CEO vs MD: Difference and Comparison

An organization or company is a set of people who are organized and set on their ideas for development towards the country, like the government.

Like every other institute, organizations also have hierarchical authorities that help manage and grow.

In an organization, there needs to be employers and employees who have the same goal, i.e., working for the company’s growth and accomplishing the goals set for the company.

They are divided into various groups and are each given tasks for management.

Key Takeaways

  1. The CEO is responsible for a company’s overall strategy and direction and reports to the board of directors.
  2. The MD is responsible for the company’s day-to-day operations and reports to the CEO.
  3. While the roles of CEO and MD can overlap, the CEO focuses on long-term planning, while the MD focuses on executing the company’s plans.

CEO vs MD

The difference between CEO and MD is that the face of the CEO can be used to represent the company during meetings and other gatherings for business, but the same cannot be done with the MD.

CEO vs MD
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Business Quiz

Test your knowledge about topics related to business

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__________ scale firms enjoy economies of scale.

2 / 10

The Standard of living is the number of goods and services people can buy with the money they have.

3 / 10

Whose liability is limited to the extent of value of business assets and his private assets?

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The six Ps are collectively known as the Marketing Mix. They are ways in which organisations differentiate themselves. They include

5 / 10

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7 / 10

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Which country's currency is called the Baht?

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Overall and strategic planning is done by the ___________.

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CEO, or the Chief Executive Officer, is one of the major executive entities or individuals who work in the company’s management.

They come under the board of directors and must work according to their decisions. Their main responsibility is to maximise the profit for the organization.

MD, or the Managing Director, is the person in charge of the organisation’s functioning and management of the business.

They report to the chairman and the CEO. The MD belong to the board of managing directors and is responsible for the day-to-day functioning and performance of the company.

Comparison Table

Parameters of ComparisonCEOMD
Abbreviation forChief Executive OfficerManaging Director
Level in the organizationThey come under the board of directors and among other executive officers like CMO.They belong to the board of directors and report to the chairman
AuthorityThe board of directors have authority over the CEOAre accountable to the CEO as they come under CEOs
Responsibility for performanceThey are responsible for the overall performance of the companyAre responsible for individual or particular division’s performance for the company
Other responsibilityThey are focused on guiding other executive officersThey are focused on managing day to day activities of the company
FunctionsThey are required to facilitate business with their ideas and strategic visions for improving the companyHelps in managing the overall management of the company
RepresentationThey represent the entire companyThey do not represent the company unless the CEO and MD of the company are the same.

What is the CEO?

A CEO is a person who manages the performance of the company and ensures profits for the company or organisation they are working for. A CEO can be used as a representative of the company.

They must have strategic visions and plans for improving the company’s development and bringing profit. They have to overlook the functioning of the employees and guide other executive officers with their work.

A CEO can be found in public or private organizations, NGOs, and non-paid organizations. This generation’s CEOs must have a top degree in science, technology and business management.

The CEO of a company is not necessarily the owner of the company, and depending on the company’s structure, their responsibilities and roles can change.

ceo

What is MD?

A managing director or an MD is responsible for the company’s daily functioning and checking the performance of the individual employees or a particular group.

They belong to the board of directing managers and are responsible for the business and management of the overall company.

In some companies, they work as the head of a unit within a company rather than in managing the entire company’s functioning.

An MD cannot be used as a representative of the company. This is only possible if the CEO and MD of the company are the same individuals.

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Main Differences Between CEO and MD

  1. CEO stands for Chief Executive Officer, whereas MD stands for Managing Director.
  2. In a company or an organization, the CEOs come under the board of directors, among other executive officers like CMO, CCM, etc. On the other hand, MD belongs to the board of managing directors and reports to the company’s chairman.
  3. The board of directors hold authority over the CEOs, whereas the CEOs hold authority over the MDs. They are even allowed to order them.
  4. They are both responsible for the performance of their employees, but the difference is that CEOs are responsible for the company’s overall performance during deals. But MD is responsible for the performance of individuals or particular company divisions.
  5. The other responsibilities of the CEO include being focused on guiding other executive officers of their level. MD is also responsible for managing the day-to-day activities of the company.
  6. CEOs are required to facilitate business meetings with their ideas and strategic visions for the development of their company. On the other hand, MD is required to help the board of managing directors make decisions and work on the company’s management.
  7. The face of a CEO is used for representing the company. This is not the case with MD unless the MD and CEO of the company are the same individuals.
Difference Between CEO and MD
References
  1. http://www.ijem.upm.edu.my/vol14no1/7)%20Value%20Relevance.pdf
  2. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3336641

Last Updated : 11 June, 2023

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19 thoughts on “CEO vs MD: Difference and Comparison”

  1. I think the article could have delved deeper into the relative authority of CEOs and MDs in different types of organizations.

    1. That’s a good point, Elliot. It would be interesting to see how their roles vary in different contexts.

  2. The article presented a lot of useful information. I’d love to see a case study to apply these concepts.

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