting from the patterns of the interplay between the most variables. Different configurations produce different patterns of interactions between the relevant variables and give rise to different values of the defined and quantified performance indices. Modeling the relevant structures and undertaking experimental simulations capable of anticipating these patterns becomes the appropriate methodological tool for developing strategies and steering information, capable of securing survival and development of the organization. Structural configurations are in a continuous interaction with the environment. This invalidates any static view to strategic management and forces us to link structure to behavior in a dynamic system of continuous interaction between the important structural variables. In this way we may construct system models and study satisfactory approximations of the