This study is based on Porter¡¦s five forces model of competition. It combines system dynamics theory to make Porter¡¦s five forces model be simulated by dynamic system model and then the strategy can be simulated by computer. With this strategic experiment, the industry analysis or industry strategy can be simulated and experimented just like in the laboratory and make the forecast in the future be achievable. The conclusions of this study are presented as follows: 1.The five forces in Porter¡¦s five forces model can be expressed and quantified by combination of each two forces. 2.The Porter¡¦s five forces model is not strong enough to cope with the dynamic, twinkling and changeful environment. But it can be compensated by system dynamics theory. 3.Combining the system dynamics theory and Porter¡¦s five forces model, the relationship between every two forces can be transformed into cause-and-effect chain. The total forces among five forces can be expressed by system feedback circle. 4.After combination of the system dynamic theory and Porter¡¦s five forces model, we can use the iThink software to simulate the combination. It makes the unquantifiable force change be able to be simulated and forecasted. The conclusions above are significant to the study in the following aspects. 1.The ten forces relationship of Porter¡¦s five forces model can be expressed by cause-and-effect chain in system dynamics theory. 2.The pull-and-push relationship of the ten forces combination in Porter¡¦s five forces model can be expressed by system feedback circle. 3.The mutual and active forces in the system dynamics can be quantified, simulated and forecasted.