Sub MarkBad()
Dim iRow As Long
Dim c1 As Range
Dim c2 As Range
Dim rng1 As Range
Dim rng2 As Range

iRow = Worksheets("Sheet1").Range("A1").End(xlDown).Row
Set rng1 = Worksheets("Sheet1").Range("A1:A" & iRow)
iRow = Worksheets("Sheet2").Range("A1").End(xlDown).Row
Set rng2 = Worksheets("Sheet2").Range("A1:A" & iRow)
For Each c1 In rng1
For Each c2 In rng2
If c1 = c2 Then c2.Offset(0, 1) = "bad"
Next c2
Next c1
End Sub

HTH,
Merjet