The dynamics of an industry plays a critical role in the formulation of a firm’s strategy. It can increase or decrease opportunities or a threat for a firm and it often force the firm to make strategic adjustments. A basic understanding of the process of evolution is essential since correct response to the change in the competitive environment can mean the difference between success and failure of a firm. The first part of the unit will present the concept of product life cycle to explain the process of industry evolution and its significance for the formulation of strategy. In the latter part of the unit, growth strategies in dynamic and stable environments will be dealt in detail.