  We have performaed molecular dynamics simulations of Fe(80)Ni(20) alloys
using an inter-atomic potential of the EAM-type which allows the simulation of
the martensite-austenite transition. We present results, showing the
development of an inhomogeneous shear system on a nanoscale during the
thermally induced austenitic transition. In addition to this we obtained the
phonon dispersion relations of the martensite phase by calculating the
dynamical structure factor from our simulation results. On approaching the
transition temperature the phonon dispersion shows anomalies which might be
connected with the formation of the microstructure during the austenitic
transition.
